<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[X] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
MBIA Inc.
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
MBIA Inc.
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(j)(2)
or Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:*
(4) Proposed maximum aggregate value of transaction:
------
*Set forth the amount on which
the filing fee is calculated and state how it was determined.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
Notes:
<PAGE>
PRELIMINARY PROXY
--------------------------------------------------------------------------------
MBIA INC. DAVID H. ELLIOTT
113 King Street Chairman
Armonk, NY 10504
914 273 4545
LOGO OF MBIA
March 27, 1995
Dear Shareholder:
On May 11, 1995 MBIA Inc. will hold its annual meeting of shareholders and I
extend a personal invitation to you on behalf of the Board of Directors to join
us so we can report to you on the activities of the Company during 1994 and
discuss our prospects for 1995. The meeting will be held in our headquarters at
113 King Street, Armonk, New York, at 10:00 a.m.
This year you are being asked to act on the following: (a) the election of
directors; (b) a Board of Directors proposal to amend the Company's Certificate
of Incorporation to increase the number of authorized shares of Common Stock;
(c) a Board of Directors proposal to increase the number of shares available
for grant under the Company's 1987 Employee Stock Option Plan; (d) a Board of
Directors proposal to adopt an incentive plan; and (e) the selection of
independent auditors for 1995. These proposals are described in the attached
proxy statement which you are encouraged to ready fully.
Whether or not you plan to attend the meeting, it is important that your
shares be represented. Regardless of the number of shares you own, please date,
sign and mail the enclosed proxy promptly.
We appreciate your continued support.
Sincerely,
/s/ David H. Elliott
David H. Elliott
Chairman
<PAGE>
MBIA INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To the Shareholders of MBIA Inc.:
The annual meeting of the shareholders of MBIA Inc. will be held at the
Company's headquarters, 113 King Street, Armonk, New York 10504, on Thursday,
May 11, 1995 at 10:00 a.m., New York time, for the following purposes:
PROPOSAL 1: To elect 13 directors of the Company for terms expiring at
the 1996 Annual Meeting;
PROPOSAL 2: To vote on amendment to the Company's Certificate of
Incorporation to allow an increase in the Company's authorized shares of
Common Stock;
PROPOSAL 3: To vote on an increase in the number of shares available for
granting under the Company's 1987 Employee Stock Option Plan;
PROPOSAL 4: To vote on an employee incentive compensation plan;
PROPOSAL 5: To ratify the appointment by the Board of Directors of
Coopers & Lybrand L.L.P., certified public accountants, as independent
auditors for the Company for the year 1995;
and to transact such other business as may properly come before the meeting
or any adjournment thereof.
Shareholders of record at the close of business on March 20, 1995 will be
entitled to vote at the meeting, whether in person or by proxy. Please sign,
date and return the enclosed proxy card as soon as possible in the envelope
provided. Shareholders who attend the meeting may revoke their proxies and vote
in person, if they wish to do so.
By order of the Board of Directors,
/s/ Louis G. Lenzi
Louis G. Lenzi Secretary
113 King Street Armonk, New York 10504 March 27, 1995
<PAGE>
MBIA INC.
PROXY STATEMENT
Your proxy in the form enclosed is solicited by the Board of Directors of
MBIA Inc. (the "Company"). Your proxy may be revoked by you at any time prior
to its use. The shares represented by the proxies received will be voted at the
meeting, or any adjournment thereof, in accordance with such specifications as
are made therein or, if no such specifications are made, in accordance with the
recommendations of the Board of Directors.
The record date for the determination of shareholders entitled to vote at the
meeting was March 20, 1995. On the record date, there were outstanding
41,645,624 shares of the Company's Common Stock ("Common Stock"), constituting
all of the outstanding voting securities of the Company. Each share is entitled
to one vote. Abstentions and broker non-votes are counted for purposes of
determining the number of shares represented at the meeting but are deemed not
to have voted on any proposal.
The mailing address of the executive offices of the Company is 113 King
Street, Armonk, New York 10504. This Proxy Statement and the accompanying
Notice of Annual Meeting of Shareholders and proxy card are being mailed, on or
about March 27, 1995, to shareholders of record on the record date.
PROPOSAL 1:
ELECTION OF DIRECTORS
All of the Company's directors are elected at each annual meeting of
shareholders. At the 1995 Annual Meeting, the shareholders will elect 13
directors to serve for a term expiring at the 1996 Annual Meeting.
The names of the nominees being presented for consideration by the
shareholders, their ages, the years they have been directors of the Company,
their principal occupations over the past five years, their current positions
with the Company and certain other directorships held by them are set forth
below. The shares represented by all proxies received will be voted for these
nominees, except to the extent authority to do so is withheld as provided for
in the enclosed proxy card. If any such nominee should be unable or unwilling
to serve (an event not now anticipated), all proxies received will be voted for
the person, if any, as shall be designated by the Board of Directors to replace
such nominee. The Board has set a policy that no person who has attained the
age of 70 years or older shall be nominated to be a director.
William O. Bailey Mr. Bailey has been a director of the Company since 1986.
Prior to his retirement on December 31, 1993, Mr. Bailey
was Chairman of the Company from 1986 through 1993. From
1986 through 1991, he was Chairman and Chief Executive
Officer of the Company and its operating subsidiary,
Municipal Bond Investors Assurance Corporation ("MBIA
Corp."). Mr. Bailey is currently the Chairman of Terra
Nova (Bermuda) Holdings Ltd., a director of Business
Men's Assurance Company of America, and a trustee of
Century Shares Trust. Age 68.
Joseph W. Brown, Jr.
Mr. Brown is Chairman, President and Chief Executive
Officer of Talegen Holdings, Inc. (insurance company).
From 1989 through 1991, Mr. Brown was President and Chief
Executive Officer of Fireman's Fund Insurance
1
<PAGE>
Company (insurance company). He had been employed in
various capacities at Fireman's Fund since 1974. Mr.
Brown has served as a director of the Company since being
elected at the 1990 Annual Meeting and previously served
as a director from December of 1986 through May of 1989.
Age 46.
David C. Clapp Mr. Clapp is a limited partner of The Goldman Sachs
Group, L.P. From 1990 until late 1994, he was Partner-in-
charge of the Municipal Bond Department at Goldman Sachs
& Co. (investment banking). He is past Chairman of the
Municipal Securities Rulemaking Board and President of
the Board of Trustees of the Museum of the City of New
York. Age 57.
David H. Elliott Mr. Elliott is currently the Chairman of the Company and
Chairman of MBIA Corp. From 1986 to 1991, he served as
the President and Chief Operating Officer of the Company
and MBIA Corp. He has been a director of the Company
since March of 1988. He is a director of MBIA Corp., and
was the President of the Municipal Bond Insurance
Association, MBIA Corp.'s predecessor, from 1976 to 1980
and from 1982 to 1986. Mr. Elliott is a member of the
board of Gryphon Holdings, Inc. Age 53.
Claire L. Gaudiani Dr. Gaudiani has been President of Connecticut College
since 1988. Dr. Gaudiani serves as a director of Southern
New England Telephone Company, Public Radio International
and the National Collegiate Athletic Association
Presidents Commission. She has been a director of the
Company since being elected at the 1992 Annual Meeting.
Age 50.
William H. Gray, III Mr. Gray is President and Chief Executive Officer of the
United Negro College Fund, Inc. Mr. Gray has served as
Special Advisor to the President on Haiti, Majority Whip
and Budget Chairman for the U.S. House of
Representatives, a faculty member at several colleges,
and has been pastor of the 5,000 member Bright Hope
Baptists Church in Philadelphia for more than 20 years.
He serves as a director of The Chase Manhattan
Corporation, The Prudential Insurance Company of America,
Warner-Lambert Company, Westinghouse Electric
Corporation, Union Pacific Corporation, Rockwell
International Corp. and Lotus Development Corp. Mr. Gray
has been a director of the Company since being elected at
the 1992 Annual Meeting. Age 53.
Freda S. Johnson Ms. Johnson is President of Government Finance
Associates, Inc. (municipal finance advisory company), a
firm which she has been associated with since late 1990.
From early 1990 until December 1990, she was an
independent public finance advisor. She served as
Executive Vice President and Executive Director of the
Public Finance Department of Moody's Investors Service,
Inc. (rating agency) from 1979 to 1990. Ms. Johnson is a
member of the Municipal Securities Rule Making Board's
MSIL Committee on Dissemination of Disclosure Information
and a member of the National Association of State
Auditors, Comptrollers and Treasurers' National Advisory
Board on State and Local Government Secondary Market
Disclosure. She is also a director of the National
Association of Independent Public Finance Advisors. Ms.
Johnson has served on the Company's Board of Directors
since July of 1990. Age 47.
Daniel P. Kearney
Mr. Kearney is President of Aetna Life Insurance and
Annuity Company (insurance company). Prior to joining
Aetna Life and Casualty Company
2
<PAGE>
in 1991, he served as President and Chief Executive
Officer of the Resolution Trust Corporation Oversight
Board from 1989 to 1991. From 1988 to 1989, Mr. Kearney
was a principal at Aldrich, Eastman & Waltch, Inc., a
pension fund advisor. Mr. Kearney was a managing director
at Salomon Brothers Inc (investment banking firm) in
charge of the mortgage finance and real estate finance
departments from 1977 to 1988. Mr. Kearney has served on
the Company's Board of Directors since being elected at
the 1992 Annual Meeting. Age 55.
