<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, for the Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
</TABLE>
MBIA INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] 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 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] 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:
<PAGE> 2
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MBIA INC. JOSEPH W. BROWN, JR.
113 King Street Chairman
Armonk, NY 10504
914 273 4545
[MBIA Logo]
March 30, 2000
Dear Shareholder:
On May 11, 2000, MBIA Inc. will hold its annual meeting of
shareholders and I am pleased to invite you on behalf of the Board of
Directors to join us so we can report to you on the activities of the
Company during 1999 and discuss the outlook for 2000. 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 adopt the
Company's 2000 Stock Option Plan; and (c) the selection of independent
auditors for 2000. These proposals are described in the attached proxy
statement which you are encouraged to read 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, complete, sign and return the enclosed proxy
promptly.
We appreciate your continued support.
Sincerely,
[/s/ Joseph W. Brown, Jr.]
Joseph W. Brown, Jr.
Chairman
<PAGE> 3
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, 2000 at 10:00 a.m., New York time, for the following purposes:
PROPOSAL 1: To elect 10 directors of the Company for terms expiring
at the 2001 Annual Meeting;
PROPOSAL 2: To vote on the adoption of the Company's 2000 Stock
Option Plan;
PROPOSAL 3: To ratify the appointment by the Board of Directors of
PricewaterhouseCoopers LLP, certified public accountants, as independent
auditors for the Company for the year 2000;
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 16, 2000 will be
entitled to vote at the meeting, whether in person or by proxy. Please sign,
date, complete, 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 30, 2000
<PAGE> 4
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 is March 16, 2000. On the record date, there were outstanding
98,891,282 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. Directors are elected by a plurality of the votes
cast. The vote required for approval of the stock option plan and for
ratification of the independent auditors is a majority of shares voting.
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 30, 2000, 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 2000 Annual Meeting, the shareholders will elect 10
directors to serve for a term expiring at the 2001 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. Richard L. Weill, a current director and executive officer of the
Company, will not be standing for reelection at this year's meeting.
Pierre-Henri Richard, a director of the Company since 1990, voluntarily resigned
from the Board, effective March 14, 2000. 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. The Board has granted Mr. Lebenthal a two year waiver of this policy.
Joseph W. Brown, Jr........... Mr. Brown joined the Company as Chief Executive
Officer on January 7, 1999 and became Chairman
of the Company in May. Prior to that he was
Chairman of the Board of Talegen Holdings, Inc.
(insurance), from 1992 through 1998. Prior to
joining Talegen, Mr. Brown had been with
Fireman's Fund Insurance Companies for 17 years
during which he held positions from actuary to
Chief Executive Officer. He is a Fellow of the
Property Casualty Actuarial Society and a
Member of the American Academy of Actuaries and
the Society of Chartered Property & Casualty
Underwriters. Mr. Brown has served as a
director of the Company since 1990 and
previously served as a director from December
of 1986 through May of 1989. Age 51.
<PAGE> 5
David C. Clapp................ Mr. Clapp is currently Senior Director,
Goldman, Sachs & Co., Inc. From 1990 until late
1994, he was Partner-in-charge of the Municipal
Bond Department at Goldman Sachs & Co.
(investment bank). Mr. Clapp is a member of the
Boards of the Hazelden Foundation and The Kent
School. He is past Chairman of the Municipal
Securities Rulemaking Board, President of the
Board of Trustees of the Museum of the City of
New York and Chair of the New York Arthritis
Foundation. Mr. Clapp has served as director of
the Company since 1994. Age 62.
Gary C. Dunton................ Mr. Dunton, who joined the Company in early
1998, is President of both the Company and MBIA
Insurance Corporation. Prior to that, he was
President of the Family and Business Insurance
Group, USF&G Insurance with whom he had been
associated since 1992. Mr. Dunton was on the
Company's board from 1996 until early 1998. Mr.
Dunton currently serves as a member of the
Board of Trustees for the American Institute
for Chartered Property Casualty Underwriters
and the Insurance Institute of America. Age 44.
David H. Elliott.............. Mr. Elliott is the former Chairman and Chief
Executive Officer of the Company, having served
in that capacity from 1992 until January, 1999.
From 1986 to 1991, he served as the President
and Chief Operating Officer of the Company and
MBIA Insurance Corporation ("MBIA Corp."). He
has been a director of the Company since 1988.
He also was the Chairman of the Municipal Bond
Insurance Association (the "Association"), MBIA
Corp.'s predecessor, from 1976 to 1980 and from
1982 to 1986. Mr. Elliott is a member of the
board of Aames Financial Corporation. Age 58.
