EXHIBIT 10.7
MGIC INVESTMENT CORPORATION
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
1. Purpose
The purposes of this MGIC Investment Corporation Supplemental
Executive Retirement Plan (hereinafter referred to as the "Plan") are to restore
retirement benefits to certain participants in the Company's pension plan whose
benefits under said Plan are or will be limited by reason of Sections 401(a)(17)
or 415 of the Internal Revenue Code of 1986, as amended ("Code") and to provide
certain other retirement benefits.
This Plan is completely separate from the tax-qualified
Pension Plan maintained by the Company and is not funded or qualified for
special tax treatment under the Code.
2. Effective Date
The Plan is effective as of July 31, 1990.
3. Definitions
The following terms as used herein shall have the meanings set
forth below:
"Company" means MGIC Investment Corporation, a Wisconsin
corporation.
"Employer" or "Employers" means the Company and any subsidiary
or affiliate thereof which is a "Participating Employer" under the
Pension Plan.
"Group Annuity Contract" means Group Annuity Contract 8474-0
issued by Metropolitan Life Insurance Company to provide for the
payment of benefits accrued under a terminated pension plan previously
maintained by the Company's predecessor.
"Participant" means an employee of the Employers who is a
participant in the Pension Plan and who is (or whose position is)
designated for participation herein by the board of directors of the
Company. As of the Effective Date, the following officers of Mortgage
Guaranty Insurance Corporation are designated as Participants:
Chief Executive Officer
Chief Operating Officer
All Executive Vice Presidents
All Senior Vice Presidents
"Pension Plan" means the defined benefit pension plan
maintained by the Company known as the MGIC Investment Corporation
Pension Plan and any
successor to such plan maintained by the Company or any successor or
affiliate of the Company.
"Pension Plan Benefits" means the monthly benefits payable
under the terms of the Pension Plan and/or under the Group Annuity
Contract.
In addition, (i) effective January 1, 1998, any employee of
the Employers not referred to above who is in salary grade 401 through
412, inclusive, shall be in a position designated for participation in
the Plan, and (ii) after December 31, 1999, William H. Lacy, while he
remains an employee of an Employer, shall continue to be a participant
in the Plan.
4. Administration
The Plan shall be administered by the Administrator of the
Pension Plan ("Administrator"). Decisions and determinations by the
Administrator shall be final and binding on all parties, except when manifestly
contrary to the provisions of this Plan and except that no presumption of
validity shall be given to any such decision or determination with respect to
Section 5(d). The Administrator shall have the authority to interpret the Plan,
to promulgate and revise rules and regulations relating to the Plan and to make
any other determinations which it deems necessary or advisable for the
administration thereof.
5. Pension Plan Supplement
(a) Any Participant who, upon termination of employment with
the Employers after the Effective Date has a vested and nonforfeitable right to
a pension under the Pension Plan, or such Participant's spouse or other
beneficiary, shall be entitled to a benefit payable hereunder in accordance with
this Section 5, equal to the excess, if any, of
(i) the amount of such Participant's, surviving spouse's or
other beneficiary's Pension Plan Benefits computed under the provisions
of the Pension Plan and Group Annuity Contract, but: determined without
regard to the limitations on benefits imposed by reason of Section 415
of the Code or the limitation on considered compensation under Section
401(a)(17) of the Code; and, effective January 29, 2004, for an
actively employed officer of Mortgage Guaranty Insurance Corporation
then participating in the Plan, and for officers of Mortgage Guaranty
Insurance Corporation who participate in the Plan thereafter,
determined by adding to "Compensation," as that term is defined in the
Pension Plan, the market value, determined as of the date of the award,
of restricted stock of the Company awarded (regardless of whether such
stock is subsequently forfeited) as part of such Participant's bonus
during any year beginning on or after January 1, 1999, but excluding
any such restricted stock awarded to match an election of such
Participant to receive restricted stock; over
(ii) the amount of Pension Plan Benefits actually payable to
such Participant, surviving spouse or other beneficiary for each month
under the Pension Plan and Group Annuity Contract, as computed under
the provisions of such Plan and Contract.
The amount of Pension Plan Benefits in the computation under
clauses (i) and (ii) above shall exclude any Pension Plan Benefits earned after
a Participant no longer occupies any position designated for participation in
the Plan.
(b) Benefits under this Section 5 shall become payable when
the Participant or the Participant's spouse or other beneficiary begins to
receive Pension Plan benefits and shall be payable in the same manner, at the
same time and in the same form as the benefits actually paid to the Participant,
spouse or other beneficiary under the Pension Plan.
(c) Notwithstanding the foregoing, no benefits shall be
payable under this Plan to or on behalf of any Participant whose employment with
the Employers is terminated "for cause" or who engages in "prohibited
competition." For purposes of this Plan, the term "for cause" shall mean fraud,
dishonesty, theft, gross negligence, willful misconduct in the performance of
duties or other similar causes. The term "prohibited competition" shall mean the
rendering of services to any competitor of the Employers (i) during the term of
his employment by the Employers and (ii) for a period of one year after any
termination of the Participant's employment in the geographic area or areas
(localized or national, as the case may be) in which he was employed, assigned
or otherwise worked on behalf of the Company, or a present or future parent,
subsidiary or affiliate of the Company, during the three years prior to the
termination of his employment. For purposes of this Plan, the term "competitor"
means any corporation, partnership, proprietorship or firm (i) engaged in the
business of mortgage guaranty in any geographic area in which the Company or a
present or future parent, subsidiary or affiliate of the Company is so engaged
or (ii) engaged in any other business in which the Company or any subsidiary is
engaged, in any geographic area in which the Company or any subsidiary is so
engaged, but only if such business accounted for at least 10% of the revenues of
the Company and its subsidiaries, on a consolidated basis, during the twelve
months preceding the month in which the Participant's employment terminated.