James A. Lebenthal Mr. Lebenthal has been Chairman of Lebenthal & Co., Inc.,
a broker-dealer of municipal bonds, since 1978. From 1986
to 1988, Mr. Lebenthal was also President of Lebenthal &
Co., Inc. He is President of the Commission on Savings
and Investment in America and Vice Chairman of the
Rebuild America Coalition. Mr. Lebenthal has been a
director of the Company since August of 1988. Age 66.
Robert B. Nicholas Mr. Nicholas is presently a private investor. From 1988
through 1991, he was a consultant to Aetna Life and
Casualty Company with respect to certain corporate
issues. He served as Senior Vice President, Corporate
Planning and Development, of Aetna Life and Casualty
Company and of The Aetna Casualty and Surety Company from
1986 to 1988. He is a Trustee and Chairman of the Finance
Committee of the Hartford Graduate Center and a trustee
of Denison University. Mr. Nicholas has been a director
of the Company since December of 1986. Age 65.
Pierre-Henri Richard Mr. Richard has been Chairman and Chief Executive Officer
of Credit Local de France (banking and municipal finance
firm) since 1993, having acted as Chairman of the
executive board of Credit Local de France from 1987 to
1993. From 1983 to 1993, he was Deputy Directeur General
of the Caisse des Depots et Consignations, in charge of
municipal finance. He is Chairman of the Institute for
Decentralization and serves as a director of the European
Investment Bank and Air France Group. Mr. Richard has
been a director of the Company since January of 1990. Age
54.
Paul A. Volcker Mr. Volcker has been Chairman of James D. Wolfensohn
Incorporated (investment banking firm) and a Professor of
International Economic Policy at the Woodrow Wilson
School of Public and International Affairs at Princeton
University since March 1988. He has been a director of
the American Stock Exchange since February of 1990. He
also serves as a director of The Prudential Insurance
Company of America, Nestle, S.A. and UAL Corporation. Mr.
Volcker served as Chairman of the Board of Governors of
the Federal Reserve System from 1979 to 1987. Mr. Volcker
became a director of the Company in March of 1988. Age
68.
Richard L. Weill Mr. Weill is President of the Company and MBIA Corp. From
1991 to 1994, he served as Executive Vice President of
the Company and MBIA Corp., having served as General
Counsel and Secretary of the Company and MBIA Corp. from
1989 to 1991. Mr. Weill was previously a partner with the
law firm of Kutak Rock, with which he was associated from
1969 to 1989. He is a director of MBIA Corp. Age 52.
3
<PAGE>
THE BOARD OF DIRECTORS AND ITS COMMITTEES
During the year ended December 31, 1994, the Board of Directors of the
Company (the "Board") met six times. At year end, there were six Committees of
the Board, whose activities are discussed below.
The Executive Committee, which at year end consisted of Messrs. Bailey,
Brown, Elliott (Chairman), Kearney, and Lebenthal, did not meet during 1994.
The Executive Committee is authorized, subject to limitations set forth in the
By-Laws of the Company, to exercise powers of the Board during intervals
between Board meetings.
The Finance Committee, which at year end consisted of Mr. Bailey (chairman),
Mr. Brown, Ms. Gaudiani and Mr. Volcker, met twice during 1994. This Committee
approves the general investment policies and objectives of the Company and
monitors investment activities and portfolio holdings, including review of
investment performance and asset allocation. George R. Trumbull, III served as
chairman of the Finance Committee until his resignation as a Director of the
Company on October 7, 1994.
The Risk Oversight Committee (formerly the Underwriting Committee), which at
year end consisted of Mr. Gray, Ms. Johnson (chairperson), Messrs. Kearney,
Lebenthal and Nicholas, met once during 1994. This Committee monitors the
underwriting process in order to assure general compliance with underwriting
guidelines and reviews significant changes in general underwriting policy and
guidelines which are proposed by management. It also reviews proposals to
develop new product lines which are outside the scope of existing businesses.
The Compensation and Organization Committee, which at year end consisted of
Mr. Brown (chairman), Ms. Gaudiani and Mr. Kearney, met three times during
1994. This Committee reviews and approves overall policy with respect to
compensation matters. The Committee annually reviews the performance of the
Chairman, recommends to the Board the compensation to be paid to the Chairman
and approves the compensation to be paid to the officers reporting to the
Chairman. The Committee also reviews significant organizational changes and
executive succession planning. Prior to his resignation as a Director of the
Company, Mr. Trumbull was a member of the Compensation and Organization
Committee.
The Audit Committee, which at year end consisted of Mr. Gray, Ms. Johnson,
Messrs. Lebenthal, Nicholas, and Volcker (chairman), met two times during 1994.
Its functions include review of the Company's annual financial statements,
meeting with the Company's internal auditor concerning the adequacy of internal
controls and review of the surveillance of insured issues, and meeting with the
Company's independent certified public accountants and with financial and legal
personnel of the Company. It is also a function of the Committee to recommend
to the Board the appointment of the Company's independent auditors.
The Committee on Directors, which at year-end consisted of Mr. Elliott, Ms.
Gaudiani, Messrs. Gray (chairman) and Volcker, met two times during 1994. This
Committee makes recommendations to the Board on Director nominees and on the
size and composition of the Board. It also recommends the compensation to be
paid to Directors and proposes nominees for the various Committees. Prior to
his resignation as a Director of the Company, Mr. Trumbull was a member of the
Committee on Directors.
The annual fee paid for the services of a director who is not an executive
officer of the Company was $26,000 and the fee paid for attendance at Board or
Committee meetings was $2,000, with the non-employee chairman of a committee
receiving an additional $1,000. Mr. Volcker also serves as a consultant to the
Company and for these services the investment banking firm of which he is
4
<PAGE>
Chairman received $100,000 from the Company during 1994. Directors who are also
executive officers of the Company receive no additional compensation for their
services as Directors. The Company has a Deferred Compensation and Stock
Ownership Plan for Non-Employee Directors. Pursuant to this plan, all non-
employee Directors are eligible to elect to defer all or a portion of their
fees and to receive payment of either their current fees or their deferred fees
in cash or in shares of Common Stock of the Company. As of year-end, six of the
non-employee Directors elected to participate in this plan. All Directors, with
the exception of Mr. Gray, attended at least 75% of the meetings of the Board
and of its Committees on which they served.
COMPENSATION AND ORGANIZATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Company's Compensation and Organization Committee, at
year-end, were Joseph W. Brown, Jr. (chairman), Claire L. Gaudiani and Daniel
P. Kearney. There are no members of the Company's Compensation and Organization
Committee who are current or former employees of the Company.
COMPENSATION OF EXECUTIVE OFFICERS
REPORT OF THE COMPENSATION AND ORGANIZATION COMMITTEE
To: The MBIA Inc. Board of Directors
As part of its Charter, the MBIA Inc. Compensation and Organization Committee
(the "Committee") has, among its duties, the responsibility to recommend to the
Board the compensation, including bonus and the awarding of stock options, to
be paid to the Chairman and Chief Executive Officer, and to review and approve
the recommendations of the Chairman and Chief Executive Officer as to the
compensation, including bonuses and the awarding of stock options, to be paid
to the executive officers reporting to the Chairman and Chief Executive
Officer. The Committee is presently composed entirely of independent outside
directors who are neither current nor former employees of the Company.
The Company's compensation philosophy is to pay all employees, including
executive officers, for actual performance based on level of responsibility in
a manner which motivates such employees to perform at the highest possible
level and assures that the Company obtains and retains highly qualified
employees in its competitive marketplace. The Company achieves these objectives
by using a combination of both fixed (i.e., salary) and variable (i.e., annual
bonus and, when applicable, stock options) compensation.
Executive officer salaries are based on job content of each position, the
market relative to comparable positions, the individual's relevant experience
and the actual performance of each executive. Salary changes are based on
changes in responsibilities, the individual's performance and competitive
market conditions. For purposes of comparability of salaries and salary
changes, the Committee considers the median figures for the Company's primary
competitors in the financial guaranty industry (note: only one of MBIA's
primary competitors has been publicly traded for any significant period of time
and none of MBIA's competitors are included in any of the indices in the stock
performance graph).
Individual bonuses reflect Company performance and the individual's personal
contribution to the achievement of the Company's goals and the contribution of
the operating units for which such individual is responsible. Bonus ranges are
established for each job position as a function of base salary, e.g., for 1994
the bonus range for the Chairman and Chief Executive Officer is 0% to 100% of
base salary. The size of the Company bonus pool is approved at year end by this
Committee based on
5
<PAGE>
the Company's absolute and relative performance. The performance factors
considered are return on equity, earnings per share, book value per share, the
relative performance of peer group companies and the achievement of the
Company's business plan goals. In 1994, these performance goals were
substantially met or exceeded and individual bonuses were made from a pool that
the Committee approved which aggregated 45% of all salaries.
