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TGIC » Topics » Mark K. Tonnesen

This excerpt taken from the TGIC DEF 14A filed Aug 8, 2008.
Mark K. Tonnesen
 
The material terms of our original employment agreement and related letter agreement with Mr. Tonnesen, each dated September 9, 2005, and the amended and restated employment agreement dated April 23, 2008, are summarized below.
 
Pre-2008 Employment Agreement and Letter Agreements.  Under our original employment agreement with Mr. Tonnesen, the term of Mr. Tonnesen’s employment began September 14, 2005 and extended through September 30, 2008 and thereafter for successive six (6) month terms unless either party gave one year’s prior written notice of nonrenewal. We provided a notice of nonrenewal in March 2008, which would have caused the agreement to expire in accordance with its terms at the end of March 2009. Mr. Tonnesen’s base annual salary under the agreement was $450,000, subject to annual increases determined by the Board. For calendar year 2006, the cash bonus was guaranteed not to be less than $450,000. After 2006, Mr. Tonnesen was eligible to participate in any Company incentive plan for senior executives. We agreed to cover relocation costs or $50,000 in lieu thereof, a monthly car allowance of $1,000 per month, reimbursement for financial planning services up to $7,500 per year and reimbursement for the initiation fee and


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annual membership dues to a country club in Winston-Salem, North Carolina, with such initiation fee and relocation expenses subject to gross-up for federal and state tax purposes.
 
Pursuant to the letter agreement dated September 9, 2005, Mr. Tonnesen was awarded 108,225 stock options at an exercise price of $41.12. In addition, Mr. Tonnesen received a grant of 36,075 shares of restricted stock. Fifty percent (50%) of the stock options and restricted stock vested on September 13, 2007 and the remaining fifty percent (50%) will vest on September 13, 2008. Beginning in 2007, any grants of equity awards under the 1993 Long-Term Stock Incentive Plan or any subsequent plan vest pro rata if there is a qualifying termination following any such grant. In such an event, Mr. Tonnesen will have three (3) months from his termination date to exercise any vested option awards.
 
In connection with our entering into a Phantom Stock Award Agreement with Mr. Tonnesen on December 26, 2006, we also amended the letter agreement with Mr. Tonnesen dated September 9, 2005. The purpose of the Phantom Stock Award Agreement and the amended letter agreement was to resolve an ambiguity in the original letter agreement and to preserve tax deductibility of certain equity awards pursuant to Internal Revenue Code Section 162(m). Pursuant to the amended letter agreement, on December 26, 2006, Mr. Tonnesen forfeited to us the 36,075 shares of restricted Company stock granted to him on May 9, 2006 pursuant to the original letter agreement and under the Company’s 1993 Long-Term Stock Incentive Plan. Pursuant to the amended letter agreement and the Phantom Stock Award Agreement, on December 26, 2006, Mr. Tonnesen was awarded Phantom Stock rights with respect to 36,075 shares of the common stock of the Company under the Triad Guaranty Inc. 2006 Long-Term Stock Incentive Plan.
 
2008 Employment Agreement.  On April 23, 2008, we entered into an amended and restated employment agreement with Mr. Tonnesen, which became effective on that date and replaced our original employment agreement with Mr. Tonnesen. The purpose of the amended and restated agreement was to secure Mr. Tonnesen’s services during a transition period while we explored various strategic alternatives. The amended and restated agreement provided for Mr. Tonnesen’s continued service as President and Chief Executive Officer until his planned retirement on December 31, 2008, unless he retired earlier with our consent or his employment was earlier terminated in accordance with the agreement. On July 18, 2008, we reached a mutual agreement with Mr. Tonnesen to set his retirement date at August 15, 2008 and he resigned as President and Chief Executive Officer and as a member of our Board of Directors on July 18, 2008. Mr. Tonnesen’s annual salary under the amended and restated agreement was $495,000 (unchanged since a salary adjustment effective January 1, 2007 previously approved by the Board).
 
Other benefits payable to Mr. Tonnesen under the amended and restated agreement include:
 
  •  A retention bonus of $150,000 if his employment with us continued through July 1, 2008, which was paid to Mr. Tonnesen in July 2008, and a retention bonus of $300,000 and a severance bonus of $225,000, which will be paid to Mr. Tonnesen in August 2008 as a result of his retirement effective August 15, 2008. These provisions replaced corresponding provisions of the original employment agreement that recognized Mr. Tonnesen’s ability to participate in any bonus plan for senior executives that we adopt.
 
