Item 5.02 DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY ARRANGEMENTS OF CERTAIN OFFICERS.
On November 8, 2018, the Compensation and Governance Committee (the “Committee”) of the Board of Directors (the “Board”) of MBIA Inc. (the “Company”), and the Board, approved the grant of specialone-time restricted stock awards to the Company’s named executive officers (the “Executives”), made under the Company’s 2005 Omnibus Incentive Plan in the aggregate amount of 3 million shares, with the details of the grant set forth in the table below.
The Board designed the awards to enhance the prospect that the Executives remain with the Company on a long-term basis and to promote continuity and stability. The Company and its shareholders are in an unusual situation where its operating companies’ insured portfolios are in runoff, but the ongoing monitoring and remediation of the portfolios is critical to maximizing shareholder value. The Board strongly believes that the Company’s current leadership team possesses unique skills and experience which are essential to the achievement of its priorities, including the generation of shareholder value, over the long term:
| | • | | The Executives continue to work towards mitigating losses at the Company’s operating subsidiaries, National Public Finance Guarantee Corp. (“National”) and MBIA Insurance Corporation (“MBIA Insurance”), while simultaneously maximizing recoveries on paid insurance claims and ensuring adequate liquidity for the Company. |
| | • | | Specific to National and its exposures relating Puerto Rico, it is of critical importance to the Company and to National’s policyholders that the Executives overseeing theday-to-day remediation efforts remain intact and motivated. |
| | • | | The Executives each have specialized industry knowledge, leadership and skill sets, and important and irreplaceable institutional knowledge that positively impacts the Company’s operations, and will be instrumental in helping it navigate the current challenging operating environment. |
The Board designed the length of the retention awards to ensure that the Executives’ focus remains on the long-term strength of the Company. Absent a change of circumstances described further below, the awards will not vest for over 6 years from grant – until 2025 – thus ensuring that the Executives will see no benefit from this award unless shareholders benefit as well from the Company’s long-term strength and stability. The awards will also be subject to the other restrictive conditions set forth in the 2005 Omnibus Incentive Plan. Details of the awards are as follows:
| | | | | | | | | | |
| Name | | Title | | Total Number
of Shares
at Grant | | | Total Value
of Shares
at Grant | |
Daniel M. Avitabile | | AVP and MBIA Insurance’s President and Chief Risk Officer | | | 333,333 | | | $ | 3,353,330 | |
Adam T. Bergonzi | | AVP and National’s Chief Risk Officer | | | 500,000 | | | $ | 5,030,000 | |
William C. Fallon | | Chief Executive Officer | | | 1,000,000 | | | $ | 10,060,000 | |
Jonathan C. Harris | | General Counsel and Secretary | | | 333,333 | | | $ | 3,353,330 | |
Anthony McKiernan | | Chief Financial Officer | | | 500,000 | | | $ | 5,030,000 | |
Christopher H. Young | | AVP and National’s Chief Financial Officer | | | 333,333 | | | $ | 3,353,330 | |
Under the terms of the restricted stock awards, each Executive’s restricted stock will cliff vest on March 3, 2025 (the “Vesting Date”), provided the Executive remains continuously employed by the Company through such date. However, if, prior to the Vesting Date, the Executive experiences a “qualifying termination”, then the awarded restricted stock will vest at such time. A “qualifying termination” means a termination of an Executive’s employment (a) due to his death or disability, (b) by the Company or its successor in the event of a change of control, without cause, or (c) with the approval of the Board or the board of directors of the Company’s successor in the event of a change of control.
Any shares that have not vested as of the Vesting Date will be forfeited. Such forfeiture will occur, for example, upon an Executive’s voluntary resignation or retirement (other than in connection with a “qualifying termination”), or the Company’s termination of the Executive’s employment for cause.