Stock options are generally granted annually to higher level employees in
order to align more closely their interests with those of the shareholders. The
stock option grants provide the right to purchase shares of common stock at the
fair market value (closing price) of the stock on the date of the grant. Each
option vests in five equal annual installments (subject to certain acceleration
provisions if major Company financial goals are exceeded) and has a ten-year
term. The options are granted under a shareholder-approved plan and are
typically granted from the Vice-President level up to and including the
Chairman and Chief Executive Officer. The number of stock options granted to
any executive officer is based on a percentage of compensation divided by the
value of an option, which is derived from a discounted cash flow model which
assumes a 12% annual appreciation in stock price over a five-year period and a
12 1/2% discount rate. Prior option grants are not taken into account in
determining the number of options granted in any year. In March 1994, based on
the above formula, 244,000 options were awarded.
In late 1994, the Committee determined that it would be better served to
review all aggregate and individual incentive awards at the December meeting of
the Committee rather than reviewing stock grants in March and bonus awards in
December. Therefore, stock options were granted on two separate occasions in
1994, March and December, and thereafter are to be granted each December. In
line with the Committee's intent to place more emphasis on long term growth in
shareholder value, the Committee determined that the number of stock options
granted in December would be increased by approximately twenty percent (20%) in
excess of the formula amount outlined above for officers from the Senior Vice-
President level up to but excluding the Chairman and Chief Executive Officer
with a corresponding decrease in the bonus pool that otherwise would have been
awarded to these officers of 10%. The options awarded in December were 298,700.
Executive officer salary changes and bonuses are based on the Company's
performance in certain areas, including return on equity, earnings per share,
book value per share, performance relative to the Company's peer group, success
in reaching the business plan and strategic goals set for each division,
expense management and employee development and the individual officer's
personal contribution to the achievement of these goals. The weight and effect
of any of these factors on the compensation of each executive officer varies
depending on the individual responsibility of such officer. The Chairman and
Chief Executive Officer's salary and bonus are a function of how the Company
performed in the following areas: return on equity; earnings per share; book
value per share; relative performance to peer group companies (the "Financial
Goals"); and achievement of the Company's business plan goals. For the Chairman
and Chief Executive Officer, the Committee gave 50% weight to the Financial
Goals and 50% weight to the Company's business plan goals. In the core
municipal bond business, new issue volume for the Company dropped 35% against a
total industry drop of 42% in 1994 as compared to 1993. Despite this drop, the
Company in 1994 achieved an admirable 15.8% return on equity versus the 17.4%
earned in 1993, while earnings per share were up 1% over the previous year and
the book value per share was $40.96, an increase of 7% over 1993. The Company's
business plan goals were substantially met, including generating returns in
excess of the Company's cost of capital, increasing market penetration in both
the municipal bond insurance market and the structured finance sector and
maintaining the Company's position as the financial guaranty insurance
industry's lowest cost producer. Based on this performance and the shift to
place more emphasis on longer term incentives, the Committee awarded the
Chairman and Chief Executive Officer options of 30,000 in December compared to
the 20,000 which were awarded in March for 1993 performance and a bonus of
$365,000 compared to the $485,000 granted in 1993 and left his salary at the
same level as last year of $525,000.
6
<PAGE>
Based on currently prevailing authority, including proposed Treasury
regulations issued in December 1993, and in consultation with outside tax and
legal experts, the Committee has determined that it is unlikely that the
Company would pay any amounts in 1995 that would result in the loss of a
federal income tax deduction under Section 162(m) of the Internal Revenue Code
of 1986, as amended.
Respectfully submitted,
MBIA Inc. Compensation and
Organization Committee
Joseph W. Brown, Jr., Chairman
Claire L. Gaudiani
Daniel P. Kearney
7
<PAGE>
MBIA INC.
I. SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
--------------------------------------- AWARDS
OTHER SECURITIES
ANNUAL UNDERLYING ALL OTHER
NAME & PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($) OPTIONS(#) COMPENSATION(A)($)
------------------------- ---- --------- -------- --------------- ------------ ------------------
<S> <C> <C> <C> <C> <C> <C>
David H. Elliott 1994 $525,000 $365,000 $22,356 50,000 $180,430
Chairman 1993 485,000 485,000 16,787 20,000 186,208
1992 475,000 400,000 10,900 17,000 220,517
Richard L. Weill 1994 300,500 228,000 10,260 38,700 103,561
President 1993 280,000 280,000 9,734 10,000 108,357
1992 270,000 235,000 12,704 9,000 128,057
Robert R. Godfrey 1994 260,000 162,000 6,045 21,800 75,699
Executive 1993 260,000 240,000 4,874 10,000 75,110
Vice-President 1992 250,000 200,000 3,619 8,000 89,531
James E. Malling 1994 230,000 150,000 9,700 24,200 98,025
Executive 1993 230,000 200,000 9,222 10,000 105,608
Vice-President 1992 210,000 140,000 6,177 7,000 106,835
Arthur M. Warren 1994 204,000 118,000 5,913 5,700 110,173
Senior Vice-President 1993 204,000 145,000 6,347 6,000 114,338
1992 200,000 135,000 3,408 6,000 107,077
</TABLE>
--------
(a) Consists of (i) contributions to the Company's money purchase pension plan
and 401(k) plan, and (ii) premiums paid on behalf of such employees under a
split-dollar life insurance policy. Such amounts in 1994 were as follows:
Elliott--(i) $133,500 and (ii) $46,930; Weill--(i) $79,275 and
(ii) $24,286; Godfrey--(i) $63,300 and (ii) $12,399; Malling--(i) $57,000
and (ii) $41,025; and Warren--(i) $48,300 and (ii) $61,873.
8
<PAGE>
MBIA INC.
II. OPTION GRANTS IN 1994
INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
PERCENT OF
NUMBER OF TOTAL PRESENT
SECURITIES OPTIONS VALUE OF
UNDERLYING GRANTED TO EXERCISE OPTION
OPTIONS EMPLOYEES PRICE EXPIRATION AWARD ON
NAME GRANTED(A)(#) IN 1994 PER SHARE($/SH) DATE GRANT DATE(B)
---- ------------- ---------- --------------- ---------- -------------
<S> <C> <C> <C> <C> <C>
David H. Elliott 20,000 4% $59.625 2004 $504,482
30,000 5% $50.125 2004 636,155
Richard L. Weill 15,000 3% $59.625 2004 378,361
10,000 2% $60.125 2004 254,356
13,700 2% $50.125 2004 290,511
Robert R. Godfrey 10,000 2% $59.625 2004 252,241
11,800 2% $50.125 2004 250,221
James E. Malling 14,000 3% $59.625 2004 353,137
10,200 2% $50.125 2004 216,293
Arthur M. Warren 5,700 1% $59.625 2004 143,777
</TABLE>
--------
(a) The options were granted at an exercise price equal to the closing price of
the stock on the date of the grant, have a ten-year term and vest in five
equal annual installments (subject to certain acceleration provisions if
major Company financial goals are exceeded, if there occurs a change in
control of the Company or upon the death, disability or retirement of the
employee).
(b) The valuation method assumes: (1) annual 12% growth in the value of the
underlying stock over a five-year period; (2) exercise of the option at the
end of five years; and (3) discounting of the net proceeds (stock price
less option exercise price) to a present value at a rate of 12.5%. For
example, with respect to the first grant in 1994 at the exercise price of
$59.625 per share, the valuation would be determined as follows:
<TABLE>
<C> <S> <C>
1) 12% per annum growth of stock price using $59.625 as a base $105.080
2) Exercise of option at year five 59.625
--------
Net proceeds at year five $ 45.455
3) Present value of net proceeds at a 12.5% discount rate $ 25.220
========
</TABLE>
This is a net present value calculation of the assumed net proceeds and, as a
result, does not include any assumptions relating to future price volatility or
dividend yield. The 12.5% discount rate is the Company's estimated weighted
cost of capital, a component of which is the risk-free rate of return.
MBIA INC.
III. AGGREGATED OPTION EXERCISES IN 1994 AND 1994 YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
SECURITIES UNDERLYING IN-THE-MONEY
OPTIONS AT OPTIONS AT
DECEMBER 31, DECEMBER 31,
SHARE 1994(#) 1994($)(*)
ACQUIRED ON VALUE ------------------------- -------------------------
NAME EXERCISE(#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
David H. Elliott 0 $0 176,986 65,400 $4,470,430 $200,825
Richard L. Weill 0 $0 76,200 46,500 1,617,225 93,225
Robert R. Godfrey 0 $0 35,329 29,400 573,290 80,600
James E. Malling 0 $0 19,600 31,600 244,300 69,775
Arthur M. Warren 0 $0 41,320 10,500 999,617 7,350
</TABLE>
--------
* Based on share price of $56.125.
9
<PAGE>
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
COMPARISON OF FIVE YEAR CUMULATIVE RETURN
AMONG MBIA, S&P 500 AND S&P FINANCIAL
Measurement period _________ _________ _____________
(Fiscal year Covered) MBIA S&P 500 S&P FINANCIAL
--------------------- --------- --------- -------------
<S> <C> <C> <C>
Measurement PT -
12/31/89 $100 $100 $100
FYE 12/31/90 $ 89 $ 97 $ 79
FYE 12/31/91 $155 $126 $118
FYE 12/31/92 $206 $136 $146
FYE 12/31/93 $207 $150 $162
FYE 12/31/94 $188 $152 $156
</TABLE>
10
<PAGE>
PROPOSAL 2:
AMEND CERTIFICATE OF INCORPORATION TO APPROVE INCREASE IN
COMMON SHARES AUTHORIZED
The Company's Certificate of Incorporation presently authorizes the issuance
of 110,000,000 shares of stock, consisting of 10,000,000 shares of Preferred
Stock, par value $1.00 per share, and 100,000,000 shares of Common Stock, par
value $1.00 per share. As of December 31, 1994, no shares of Preferred Stock
were issued and outstanding. As of that date, 42,077,387 shares of Common Stock
were issued (of which 41,714,724 shares were outstanding and 362,663 shares
were held in the Company's treasury) and 593,706 shares were reserved for
issuance under the Company's existing plans, leaving a balance of 57,328,907
authorized, unissued and unreserved shares of Common Stock.