  •  A grant of 40,500 shares of restricted stock under our 2006 Long-Term Stock Incentive Plan. These shares will vest in a lump sum on August 14, 2010. This grant was awarded to Mr. Tonnesen in February 2008 as part of our efforts to retain key executives who are key to our ability to meet the challenges that we face in 2008, as described above under “Compensation Discussion and Analysis — 2008 Executive Compensation.”
 
  •  Participation in all of our medical and employee plans on the same basis as other executives, and paid time off in accordance with our policy from time to time as though Mr. Tonnesen had been employed by us for at least ten (10) years. This provision was included in the original agreement and is not new.
 
  •  Reimbursement of his reasonable business expenses, including reimbursement of up to $5,000 for his attorney’s fees and expense in the negotiation of the amended and restated employment agreement.
 
Under the amended and restated employment agreement we will pay certain post-termination benefits to Mr. Tonnesen as a result of his retirement on August 15, 2008, provided he is reasonably available to serve as an


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independent consultant on the terms set forth in the agreement. The nature and amount of the benefits depend on the circumstances of his termination of employment, as follows:
 
  •  In the event of Mr. Tonnesen’s death prior to August 15, 2008, we will pay Mr. Tonnesen’s estate his salary to the end of the month in which he died plus a lump sum amount equal to his annual salary at the time of his death. This provision was included in the original agreement and is not new.
 
  •  Following Mr. Tonnesen’s retirement on August 15, 2008 in accordance with the agreement, we will pay Mr. Tonnesen an aggregate of $675,000 in eighteen (18) equal monthly installments beginning six (6) months after the retirement date (such twenty-four (24) month period being referred to as the “post-termination period”). In addition to these monthly payments, Mr. Tonnesen will be entitled to participate in our health care plan for the benefit of himself and his dependents during the post-termination period. If we are unable to include Mr. Tonnesen in our plan for any reason, we will use our best efforts to obtain equivalent coverage for Mr. Tonnesen and his dependents under an individual policy. Mr. Tonnesen may elect COBRA coverage under the circumstances provided in the agreement. We will pay Mr. Tonnesen a monthly amount equal to the premium actually paid by Mr. Tonnesen for the health care coverage described above. These benefits replace the severance payment that we would have had to pay Mr. Tonnesen under his original employment agreement if we terminated his employment without cause. The amount of the severance payment under the original agreement would have been the greater of $1.8 million or two times his annual salary during the two calendar years prior to the year of termination.
 
  •  Upon Mr. Tonnesen’s retirement on August 15, 2008 as contemplated by the agreement, in addition to the benefits described above, he will be entitled to participate during the post-termination period in life insurance, accident and disability policies and other welfare plans and arrangements generally available to our active employees and in which he participated prior to the termination date, subject to the terms of such plans and arrangements and the provisions of Section 409A of the Code. During the post-termination period Mr. Tonnesen will not participate in sick leave, vacation pay and similar programs or receive various perquisites specified in the agreement.
 
The payment of the post-termination benefits described above is subject to Mr. Tonnesen’s releasing us and our affiliates of any and all claims under the agreement. The amended and restated employment agreement also contains the same non-competition and non-solicitation covenants that were included in our original employment agreement with Mr. Tonnesen.
 
This excerpt taken from the TGIC DEF 14A filed Apr 6, 2007.
Mark K. Tonnesen  Age — 55  Director since — 2005
 
Mr. Tonnesen became President and Chief Executive Officer of the Company on September 14, 2005. Prior to joining the Company, Mr. Tonnesen was employed by the Royal Bank of Canada, where he held a number of positions, most recently Head of Integration, Personal and Commercial Clients from 2004 to 2005, Vice Chairman and Chief Financial Officer, RBC Insurance from 2001 to 2004 and Executive Vice President, Card Services and Point of Sale from 1997 to 2001.
 
This excerpt taken from the TGIC DEF 14A filed Apr 7, 2006.
Mark K. Tonnesen     Age — 54     Director since — 2005
  Mr. Tonnesen became President and Chief Executive Officer of the Company on September 14, 2005. Prior to joining the Company, Mr. Tonnesen was employed by the Royal Bank of Canada, where he held a number of positions, most recently Head of Integration, Personal and Commercial Clients from 2004 to 2005, Vice Chairman and Chief Financial Officer, RBC Insurance from 2001 to 2004 and Executive Vice President, Card Services and Point of Sale from 1997 to 2001.
     

EXCERPTS ON THIS PAGE:

DEF 14A
Aug 8, 2008
DEF 14A
Apr 6, 2007
DEF 14A
Apr 7, 2006

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