Claire L. Gaudiani............ Dr. Gaudiani has been President of Connecticut
College since 1988. She also serves as a
director of Public Radio International, The
Luce Foundation and the Citizen's
Bank-Connecticut. Dr. Gaudiani has also been
President of the New London Development
Corporation since 1997. She has been a director
of the Company since being elected at the 1992
Annual Meeting. Age 55.
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
Baptist Church in Philadelphia for 25 years. He
serves as a director of The Chase Manhattan
Corporation, The Prudential Insurance Company
of America, Warner-Lambert Company, CBS
Corporation, Rockwell International Corp.,
Electronic Data Systems Incorporated and
ezgov.com. Mr. Gray has been a director of the
Company since 1992. Age 58.
2
<PAGE> 6
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. from 1979 to 1990. Ms. Johnson is
a past member of the National Association of
State Auditors, Comptrollers and Treasurers'
National Advisory Board on State and Local
Government Secondary Market Disclosure and a
member of the corporate advisory board of
Queens College. She is also a past director of
the National Association of Independent Public
Finance Advisors and was a member of the
Municipal Securities Rulemaking Board's MSIL
Committee on Dissemination of Disclosure
Information. Ms. Johnson has served on the
Company's Board of Directors since 1990. Age
52.
Daniel P. Kearney............. Mr. Kearney, currently a financial consultant,
retired as Executive Vice President of Aetna
Inc. (insurance company) in February 1998.
Prior to joining Aetna 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 bank) in charge of
the mortgage finance and real estate finance
departments from 1977 to 1988. He serves as a
director of Fiserv, Inc., MGIC Investors
Corporation and Great Lakes REIT. Mr. Kearney
has served on the Company's Board of Directors
since being elected at the 1992 Annual Meeting.
Age 60.
James A. Lebenthal............ Mr. Lebenthal has been Chairman of Lebenthal &
Co., Inc., a broker-dealer of municipal bonds,
since 1978. From 1986 to 1988, and from
April -- June 1995, Mr. Lebenthal was also
President of Lebenthal & Co., Inc. He is Vice
Chairman of the Rebuild America Coalition. Mr.
Lebenthal has been a director of the Company
since August of 1988. Age 71.
John A. Rolls................. Mr. Rolls has been President and Chief
Executive Officer of Thermion Systems
International since 1996. From 1992 until 1996,
he was President and Chief Executive Officer of
Deutsche Bank North America. Prior to joining
Deutsche Bank in 1992, he served as Executive
Vice President and Chief Financial Officer of
United Technologies from 1986 to 1992. He is a
director of Bowater, Inc., Fuel Cell Energy,
Inc. and VivaScan Corporation. Mr. Rolls joined
the Company's Board in 1995. Age 58.
3
<PAGE> 7
THE BOARD OF DIRECTORS AND ITS COMMITTEES
During the year ended December 31, 1999, 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. Brown,
Elliott (chairman), Kearney and Lebenthal, did not meet in 1999. 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 Messrs. Clapp,
Elliott, Rolls (chairman) and Weill, met once during 1999. 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.
The Risk Oversight Committee, which at year end consisted of Mr. Clapp, Ms.
Johnson, Messrs. Kearney (chairman) and Weill, met once during 1999. 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. Clapp (chairman), Ms. Gaudiani, Messrs. Kearney and Rolls, met four times
during 1999. 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.
The Audit Committee, which at year end consisted of Mr. Gray, Ms. Johnson
(chairperson), Messrs. Lebenthal and Rolls, met five times during 1999. Its
functions include reviewing 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 and Mr. Gray (chairman), met twice during 1999. This Committee makes
recommendations to the Board on Director nominees and on the size and
composition of the Board. It also recommends guidelines and criteria for the
selection of nominees.
The annual fee paid for the services of a director who is not an executive
officer of the Company was $30,000 in 1999 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. There is also an annual award of stock
units equivalent to $30,000 made to each non-employee Director as additional
compensation. 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, eight of the non-employee Directors elected to participate in
this plan. All Directors standing for reelection attended at least 75% of the
meetings of the Board and of its Committees on which they served.
4
<PAGE> 8
COMPENSATION AND ORGANIZATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Company's Compensation and Organization Committee, at
year-end, were Mr. Clapp (chairman), Ms. Gaudiani, Mr. Kearney and Mr. Rolls.
There are no members of the Company's Compensation and Organization Committee
who are current or former employees of the Company.