The Board of Directors deems it advisable that the Certificate of
Incorporation of the Company, as amended, be further amended, subject to
approval by the shareholders, to increase the authorized Common Stock from
100,000,000 to 200,000,000 shares. Approval of the amendment to the Certificate
of Incorporation requires the affirmative vote of a majority of all shares of
Common Stock of the Company in person or represented by proxy and entitled to
vote at the Annual Meeting of Shareholders. Abstention from voting on the
proposal will have the same effect as voting against the proposal. Broker non-
votes will have no effect on the outcome.
The Board of Directors unaminously recommends a vote FOR approval of the
amendment of Article 3 of the Company's Certificate of Incorporation so that,
as amended, it shall read as follows:
"3. The designation of each class of shares, the authorized number of shares
of each such class, and the par value (if any) of each such shares thereof, are
as follows:
The total number of shares of capital stock that the Company shall have
authority to issue is Two Hundred Ten Million (210,000,000) shares of which Two
Hundred Million (200,000,000) shall be common stock, par value $1.00 per share,
and of which Ten Million (10,000,000) shares shall be preferred stock, par
value $1.00 per share."
The additional shares of Common Stock would become part of the existing class
of Common Stock, and the additional shares, when issued, would have the same
rights and privileges as the shares of Common Stock now issued. There are no
pre-emptive rights relating to the Common Stock. If the proposed amendment is
approved by the shareholders, it will become effective upon filing and
recording a Certificate of Amendment as required by the Connecticut Stock
Corporation Act.
Although the Company has no present plans, agreements, or understandings
regarding the issuance of the proposed additional shares, the Board of
Directors believes that adoption of the amendment is advisable because it will
provide the Company with greater flexibility in connection with possible future
financing transactions, acquisitions of other companies or business properties,
stock dividends or splits, employee benefit plans and other proper corporate
purposes. Moreover, having such additional authorized shares available will
give the Company the ability to issue shares without the expense and delay of a
special meeting of shareholders. Such a delay might deprive the Company of the
flexibility the Board views as important in facilitating the effective use of
the Company's shares. Except as otherwise required by applicable law or stock
exchange rules, authorized but unissued shares of Common Stock may be issued at
such time, for such purposes, and for such consideration as the Board of
Directors may determine to be appropriate, without further authorization by
stockholders.
Since the issuance of additional shares of Common Stock, other than on a pro
rata basis to all current shareholders, would dilute the ownership interest of
a person seeking to obtain control of
11
<PAGE>
the Company, such issuance could be used to discourage a change in control of
the Company by making it more difficult or costly. The Company is not aware of
anyone seeking to accumulate Common Stock or obtain control of the Company, and
has no present intention to use the additional authorized shares to deter a
change in control.
PROPOSAL 3:
APPROVE AMENDMENT TO THE MBIA INC. 1987 STOCK OPTION PLAN
INTRODUCTION
The Board of Directors has recommended, and is seeking approval of, an
amendment to the MBIA Inc. 1987 Stock Option Plan (the "Option Plan") to
increase the total number of shares of Common Stock that may be issued
thereunder. This amendment is part of the Company's efforts to increase the
alignment of its executives' and shareholders' interests. As originally
adopted, the total number of shares with respect to which awards under the
Stock Plan could be made was 3,753,011, of which awards relating to 501,074
shares of Common Stock remain available. The amendment to the Stock Plan
authorizes the grant of awards for an additional 1,000,000 shares.
The Board of Directors believes that awards made pursuant to the Option Plan
assist the Company in attracting and retaining executives of outstanding
abilities and will motivate such executives in the pursuit of the Company's
growth strategy.
In addition, the increase in the number of shares requires that the Option
Plan be further revised to continue to qualify options grants made thereunder
as performance based compensation under Section 162(m) of the Internal Revenue
Code of 1986, as amended (the "Code"). The additional required change limits
the number of shares of Common Stock that may be subject to stock options
granted to any employee in any 12 month period to 500,000 shares (with stock
appreciation rights ("SARs") granted in tandem with any option not being
counted).
If the amendments are not approved by shareholders, awards will continue to
be made under the terms of the Option Plan as previously approved by
shareholders until the number of shares currently authorized for issuance
thereunder is exhausted.
Approval of the amendment to the Option Plan requires the affirmative vote of
a majority of all shares of Common Stock of the Company in person or
represented by proxy and entitled to vote at the Annual Meeting of
Shareholders. Abstention from voting on the proposal will have the same effect
as voting against the proposal. Broker non-votes will have no effect on the
outcome.
The closing price of a share of Common Stock on March 20 was $61.75.
The Board of Directors unanimously recommends a vote FOR approval of the
amendment to the Option Plan.
1987 OPTION PLAN
Awards under the Option Plan may be granted in the form of (i) incentive
stock options with the meaning of Section 422 of the Code, (ii) non-qualified
stock options, or (iii) stock appreciation rights ("SARs") accompanying options
under the Option Plan.
The Option Plan is administered by the Compensation and Organization
Committee (the "Committee"). The Committee is responsible for determining the
recipients of awards under the Option Plan and the size and nature of each
award. Recipients of stock options will have the terms of their options set
forth in stock option agreements between these recipients and the Company.
12
<PAGE>
Stock Options. Incentive stock options ("ISOs") and non-qualified stock
options ("NQSOs") may be granted under the Option Plan. The option price per
share under an option must equal or exceed the fair market value of a share of
Common Stock on the date the option is granted, or, in the case of an ISO
granted to a holder of more than 10% of the voting power of all classes of
stock of the Company (a "10% Stockholder"), 110% of such fair market value. In
any year an eligible employee may not receive ISOs that permit him to first
exercise an option in any calendar year for Common Stock with a fair market
value on the date the ISO is granted of more than $100,000. Options granted
under the Option Plan become exercisable at such time or times as may be
determined by the Committee and as set forth in an employee's stock option
agreement.
An option terminates on the date established in the option agreement, which
may not be more than 10 years after issuance or, in the case of ISOs granted to
a 10% Stockholder, five years. The options are non-transferable. The rights of
an employee in outstanding options upon termination of his employment because
of death, disability, discharge for cause or voluntary departure are determined
by the Committee and set forth in an employee's stock option agreement.
Stock Appreciation Rights. SARs may be granted to selected optionees in
tandem with either ISOs or NQSOs when the stock option is granted or at any
later time during the term of the option. SARs are exercisable with respect to
a number of shares determined in accordance with the Option Plan and may be
exercised not less than six months following the date of its issue during
certain limited periods set forth in the Option Plan. Exercise of the SAR is
treated as a surrender of rights under the related option with respect to the
number of shares for which the SAR is exercised. Conversely, to the extent the
option is exercised and the number of shares of Common Stock exceeds 50% of the
number of shares subject to the original option grant, a corresponding portion
of the SAR will be canceled. Amounts received on the exercise of SARs are
treated as compensation, subjecting the employee to tax and withholding and
giving rise to a deduction for the Company.
Termination and Amendment. The Board may suspend, terminate, modify or amend
the Option Plan; provided, however, that any amendment that would increase the
aggregate number of shares of Common Stock that may be issued, materially
increase the benefits accruing to participants or materially modify the
requirements as to eligibility for participation will be subject to stockholder
approval to the extent required by Rule 16b-3 adopted by the SEC pursuant to
Section 16(b) of the Securities Exchange Act of 1934. No suspension,
termination, modification or amendment of the Option Plan may be made without
the consent of an employee which would adversely affect the employee's rights
under the award theretofore granted.
Award Table. Neither the number of individuals who will be selected to
participate, nor the type or size of awards that will be approved by the
Committee under the Option Plan, as amended, can be determined. The following
table illustrates the awards that were made under the Option Plan, prior to its
amendment, in 1994.
MBIA 1987 OPTION PLAN
<TABLE>
<CAPTION>
NAME SHARES
---- -------
<S> <C>
David H. Elliott 50,000
Chairman
Richard L. Weill 38,700
President
Robert R. Godfrey 21,800
Executive Vice President
James E. Malling 24,200
Executive Vice President
Arthur M. Warren 5,700
Senior Vice President
All Executive Officers as a group (10 persons) 199,400
All other employees as a group (132 persons) 552,700
</TABLE>
13
<PAGE>
FEDERAL INCOME TAX ASPECTS
The following is a brief summary of the Federal income tax consequences of
awards made under the Option Plan based upon the Federal income tax laws in
effect on the date hereof. This summary is not intended to be exhaustive, and
does not describe state or local tax consequences.
Incentive Stock Options. No taxable income is realized by the participant
upon the grant or exercise of an ISO. If a participant does not sell the stock
received upon the exercise of an ISO ("ISO Shares") until the later of (a) two
years from the date of grant and (b) within one year from the date of exercise,
when the shares are sold any gain (loss) realized will be long-term capital
gain (loss). In such circumstances, no deduction will be allowed to the Company
for Federal income tax purposes.