(d) In the case of a Participant who first becomes a
Participant in 1996, the foregoing provisions of Section 5 shall be modified to
the extent provided below:
(i) For purposes of Section 5(a), such Participant
shall be deemed to have a vested and nonforfeitable right to a pension
under the Pension Plan.
(ii) For purposes of clause (i) of Section 5(a), such
Participant (A) shall be deemed to have a Past Service Benefit under
Section 5.01(a) of the Pension Plan equal to $2,833.33 per month, and
(B) shall be deemed to have a number of years of Vesting Service under
the Pension Plan sufficient to be eligible for each benefit under the
Pension Plan and a vested percentage under the Pension Plan sufficient
to avoid any reduction in the amount of any such benefit.
(iii) Section 5(b) shall not apply and benefits under
this Section 5 shall become payable when such Participant or such
Participant's spouse or other beneficiary would have received Pension
Plan benefits assuming that such Participant's deemed Vesting Service
under clause (ii) of this Section 5(d) was such Participant's actual
Vesting Service under the
Pension Plan and giving effect to any election to commence receiving
benefits filed with the Administrator as contemplated below, except
that if such an election is made under this Plan and such Participant
is also eligible to elect to commence receiving benefits under the
Pension Plan, such Participant shall also make such an election under
the Pension Plan. Benefits under this Plan shall be payable in the same
manner and in the same form as benefits would have been payable to the
Participant, spouse or other beneficiary under the Pension Plan in
accordance with the immediately preceding sentence if such benefits
were actually payable thereunder. Any election by such Participant to
commence receiving benefits or of the form of benefits under this Plan
shall be filed with the Administrator in accordance with the same
procedures as established under the Pension Plan, and in the case of an
election of the form of benefits, shall be the same as any such
election under the Pension Plan and shall be subject to the same
restrictions as under the Pension Plan.
(iv) Section 5(c) shall apply only to benefits under
this Plan which are attributable to the Annual Pension Credits of such
Participant. No benefits under this Plan which are attributable to the
Past Service Benefit referred to in clause (ii) of this Section 5(d)
shall be payable to or on behalf of such Participant if (A) prior to
the third anniversary of such Participant's first day as an employee of
an Employer, such Participant quits (as such term is used in Section
2.01 (a)(i) of the Pension Plan) as an employee of the Employers other
than as a result of a meaningful reduction in such Participant's job
status, responsibilities or compensation, or (B) such Participant
engages in "prohibited competition," as such term is used in Section
5(c).
(v) Capitalized definitional terms used in this Section
5(d) which are defined in the Pension Plan are used as so defined."
6. Plan Reserve
(a) The Company shall establish a bookkeeping reserve with
respect to the benefits provided under this Plan. Such reserve shall serve
solely as a device for determining the amount of the Company's accrued deferred
liability for the benefits provided herein, and shall not constitute or be
treated as a trust fund of any kind, it being expressly provided that the
amounts credited to the reserve shall be and remain the sole property of the
Company, and that no Participant shall have any proprietary rights of any nature
whatsoever with respect thereto or with respect to any investments the Company
may make to aid it in meeting its obligations hereunder.
(b) No funds or other assets of the Company shall be
segregated and attributable to the amounts that may from time to time be
credited to the reserve. Benefit payments under the Plan shall be made from the
general assets of the Company at the time any such payments becomes due and
payable. To the extent that any person acquires a right to receive payments from
the Company hereunder, such right shall be no greater than the right of an
unsecured creditor.
7. Inter-Employer Reimbursements
Although all benefit payments hereunder shall be made by the
Company, the Administrator shall determine whether any portion thereof is
allocable to any other Employer on account of its employment of one or more
Participants. In any such case, the Company shall be reimbursed by such other
Employer in the amount and manner determined by the Administrator.
8. Non-Alienation of Payments
Benefits payable under the Plan shall not be subject in any
manner to alienation, sale, transfer, assignment, pledge, attachment,
garnishment or encumbrance of any kind, by will, or by inter vivos instrument.
Any attempt to alienate, sell, transfer, assign, pledge or otherwise encumber
any such benefit payment, whether currently or thereafter payable, shall be void
and shall not be recognized by the Administrator or the Company.
9. Limitation of Rights Against the Employers
Participation in this Plan, or any modifications thereof, or
the payments of any benefits hereunder, shall not be construed as giving to any
person any right to be retained in the service of the Employers, limiting in any
way the right of the Employers to terminate such person's employment at any
time, or evidencing any agreement or understanding that the Employers will
employ such person in any particular position or at any particular rate of
compensation.
10. Applicable Laws
The Plan shall be construed, administered and governed in all
respects under and by the laws of the State of Wisconsin.
11. Liability
Neither the Company nor any shareholder, director, officer or
other employee of any Employer or any other person shall be liable for any act
or failure to act hereunder except for gross negligence or fraud.
12. Amendment or Termination
(a) The Company, by action of its board of directors, reserves
the right to amend or terminate this Plan at any time, provided that no such
amendment or modification shall adversely affect the rights of any Participant,
spouse or other beneficiary with respect to any benefits under this Plan which
have accrued to the effective date of such amendment, termination or
modification.
(b) It is understood that an individual's entitlement to
benefits under Section 5 of this Plan may be automatically reduced as the result
of an increase in his Pension Plan Benefits. Nothing herein shall be construed
in any way to limit the right of the Company to amend or modify the Pension
Plan.