REPORT OF THE COMPENSATION AND ORGANIZATION COMMITTEE
ON EXECUTIVE COMPENSATION
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, 1)
recommend to the Board the compensation to be paid to the Chairman and Chief
Executive Officer (the "CEO"), 2) review and approve the recommendations of the
CEO as to the compensation to be paid to the executive officers reporting to the
CEO and certain other key executive officers, and 3) review and approve the
aggregate levels of compensation to be paid to all other employees as a group.
Compensation includes base salary, bonus and the awarding of stock options and
other long-term incentives. The Committee is composed entirely of independent
outside directors who are neither current nor former employees of the Company.
ELEMENTS OF COMPENSATION
The Company's compensation philosophy is to pay all employees, including
executive officers, for actual short- and long-term 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 attracts 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 and other long-term
incentives) compensation. In addition, the Committee reviews the compensation of
the Company's executive officers, comparing it to a group of the Company's
primary competitors in the financial guaranty industry.
ANNUAL COMPENSATION
Executive officer salaries are based on the 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: 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 and
percentage mix between cash and restricted stock are established for each job
position as a function of base salary, e.g., the bonus range for CEO is 0%-200%
of base salary, all of which will be paid in restricted stock.
Executive officer salary changes and bonuses are based on the Company's
performance in certain areas, including return on equity, earnings per share,
adjusted 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.
5
<PAGE> 9
Mr. Brown joined the Company on January 7, 1999 supported by a Board
approved compensation package that was designed to incentivize him to lead the
Company and promote its financial performance. His base salary was set at
$750,000 per year and fixed at that level until January 1, 2004, at which time
it will be reviewed. Mr. Brown agreed to purchase 160,000 shares of common stock
on or before February 8, 1999, thus bringing his holdings to over 200,000
shares. In respect of such level of ownership, the Company granted him 800,000
stock options (4 options for every share held). These options expire January 7,
2009 and do not vest initially until both (a) the stock has traded at $90 or
above for 10 consecutive days (the "Trading Price") and (b) a minimum of three
years from the grant date has passed. Additionally, per his employment
agreement, Mr. Brown has agreed with the Committee to be paid his annual bonus
in restricted stock with no cash component.
The CEO's salary and bonus are a function of how the Company performed in
the following areas: return on equity; change in earnings per share; change in
adjusted book value per share; relative performance to peer group companies (the
"Financial Goals"); the achievement of the Company's business plan goals and the
specific goals assigned to the CEO. For Mr. Brown, the Committee gave 70% weight
to the Financial Goals and 30% weight to the Company's business plan and his
specific goals. In 1999, including certain one-time charges, the Company
achieved an 8.8% return on equity while earnings per share were down 26% over
the previous year and the adjusted book value per share was $52.51, a decrease
of 1% compared to 1998. The Company's business plan goals were substantially
met, including improving capital adequacy, significantly raising the returns it
earns on its insurance products, maintaining a conservative underwriting
approach and increasing the Company's international presence. Based on the 1999
reported financial performance, Mr. Brown requested and the Committee concurred
that no annual bonus be awarded him for 1999.
The salary and bonus of the executive officers reporting to the CEO and
certain other key executive officers are a function of how the Company performed
in the following areas: return on equity; earnings per share; adjusted book
value per share; relative performance to peer group companies (the "Financial
Goals"); and achievement of the Company's business plan goals and specific goals
assigned to the individual by the Chief Executive Officer. During the course of
1999, Mr. Brown recommended and the Committee concurred with salary adjustments
to levels for this group which will be maintained through January 1, 2003.
Excluding certain one-time charges, the Company, in 1999, achieved a 13.1%
return on equity while earnings per share were up 1% over the previous year and
the adjusted book value per share was $54.22, an increase of 1% over 1998. With
the exception of the results for the investment management businesses which were
excellent in 1999, the reported results for the insurance operations and
muniservices businesses suffered from the combination of the effects of a change
in the Company's reserve policy and losses reported as a result of the
restructuring of the Company's muniservices units. In contrast to the reported
results in the insurance business, the Company achieved a significant increase
in IRR for new business written and utilized capital on a very effective basis
for 1999. Based on the very strong underlying fundamentals of the operations but
acknowledging the disappointing reported financial results, Mr. Brown
recommended and the Committee concurred that the bonus pool for this group be
paid at 60% of maximum opportunity, with the eventual payout averaging 20% cash
and 80% restricted stock.