If ISO Shares are disposed of prior to the expiration of the holding periods
described above, the participant generally will realize ordinary income at that
time equal to the excess, if any, of the fair market value of the shares at
exercise (or, if less, the amount realized on the disposition of the shares)
over the price paid for such ISO Shares. The Company will be entitled to deduct
any such recognized amount. Any further gain or loss realized by the
participant will be taxed as short-term or long-term capital gain or loss.
Subject to certain exceptions for disability or death, if an ISO is exercised
more than three months following the termination of the participant's
employment, the option will generally be taxed as a non-qualified stock option.
Non-Qualified Stock Options. No income is realized by the participant at the
time a non-qualified stock option is granted. Generally upon exercise of non-
qualified stock option, the participant will realize ordinary income in an
amount equal to the difference between the price paid for the shares and the
fair market value of the shares on the date of exercise. The Company will be
entitled to a tax deduction in the same amount. Any appreciation (or
depreciation) after date of exercise will be either short-term or long-term
capital gain or loss, depending upon the length of time that the participant
has held the shares.
Stock Appreciation Rights. No income will be realized by a participant in
connection with the grant of an SAR. When the SAR is exercised, the participant
will generally be required to include as taxable ordinary income in the year of
exercise an amount equal to the amount of cash and the fair market value of any
shares received. The Company will be entitled to a deduction at the time and in
the amount included in the participant's income by reason of the exercise. If
the participant receives common stock upon exercise of an SAR, the post-
exercise appreciation or depreciation will be treated in the same manner
discussed above under Non-Qualified Stock Options.
PROPOSAL 4:
APPROVE THE MBIA INC. 1995 INCENTIVE PLAN
INTRODUCTION
To further its policy of providing the Company's key employees the
opportunity to earn competitive levels of incentive compensation based
primarily on the performance of the Company, the Board of Directors has adopted
the MBIA Inc. 1995 Incentive Plan (the "Incentive Plan"), effective January 1,
1995, but subject to the approval of the Company's shareholders. While the
Company does not expect that it would pay any significant amounts which would
fail to be deductible for Federal income tax purposes because of the
limitations imposed by Section 162 (m) of the Internal Revenue Code ("Section
162(m)"), the Incentive Plan has been designed to enable the Company to make
awards to executive officers that would be exempt from the limitations
contained in such Section 162(m).
The principal features of the Incentive Plan are summarized below. The
description below is subject to the terms of the Incentive Plan, which is
contained in its entirety as Exhibit A hereto.
14
<PAGE>
To be approved, this proposal requires the affirmative vote of the holders of
a majority of the shares of Common Stock present in person or represented by
proxy at the Annual Meeting and entitled to vote thereon. Abstentions from
voting on this proposal will have the effect of votes against this proposal.
Broker non-votes will have no effect on the outcome of this proposal.
The Board of Directors unanimously recommends that shareholders vote FOR
approval of the Incentive Plan.
1995 INCENTIVE PLAN
Eligibility. The Incentive Plan authorizes the Compensation and Organization
Committee of the Board of Directors or any subcommittee thereof (the
"Committee") to award incentive compensation to officers and other key
employees of the Company and its subsidiaries, including all of the Company's
executive officers. The number of eligible participants in the Incentive Plan
will vary from year to year at the discretion of the Committee. During 1994,
approximately 350 employees (including all of the Company's current executive
officers) were eligible to receive incentive compensation under the Company's
prior annual bonus program and it is expected that no more than the same number
of employees will be eligible to receive award opportunities under the annual
component of the Incentive Plan in 1995. The number of employees who will
participate in the long term component is expected to be less than 150.
Incentive Awards. The Incentive Plan has two component parts, a long-term
program and a short-term program. The long-term program authorizes the payment
of an incentive award at the end of a multi-year cycle selected by the
Committee based upon attaining performance targets relating to corporate,
divisional, unit or individual objectives established by the Committee. The
short-term program authorizes the payment of annual bonuses based upon the
attainment of performance targets also related to corporate, divisional, unit
or individual objectives established by the Committee.
Performance Criteria. The Committee shall establish the performance
objectives that must be attained in order for the Company to pay bonuses under
the Incentive Plan. The Company believes that various factors influence its
overall performance and that different key employees have a direct impact on
different aspects of its business. Further, the Company believes that, to be
effective, any incentive plan must provide the Committee latitude to make
awards that reward performance measured against a wide array of performance
objectives. Accordingly, unless the Committee determines at the time of grant
not to qualify the award as performance based compensation under Section
162(m), the performance objectives for awards made under the Incentive Plan
will be based upon one or more of the following criteria: (i) consolidated
earnings before income taxes; (ii) earnings per share; (iii) book value per
share; (iv) return on shareholders equity; (v) the relative performance of peer
group companies; (vi) expense management; (vii) return on investment; (viii)
improvements in capital structure; (ix) profitability of an identifiable
business unit or product; (x) maintenance or improvement of product margins;
and (xi) ratio of claims to revenues.
Form of Payment. The Committee shall determine whether an award under the
Incentive Plan is payable in cash, in shares of Common Stock or in any
combination thereof. The Committee shall have the right to impose whatever
conditions it deems appropriate with respect to the award of shares of Common
Stock, including conditioning the vesting of such shares on the performance of
additional service. The maximum number of shares available for issuance under
the Incentive Plan shall be 1,500,000 shares.
Payment of Awards. If any of the performance criteria established by the
Committee with respect to a particular award is satisfied for the relevant
performance period, the Committee
15
<PAGE>
may authorize payment to the participant of (i) an annual bonus in an amount
not to exceed $1,000,000 or (ii) a long-term award in an amount or in value not
to exceed $3,000,000. The Committee has the discretion to pay amounts which are
less than these maximum amounts payable under the Incentive Plan based on
individual performance or such other criteria as the Committee shall deem
relevant and may establish rules or procedures that will limit the amounts
payable to each participant to a level which is below the maximum amount
authorized. A participant who is not an employee of the Corporation or one of
its subsidiaries on the last day of the performance period for which the award
is payable may receive a pro-rated award, based on the full period of
performance, unless the Committee determines that the participant will not
receive such an award.
Notwithstanding anything else in the Incentive Plan to the contrary, the
Committee shall also have the authority, in its discretion, (i) to pay bonuses
for any calendar year or performance period to eligible participants whose
compensation is not subject to the restrictions of Section 162(m) for the
calendar year in which such bonuses would be deductible by the Company for
Federal income tax purposes and (ii) to provide for a minimum bonus amount for
any calendar year in connection with the hiring of any person regardless of
whether performance objectives are attained.
Administration. The Committee, which shall at all times be comprised of at
least two directors each of whom is an "outside director" for purposes of
Section 162(m), shall administer and interpret the Incentive Plan. With respect
to any award to an executive officer intended to qualify for the performance
based compensation exception to Section 162(m), the Incentive Plan shall be
interpreted in a manner which is consistent with the requirements of Section
162(m). Subject to the express provisions of the Incentive Plan, the Committee
shall have the authority to select the officers and key employees eligible to
participate in the Incentive Plan, to establish the performance objectives for
each performance period, and to reduce the amount that may be paid to any
participant from the maximum amount otherwise payable pursuant to the Incentive
Plan. Prior to making any payment with respect to any performance award made
under the Incentive Plan, the Committee shall be required to certify (i) that
the performance objectives have been attained and (ii) the amount payable to
such executive officer.
Amendment and Termination. The Board or the Committee may at any time amend,
terminate or suspend the Incentive Plan, except that (i) no such action shall,
without the consent of such participant, adversely affect the rights, if any,
of any participant with respect to any award with respect to any calendar year
which already commenced and (ii) no such action shall be effective without
approval by the shareholders of the Company to the extent that such approval is
required for the Committee to be able to continue to qualify the payments under
the Incentive Plan for treatment as performance based compensation under
Section 162(m). Notwithstanding anything else in the Incentive Plan to the
contrary, the Incentive Plan will not be effective with respect to calendar
years ending after December 31, 2000, unless otherwise extended by action of
the Board.
Federal Income Tax Consequences. Payments made under the Incentive Plan will
be taxable to the recipients thereof when paid and the Company or the
subsidiary of the Company which employs or employed the recipient will
generally be entitled to a Federal income tax deduction in the calendar year
for which the amount is paid.
New Plan Award Table. Because payment of any award will be contingent on the
attainment of performance objectives established for such year by the
Committee, the amounts payable to eligible participants under the Incentive
Plan for any performance period during which the Incentive Plan is in effect
cannot be determined in advance.
16
<PAGE>
PROPOSAL 5:
SELECTION OF INDEPENDENT AUDITORS
Coopers & Lybrand L.L.P. currently serve as the Company's independent
auditors. They have served in that capacity since the Company's founding in
1986, and prior to that served as the independent auditors of the Municipal
Bond Insurance Association, starting in 1974. During 1994, Coopers & Lybrand
L.L.P. examined the accounts of the Company and its subsidiaries and also
provided other services to the Company in connection with Securities and
Exchange Commission filings.
Upon recommendation of the Audit Committee, the Board has appointed Coopers &
Lybrand L.L.P. as the independent auditors of the Company for 1995. The
shareholders are asked to approve this action of the Board.
It is anticipated that one or more representatives of Coopers & Lybrand
L.L.P. will be present at the Annual Meeting with an opportunity to make a
statement, if desired, and will be available to answer appropriate questions
from shareholders present.
OTHER MATTERS
The Board knows of no other business to be brought before the meeting other
than as set forth above. If any other business should properly come before the
Annual Meeting, it is the intention of the persons named in the enclosed proxy
card to vote such proxies in accordance with their best judgment of such
matters.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The table below contains certain information with respect to the only
beneficial owners known to the Company as of March 20, 1995 of more than 5% of
the outstanding shares of Common Stock.
<TABLE>
<CAPTION>
SHARES OF COMMON
NAME AND ADDRESS OF STOCK BENEFICIALLY PERCENT OF
BENEFICIAL OWNER OWNED CLASS
---------------------------------------- ------------------ ----------
<S> <C> <C>
The Aetna Casualty and Surety Company(1) 3,813,009 9.16%
151 Farmington Avenue
Hartford, CT 06156
FMR Corp(2) 3,792,300 9.11%
82 Devonshire Street
Boston, MA 02109
</TABLE>
--------
(1) Information as to beneficial ownership of shares of Common Stock and
percentages owned is based on the Schedule 13D filed by The Aetna Casualty
and Surety Company with the Securities and Exchange Commission with respect
to its beneficial ownership of the Common Stock and the Registration
Statement on Form S-3 filed by the Company in October of 1992. Such
shareholder has sole voting power and sole dispositive power with respect
to the shares beneficially owned.
(2) Information as to the beneficial ownership of shares of Common Stock is
based on the February 13, 1995 Schedule 13G filed by FMR Corp. with the
Securities and Exchange Commission. Such filing indicates that the
shareholder has sole voting power with respect to 227,400 of these shares
and sole dispositive power with respect to 3,792,300 of these shares.
17
<PAGE>
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth, as of March 9, 1995, the beneficial ownership
of shares of Common Stock of each Director, each Executive Officer named in the
Summary Compensation Table above Directors and all Executive Officers of the
Company, as a group.
<TABLE>
<CAPTION>
SHARES TOTAL
SHARES ACQUIRABLE SHARES
BENEFICIALLY UPON EXERCISE BENEFICIALLY
NAME OWNED OF OPTIONS OWNED(2)
---- ------------ ------------- ------------
<S> <C> <C> <C>
Directors(3)
William O. Bailey 21,200 258,941 280,141
Joseph W. Brown, Jr. 2,000 -- 2,000
David C. Clapp 0 -- 0
David H. Elliott 12,173(1) 176,986 189,159
Claire L. Gaudiani 100 -- 100
William H. Gray, III 0 -- 0
Freda S. Johnson 1,317 -- 1,317
Daniel P. Kearney(4) 500 -- 500
James A. Lebenthal 678 -- 678
Robert B. Nicholas 2,000 -- 2,000
Pierre-Henri Richard 90 -- 90
Paul A. Volcker 4,000 -- 4,000
Executive Officers
Robert R. Godfrey 7,363(1) 35,329 42,692
James E. Malling 1,376(1) 19,600 20,976
Arthur M. Warren 9,159(1) 41,320 50,479
Richard L. Weill 6,228(1) 76,200 82,428
All of the above and other
Executive
Officers as a group 84,049(1) 706,658 790,707
</TABLE>
--------
(1) This number includes shares held by the Executive Officers under the
Company's exempt 401(k) Plan.
(2) The percentage of shares of Common Stock beneficially owned by all
Directors and Executive Officers as a group is 1.90% of the shares of
Common Stock outstanding.
(3) In addition, as of March 9, 1995, the non-employee Directors also held
7,368 Common Stock equivalent deferral units under the Company's Deferred
Compensation and Stock Ownership Plan for Non-Employee Directors. (See the
discussion of this plan under "The Board of Directors and its Committees")
(4) Mr. Kearney may be deemed to have a beneficial ownership interest in the
shares of Common Stock held by the entity named under "Security Ownership
of Certain Beneficial Owners" with which he is affiliated.
18
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
ORGANIZATION OF THE COMPANY
The Municipal Bond Insurance Association (the "Association") was organized in
1973 as an unincorporated association through which its members wrote municipal
bond insurance on a several and not joint basis. Since 1981, the Association's
five members, and their respective percentages of liability on Association
policies, have been as follows: The Aetna Casualty and Surety Company ("Aetna")
(33%), Fireman's Fund Insurance Company (30%), CIGNA Property and Casualty
Insurance Company (formerly, Aetna Insurance Company) (12%), and The
Continental Insurance Company ("Continental") (10%) (together with certain of
their affiliates, referred to collectively as the "Founding Shareholders" and
individually as a "Founding Shareholder"), and The Travelers Indemnity Company
("Travelers") (15%). The business of the Association was reorganized in
December 1986 through the following actions (the "Reorganization"):
1. The Company was incorporated in Connecticut and capitalized by the Founding
Shareholders by an investment of $509.9 million in cash, the contribution of
their interests in the Association's tangible and intangible assets, and the
cession to the Company of substantially all of the Founding Shareholders' net
municipal bond insurance written.
2. The cession of insurance in force was accomplished pursuant to reinsurance
agreements by which the Founding Shareholders ceded to the Company
substantially all of their net municipal bond insurance business written as
Association members and all such future Association business to be written to
honor prior commitments (see paragraph 5 below). The Founding Shareholders paid
the Company reinsurance premiums equal to their net unearned premium reserve on
the ceded business, totaling approximately $415.3 million on a statutory basis.
The participation of the Founding Shareholders totaled approximately 89% of the
Association's net insurance in force at December 31, 1986. The balance of the
net insurance in force was retained by the fifth member of the Association,
Travelers, which elected not to participate in the Reorganization. (Effective
August 31, 1993 Travelers ceded to MBIA Corp. its net insurance in force in
connection with municipal bond issues written by the Association (the
"Travelers Cession")) Through reinsurance assumption agreements, MBIA Corp. was
substituted for the Company and assumed a direct obligation to the Founding
Shareholders on 100% of this ceded business, the Founding Shareholders released
the Company from its obligations under the reinsurance agreements, and MBIA
Corp. received the insurance premium associated with such ceded business under
the reinsurance agreements. The members of the Association remain liable to
municipal bond investors, severally and not jointly, for their respective
shares of the Association guarantee represented by the ceded Association
insurance policies. However, the Founding Shareholders transferred to MBIA
Corp. virtually all of their net unearned premium reserve on these Association
policies, and MBIA Corp. agreed to indemnify the Founding Shareholders for
their respective shares of any claims under such insurance policies.
3. Effective December 31, 1987, the Founding Shareholders ceded to MBIA Corp.
all of the remaining portion of the risk on those municipal bond issues written
by the Association prior to the Reorganization, paying MBIA Corp. reinsurance
premiums equal to their unearned premium reserves of $1.4 million.
4. The Founding Shareholders and Travelers, as members of the Association,
entered into an agreement pursuant to which the Association ceased writing new
business except pursuant to prior commitments.
5. At the beginning of January 1987, the Association ceased writing municipal
bond insurance, except to honor then-existing commitments, including policies
under UITs to insure bonds sold out of UITs. As the Association writes
municipal bond insurance to honor such commitments, the Founding
19
<PAGE>
Shareholders' share of this insurance (approximately 89%) is ceded to MBIA
Corp. under the reinsurance arrangements described above, and the Founding
Shareholders pay MBIA Corp. a reinsurance premium equal to the premiums they
receive. The Association also receives premiums associated with policies
written on an installment basis. Such reinsurance premiums, net of premium
credits on refunded issues, aggregated $4.5 million and $6.9 million during
1992 and 1991, respectively. Included in the business assumed from the
Association are unearned premiums of $1.9 million and $2.2 million at December
31, 1992 and December 31, 1991, respectively, relating to insurance on UITs
originally sponsored by a Founding Shareholder, Aetna, and American Express
Company, which was an affiliate of a Founding Shareholder, Fireman's Fund
Insurance Company, at the time insurance was provided to the UIT. In 1990 and
in 1993, MBIA Corp. assumed an additional $0.9 million and $0.5 million,
respectively, of unearned premiums relating to the insured UIT sponsored by
American Express Company which had been previously ceded.
SUBSEQUENT REINSURANCE AND INSURANCE TRANSACTIONS WITH FOUNDING SHAREHOLDERS
On September 30, 1989, the Founding Shareholders agreed to endorse the
reinsurance agreements among the Founding Shareholders and MBIA Corp. to
specifically exclude a portfolio of eight real estate projects from the terms
of the reinsurance agreements. As a result, on September 30, 1989, the
portfolio ceased to be an obligation of MBIA Corp., and MBIA Corp. ceded to the
Founding Shareholders reinsurance premiums equal to their net unearned premium
reserve on the ceded business, totaling approximately $6.5 million determined
in accordance with generally accepted accounting principles.
In 1993, MBIA Corp. assumed the remaining portion of Travelers' risk on the
Association policies as well as the $10.8 million of deferred premium revenue
associated with those policies.
In connection with the Travelers Cession, the Founding Shareholders and
Travelers amended the Association Agreement governing the administration of the
Association policies in force, and the Association members amended the
Management Agreement with MISC. The principal purpose of the amendments was to
reflect the fact that Travelers' net in force Association policy obligations
were assumed by MBIA Corp. The amendments to the Management Agreement also
eliminated certain administrative responsibilities of MISC thereunder.
Since 1989, MBIA Corp. has executed five surety bonds to guarantee the
payment obligations of the Founding Shareholders and Travelers which had their
S&P rating downgraded from AAA with respect to their previously issued
Association policies. In the event that they do not meet their Association
policy payment obligations, MBIA Corp. will pay the required amount to
Citibank, N.A., the fiscal agent under related Fiscal Agency Agreements, which
in turn will disburse the surety bond payments to the designated Association
policy beneficiaries. The aggregate amount payable by MBIA Corp. on these
surety bonds is limited to $340 million.
SHAREHOLDERS' AGREEMENT
Under the Amended and Restated Shareholders' Agreement (the "Shareholders'
Agreement") among the Company, the Founding Shareholders and Credit Local de
France (the Founding Shareholders and Credit Local de France are referred to
herein as the "Shareholders"), subject to certain limitations, until July 1,
1997 each of the Shareholders has the right individually to require one
registration under the Securities Act of all or a portion of its shares of
Common Stock, to participate collectively with each other Shareholder in one
such registration, and to include its shares in a registration under the
Securities Act initiated by another Shareholder or by the Company. The
Shareholders are responsible for all expenses in connection with the
registration of their shares. Aetna and Credit Local de France are the only
Shareholders that currently own Common Stock of the Company. All other
provisions of the Shareholders' Agreement, including voting rights and the
right to approve certain corporate actions, have expired.
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Pursuant to terms of the Shareholders' Agreement which have now expired, the
Shareholders caused the election of certain directors to the Company's Board of
Directors. Individuals with relationships to the Shareholders during the
preceding three years who are currently members of the Company's Board of
Directors are Daniel P. Kearney and Pierre-Henri Richard.
INVESTMENT MANAGEMENT AGREEMENTS
The Company, MBIA Corp. and MBIA Insurance Corp. of Illinois ("MBIA
Illinois") each have investment management agreements with Aeltus Investment
Management, Inc., (formerly Aetna Financial Services, Inc.) ("Aeltus") an
affiliate of Aetna (the "Investment Agreements"), pursuant to which Aeltus
agrees to invest and supervise the investment of assets of the Company, MBIA
Corp. and MBIA Illinois, in accordance with investment guidelines reviewed and
approved by the respective Boards of Directors of each company, and to provide
certain administrative services related to such investments. The Company
Investment Agreement is terminable by either party on 60 days' notice. The MBIA
Corp. Investment Agreement is terminable by either party on 90 days' notice,
while the MBIA Illinois Investment Agreement is terminable on 30 days' notice.
During 1994, Aeltus was paid fees of $7,727, $2,426,741 and $164,387 by the
Company, MBIA Corp. and MBIA Illinois, respectively, based on assets under
management.
The Company believes that the terms of the Investment Agreements are no less
favorable to the Company, MBIA Corp. and MBIA Illinois than those of similar
agreements with unaffiliated parties.
EMPIRE STATE MUNICIPAL EXEMPT TRUSTS, GUARANTEED SERIES
MBIA Corp. insures municipal bonds held by certain of the Guaranteed Series
of Empire State Municipal Exempt Trusts. One of the co-sponsors of the
Guaranteed Series of Empire State Municipal Exempt Trusts is Lebenthal & Co.,
Inc., the chairman of which is James A. Lebenthal, a director of the Company.
The Company believes the terms of the insurance policies and the premiums
charged are no less favorable to MBIA Corp. than the terms and premium levels
for other similar unit investment trusts.
INSURANCE COVERAGE
The Company has obtained insurance from an affiliate of Aetna to provide its
directors and officers (and their heirs and other legal representatives)
specified coverages against certain liabilities. The premium for 1994 coverage
paid to Aetna was $213,000. The Company has also obtained employee health and
life insurance from Aetna Life Insurance Company, an affiliate of Aetna.
Premiums paid in 1994 by the Company for this coverage totaled $1,389,230. In
addition, the Company has obtained dental insurance from an affiliate of CIGNA
Corporation, for which it paid a premium of $286,557 in 1994. The Company has
also obtained life insurance policies from Aetna Life Insurance Company for 23
key employees for which it paid a premium of $311,830 for 1994. The Company
believes that the terms of the above mentioned insurance are no less favorable
to the Company than the terms of similar insurance available from unaffiliated
persons.
OTHER
The following summarizes all known filing delinquencies or failures to file,
with respect to reports on Forms 3, 4 and 5 which were required to be filed by
all officers, directors and beneficial owners of more than ten percent of the
outstanding shares of the Company's Common Stock: Christopher W. Tilley, who
became Treasurer of the Company in 1994, filed a delinquent Form 3, and a Form
5 with respect to shares he owns under the Company's exempt 401(k) Plan. All of
the Company's executive officers filed a Form 5 with respect to shares they own
under the Company's
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exempt 401(k) Plan. Freda S. Johnson, a director of the Company, filed a Form 5
with respect to shares she acquired during 1994 under the Company's Directors
Deferred Compensation Plan. James A. Lebenthal, a director of the Company,
filed a Form 5 with respect to 178 shares of Common Stock he acquired in
December of 1994. William O. Bailey, a director of the Company, filed a Form 5
with respect to shares that were the subject of gifts or donations to charity.
The Company filed a Form 5 for each of six of the Company's directors, Mr.
Brown, Ms. Gaudiani, Mr. Gray, Ms. Johnson, Mr. Lebenthal and Mr. Nicholas,
with respect to deferral stock units previously acquired under the Company's
Directors Deferred Compensation Plan. The total number of shares affected by
all of the delinquent filings referred to above is 39,935.
SHAREHOLDER PROPOSALS
Shareholder proposals for the 1996 Annual Meeting of Shareholders must be
received at the principal executive offices of the Company, 113 King Street,
Armonk, New York 10504, no later than November 24, 1995, in order to be
considered for inclusion in the Company's Proxy Statement for such Meeting.
MISCELLANEOUS
The cost of preparing and mailing this notice and statement and the enclosed
form of proxy will be borne by the Company. In addition to solicitation by
mail, proxies may be solicited in person or by telephone or telegraph by
directors, officers and regular employees of the Company, without extra
compensation and at the Company's expense. The Company will also request
bankers and brokers to solicit proxies from their customers, where appropriate,
and will reimburse them for reasonable expenses. In addition, the Company has
engaged MacKenzie Partners, New York, New York to assist in soliciting proxies
for a fee of approximately $5,000 plus reasonable out-of-pocket expenses.
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K TO THE SECURITIES AND
EXCHANGE COMMISSION IS AVAILABLE ON REQUEST BY WRITING TO THE CORPORATE
COMMUNICATIONS DEPARTMENT, MBIA INC., 113 KING STREET, ARMONK, NEW YORK 10504.
By order of the Board of Directors,
/s/Louis G. Lenzi
Louis G. Lenzi
Secretary
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EXHIBIT A
MBIA INC.
1995 INCENTIVE PLAN
(EFFECTIVE AS OF JANUARY 1, 1996)
1. PURPOSE.
The purposes of the Plan are to enable the Company and its Subsidiaries to
attract, retain, motivate and reward the best qualified executive officers and
key employees by providing them with the opportunity to earn competitive
compensation directly linked to the Company's performance.
2. DEFINITIONS.
Unless the context requires otherwise, the following words as used in the
Plan shall have the meanings ascribed to each below, it being understood that
masculine, feminine and neuter pronouns are used interchangeably and that each
comprehends the others.
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Committee" shall mean the Compensation and Organization Committee of the
Board (or such other committee of the Board that the Board shall designate from
time to time) or any subcommittee thereof consisting of two or more directors
each of whom is an "outside director" within the meaning of Section 162(m).
(c) "Company" shall mean MBIA Inc.
(d) "Covered Employee" shall have the meaning set forth in Section 162(m).
(e) "Participant" shall mean (i) each executive officer of the Company and
(ii) each other key employee of the Company or a Subsidiary whom the Committee
designates as a participant under the Plan.
(f) "Performance Period" shall mean each calendar year or multi-year cycle as
determined by the Committee.
(g) "Plan" shall mean the MBIA Inc. 1996 Incentive Plan, as set forth herein
and as may be amended from time to time.
(h) "Section 162(m)" shall mean Section 162(m) of the Internal Revenue Code
of 1986, as amended, and any regulations promulgated thereunder (including any
proposed regulations).
(i) "Subsidiary" shall mean any corporation in which the Company owns,
directly or indirectly, stock representing more than 50% of the voting power of
all classes of stock entitled to vote.
3. ADMINISTRATION.
The Committee shall administer and interpret the Plan, provided that, in no
event, shall the Plan be interpreted in a manner which would cause any award
intended to be qualified as performance-based compensation under Section 162(m)
to fail to so qualify. The Committee shall establish the performance objectives
for any calendar year in accordance with Section 4 and certify whether such
performance objectives have been obtained. Any determination made by the
Committee under the Plan shall be final and conclusive. The Committee may
employ such legal counsel, consultants and agents (including counsel or agents
who are employees of the Company or a Subsidiary) as it may deem desirable for
the administration of the Plan and may rely upon any opinion received from any
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such counsel or consultant or agent and any computation received from such
consultant or agent. All expenses incurred in the administration of the Plan,
including, without limitation, for the engagement of any counsel, consultant or
agent, shall be paid by the Company. No member or former member of the Board or
the Committee shall be liable for any act, omission, interpretation,
construction or determination made in connection with the Plan other than as a
result of such individual's willful misconduct.
4. BONUSES.
(a) Performance Criteria. Within 90 days after each Performance Period begins
(or such other date as may be required or permitted under Section 162(m)), the
Committee shall establish the performance objective or objectives that must be
satisfied in order for a Participant to receive a bonus for such Performance
Period. Unless the Committee determines at the time of grant not to qualify the
award as performance-based compensation under Section 162(m), any such
performance objectives will be based upon the relative or comparative
achievement of one or more of the following criteria, as determined by the
Committee: (i)consolidated earnings before income taxes; (ii) earnings per
share; (iii) book value per share; (iv) return on shareholders equity; (v) the
relative performance of peer group companies; (vi) expense management; (vii)
return on investment; (viii) improvements in capital structure; (ix)
profitability of an identifiable business unit or product; (x) maintenance or
improvement of product margins; and (xi) ratio of claims to revenues.
(b) Maximum Amount Payable. If the Committee certifies in writing that any of
the performance objectives established for the relevant Performance Period
under Section 4(a) has been satisfied, each Participant who is employed by the
Company or one of its Subsidiaries on the last day of the Performance Period
for which the bonus is payable shall be entitled to receive (i) an annual bonus
in an amount not to exceed $1,000,000 or (ii) a long-term award in an amount
not to exceed $3,000,000. If a Participant's employment terminates for any
reason (including, without limitation, his death, disability or retirement
under the terms of any retirement plan maintained by the Company or a
Subsidiary) prior to the last day of the Performance Period for which the bonus
is payable, such Participant shall receive a bonus equal to the maximum bonus
payable to such Participant under the preceding sentence multiplied by a
fraction, the numerator of which is the number of days that have elapsed during
the Performance Period in which the termination occurs prior to and including
the date of the Participant's termination of employment and the denominator of
which is the total number of days in the Performance Period.
(c) Negative Discretion. Notwithstanding anything else contained in Section
4(b) to the contrary, the Committee shall have the right, in its absolute
discretion, (i) to reduce or eliminate the amount otherwise payable to any
Participant under Section 4(b) based on individual performance or any other
factors that the Committee, in its discretion, shall deem appropriate and (ii)
to establish rules or procedures that have the effect of limiting the amount
payable to each Participant to an amount that is less than the maximum amount
otherwise authorized under Section 4(b).
(d) Affirmative Discretion. Notwithstanding any other provision in the Plan
to the contrary, (i) the Committee shall have the right, in its discretion, to
pay to any Participant who is not a Covered Employee a bonus for the year in
which the amount paid would ordinarily be deductible by the Company for federal
income tax purposes in an amount up to the maximum bonus payable under Section
4(b), based on individual performance or any other criteria that the Committee
deems appropriate and (ii) in connection with the hiring any person who is or
becomes Covered Employee, the Committee may provide for a minimum bonus amount
in any Performance Period, regardless of whether performance objectives are
attained.
5. PAYMENT.
Except as otherwise provided hereunder, payment of any bonus amount
determined under Section 4 shall be made to each Participant as soon as
practicable after the Committee certifies that
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one or more of the applicable performance objectives have been attained (or, in
the case of any bonus payable under the provisions of Section 4(d), after the
Committee determines the amount of any such bonus).
6. FORM OF PAYMENT.
The Committee shall determine whether any bonus payable under the 1996 Plan
is payable in cash, in shares of Common Stock or in any combination thereof.
The Committee shall have the right to impose whatever conditions it deems
appropriate with respect to the award of shares of Common Stock, including
conditioning the vesting of such shares on the performance of additional
service. The maximum number of shares available for issuance under the 1996
Plan shall be 3,000,000.
7. GENERAL PROVISIONS.
(a) Effectiveness of the Plan. The Plan shall be effective with respect to
calendar years beginning on or after January 1, 1996 and ending on or before
December 31, 2000, unless the term hereof is extended by action of the Board.
(b) Amendment and Termination. Notwithstanding Section 6(a), the Board or the
Committee may at any time amend, suspend, discontinue or terminate the Plan;
provided, however, that no such action shall be effective without approval by
the shareholders of the Company to the extent necessary to continue to qualify
the amounts payable hereunder to Covered Employees as performance-based
compensation under Section 162(m).
(c) Designation of Beneficiary. Each Participant may designate a beneficiary
or beneficiaries (which beneficiary may be an entity other than a natural
person) to receive any payments which may be made following the Participant's
death. Such designation may be changed or canceled at any time without the
consent of any such beneficiary. Any such designation, change or cancellation
must be made in a form approved by the Committee and shall not be effective
until received by the Committee. If no beneficiary has been named, or the
designated beneficiary or beneficiaries shall have predeceased the Participant,
the beneficiary shall be the Participant's spouse or, if no spouse survives the
Participant, the Participant's estate. If a Participant designates more than
one beneficiary, the rights of such beneficiaries shall be payable in equal
shares, unless the Participant has designated otherwise.
(d) No Right of Continued Employment. Nothing in this Plan shall be construed
as conferring upon any Participant any right to continue in the employment of
the Company or any of its Subsidiaries.
(e) No Limitation on Corporate Actions. Nothing contained in the Plan shall
be construed to prevent the Company or any Subsidiary from taking any corporate
action which is deemed by it to be appropriate or in its best interest, whether
or not such action would have an adverse effect on any awards made under the
Plan. No employee, beneficiary or other person shall have any claim against the
Company or any Subsidiary as a result of any such action.
(f) Nonalienation of Benefits. Except as expressly provided herein, no
Participant or beneficiary shall have the power or right to transfer,
anticipate, or otherwise encumber the Participant's interest under the Plan.
The Company's obligations under this Plan are not assignable or transferable
except to (i) a corporation which acquires all or substantially all of the
Company's assets or (ii) any corporation into which the Company may be merged
or consolidated. The provisions of the Plan shall inure to the benefit of each
Participant and the Participant's beneficiaries, heirs, executors,
administrators or successors in interest.
(g) Withholding. Any amount payable to a Participant or a beneficiary under
this Plan shall be subject to any applicable Federal, state and local income
and employment taxes and any other
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amounts that the Company or a Subsidiary is required at law to deduct and
withhold from such payment.
(h) Severability. If any provision of this Plan is held unenforceable, the
remainder of the Plan shall continue in full force and effect without regard to
such unenforceable provision and shall be applied as though the unenforceable
provision were not contained in the Plan.
(i) Governing Law. The Plan shall be construed in accordance with and
governed by the laws of the State of New York, without reference to the
principles of conflict of laws.
(j) Headings. Headings are inserted in this Plan for convenience of reference
only and are to be ignored in a construction of the provisions of the Plan.
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MBIA INC.
ANNUAL MEETING OF SHAREHOLDERS -- Thursday, May 11, 1995
The proxy is solicited on behalf of
the Board of Directors of MBIA Inc.
The undersigned hereby appoints James A. Lebenthal and Paul A. Volcker and each
of them, the proxies and agents of the undersigned, each with power of
substitution, to vote all shares of Common Stock of MBIA INC. (the "Company"),
which the undersigned is entitled to vote at the Annual Meeting of Shareholders
of the Company to be held at MBIA INC., 113 King Street, Armonk, New York, on
Thursday, May 11, 1995, at 10:00 A.M., New York time, and at any adjournment
thereof, with all the powers which the undersigned would possess if personally
present, hereby revoking any prior proxy to vote at such meeting and hereby
ratifying and confirming all that said proxies and agents or their substitutes
or any of them may lawfully do by virtue hereof, upon the following matters, as
described in the MBIA INC. Proxy Statement, receipt of which is hereby
acknowledged, and in their discretion, upon such other business as may properly
come before the meeting or any adjournment thereof.
Election of Directors, Nominees: William O. Balley, Joseph W. Brown, Jr.,
David C. Clapp, David H. Elliot, Claire L. Gaudiani, William H. Gray, III, Freda
S. Johnson, Daniel P. Kearney, James A. Lebenthal, Robert B. Nicholas, Pierre H.
Richard, Paul A. Volcker and Richard L. Weill.
(Continued and to be signed on reverse side)
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This proxy when properly executed will be voted in the manner directed herein.
If no direction is made, this PROXY will be voted FOR election of Directors and
FOR Items 2,3,4 and 6.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 THROUGH 5.
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name on the line provided below.)
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1. ELECTION OF DIRECTORS
FOR WITHHOLD
ALL AUTHORITY FOR
NOMINEES ALL NOMINEES
[ ] [ ]
2. AMEND CERTIFICATE OF INCORPORATION
TO APPROVE INCREASE IN COMMON
SHARES AUTHORIZED
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. APPROVE AMENDMENT TO THE MBIA INC.
1987 STOCK OPTION PLAN.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. APPROVE THE MBIA INC. 1985
INCENTIVE PLAN.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
5. APPROVAL OF APPOINTMENT OF
COOPERS & LYBRAND AS INDEPENDENT AUDITORS.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
--------------------------------------------
Signature(s)
Date: 1995
----------------------------------
NOTE: Please sign exactly as name appears herein. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian, please
give full title as such.
PLEASE RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
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