The size of the Company's bonus pools (excluding the CEO and the executive
officers reporting to him and certain other key executive officers) for each of
the insurance business division, the investment management businesses and the
muniservices units are recommended by the CEO and approved at year-end by this
Committee based on its determination of the Company's and each unit's absolute
and relative performance. Among the performance factors considered are return on
equity, absolute return as measured by IRR on new business, growth in reported
earnings and in adjusted book value per share, the relative performance of the
Company's peer group and the achievement of the plan goals for each of the
business units. In 1999, each of these goals were substantially met or exceeded
and individual bonuses were made from a pool that the Committee approved at 75%
of maximum opportunity, compared to 81% in 1998, and which aggregated $32.4
million.
6
<PAGE> 10
LONG-TERM INCENTIVES
The Company's Long-Term Incentive Plan (the "Plan") is designed to align
the interests of higher level employees with those of shareholders. The Plan
authorizes both the annual granting of stock options under the Company's stock
option plan as well as the payment of compensation in the form of cash or stock
at the end of a multi-year cycle based on the Company attaining certain
performance goals. Awards under the Plan are divided equally, with 50% of the
award given in stock options and 50% of the award to be paid in cash or shares
of Company stock.
The payment of the cash/stock award is made upon the achievement of a
specified level of growth in adjusted book value per share ("ABV") of the
Company's stock. The ABV portion of the Plan awarded in 1999 has a base line
growth of 12%. Under the current year's award, a minimum growth of 8% is
necessary to receive any award and 18% growth would result in a maximum award of
200% of target level being granted.
Target levels for the Plan are a percentage of total salary and bonus based
upon an individual's position. The awards under the Plan are typically granted
from the Vice-President position up to and including the Chairman and Chief
Executive Officer.
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. With the exception of the CEO (and the Senior Executive officers
reporting to him for the January 1999 grants), each option vests over five years
and has a ten-year term. Because the grants are based on an annual formula,
prior option grants are not taken into account in determining the number of
options granted in any year. For 1999, based on the above formula, and excluding
Mr. Brown, 712,570 options were awarded.
The Committee, based on the significant contributions Mr. Brown made to the
Company during 1999 and the decision to not grant him an annual bonus, approved
a ten- year option grant of 164,000 shares at the market strike price of
$48.8125 on December 9, 1999 and an ABV award with a target of $2,697,192.00.
The options do not vest initially until both the Trading Price is achieved and a
minimum of three years from the grant date has passed. Further, with respect to
the ABV award (which has a scheduled payout date of early 2003), unless the
Trading Price has been achieved at some point during the period from December
31, 1999 to December 31, 2004, Mr. Brown will receive no award regardless of
whether the ABV targets are met.
TAX DEDUCTIBILITY OF EXECUTIVE COMPENSATION
Based on currently prevailing authority, including proposed Treasury
regulations issued in December 1995, 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 1999 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
David C. Clapp, Chairman
Claire L. Gaudiani
Daniel P. Kearney
John A. Rolls
7
<PAGE> 11
The Company had entered into a retirement agreement with Mr. David H.
Elliott, the former Chairman and CEO, whereby Mr. Elliott has agreed to provide
the Company with consulting services for two years following his retirement. For
such services, Mr. Elliott will be paid each year an amount equal to his annual
base salary as in effect on January 1, 1999. For each of 1999 and 2000, Mr.
Elliott will also receive a cash performance bonus to be determined by the
Compensation and Organization Committee, but which (subject to the applicable
performance criteria being satisfied) will not be less than the bonus payable to
him in respect to his 1998 services. Such fees are in addition to any amounts
otherwise payable to Mr. Elliott for his continuing service as a member of the
Board. For 1999, the Committee granted Mr. Elliott a bonus of $1,300,000
identical to the $1,300,000 paid in 1998.
In addition, the Company has entered into key employee protection
agreements with certain of its executive officers, including Messrs. Weill,
Caouette, Dunton and Budnick. Under these agreements, the executive officers
would be entitled to severance benefits upon the occurrence of both a change in
control and an involuntary or constructive termination. These benefits include a
pro-rata annual bonus and adjusted book value award, severance equal to three
times the sum of base salary and average annual bonus, full exercisability of
stock options, full vesting of restricted stock and continued health, life and
pension benefits.
8
<PAGE> 12
MBIA INC.
I. SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
----------------------------------- ------------------------- --------
OTHER ANNUAL RESTRICTED SECURITIES LTIP ALL OTHER
NAME & COMPENSATION STOCK AWARDS UNDERLYING PAYOUTS COMPENSATION
PRINCIPAL POSITION YEAR SALARY($) BONUS($) ($) ($)(A) OPTIONS(#) ($)(B) ($)(C)
- ------------------ ---- --------- -------- ------------ ------------ ---------- -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Joseph W. Brown, Jr. .... 1999 738,942 0 0 0 964,000 0 329,440
Chairman and Chief 1998 0 0 0 0 0 0 0
Executive Officer 1997 0 0 0 0 0 0 0
David H. Elliott(d)...... 1999 262,500 0 0 0 0 749,749 1,879,073
Chairman and Chief 1998 600,000 750,000 11,636 666,697 100,000 0 369,391
Executive Officer 1997 575,000 450,000 11,636 600,025 23,500 0 308,194
Gary C. Dunton........... 1999 568,750 0 18,129 960,000 273,770 0 223,335
President 1998 462,000 300,000 6,399 683,342 66,000 0 201,175
1997 0 0 0 0 0 0 0
Richard L. Weill......... 1999 531,200 0 19,424 735,000 41,420 469,087 206,313
Vice President 1998 500,000 400,000 14,938 366,690 13,600 0 228,804
1997 360,000 275,000 9,583 366,639 14,270 0 183,460
John B. Caouette......... 1999 512,500 0 31,883 735,000 116,420 0 231,616
Vice President 1998 450,000 400,000 4,715 333,349 13,310 0 219,215
1997 450,000 700,000 4,715 0 25,713 0 176,179
Neil G. Budnick.......... 1999 512,500 220,500 10,271 441,000 191,420 230,721 184,045
Vice President and Chief 1998 350,000 250,000 6,668 166,642 12,780 0 128,503
Financial Officer 1997 250,000 240,000 2,616 100,004 9,040 0 92,534
</TABLE>
- ---------------
(a) The 1999 amounts represent a portion of the annual bonus awarded to Messrs.
Dunton, Weill, Caouette, and Budnick paid in 19,667, 15,058, 15,058 and
9,035 shares of restricted stock, respectively. The shares, which vest in
four years, were valued at the closing price on the date of the awards for
all years. Dividends are paid on all restricted stock at the same rate
payable to all common shareholders and thus are not reflected in the amounts
reported. Aggregate holdings of restricted stock at year-end are as follows:
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE ($)
--------- ---------
<S> <C> <C>
Joseph W. Brown, Jr....................... 0 0
David H. Elliott.......................... 19,806 1,266,722
Gary C. Dunton............................ 29,567 1,607,363
Richard L. Weill.......................... 25,392 1,413,189
John B. Caouette.......................... 19,157 1,013,209
Neil G. Budnick........................... 13,207 707,668
</TABLE>
(b) The 1995 ABV long-term incentive was paid at 127.4% of target based on
compound annual growth in ABV of 14.2%.
(c) Consists of (i) the Company's contributions to the Company's qualified and
non-qualified money purchase pension plan, and its 401(k) plan, (ii)
premiums paid on behalf of such employees under a split-dollar life
insurance policy, and (iii) consulting fees paid during the year. Such
amounts in 1999 were as follows: Brown -- (i) $200,841 and (ii) $128,599;
Elliott -- (i) $17,500, (ii) $124,073 and (iii) $1,737,500; Dunton -- (i)
$193,313 and (ii) $30,022; Weill -- (i) $161,438 and (ii) $44,875;
Caouette -- (i) $159,563 and (ii) $72,053; and Budnick -- (i) $159,563 and
(ii) $24,482.
(d) Mr. Elliott retired as an employee of the Company effective May 13, 1999.
9
<PAGE> 13
MBIA INC.
II. OPTION GRANTS IN 1999
INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF FAIR VALUE
SECURITIES TOTAL OPTIONS EXERCISE OF OPTION
UNDERLYING GRANTED TO PRICE AWARD ON
OPTIONS EMPLOYEES IN PER SHARE GRANT EXPIRATION GRANT DATE
NAME GRANTED(#) 1999 ($/SH) DATE DATE ($)(C)
- ---- ---------- ------------- --------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Joseph W. Brown, Jr. ..... 164,000(a) 7% 48.8125 Dec 1999 Dec 2009 3,035,279(d)
800,000(a) 34% 67.8750 Jan 1999 Jan 2009 19,531,520(e)
David H. Elliott.......... 0
Gary C. Dunton............ 73,770(b) 3% 48.8125 Dec 1999 Dec 2009 1,140,211(d)
200,000(a) 8% 67.8750 Jan 1999 Jan 2009 4,882,880(e)
Richard L. Weill.......... 41,420(b) 2% 48.8125 Dec 1999 Dec 2009 640,200(d)
John B. Caouette.......... 41,420(b) 2% 48.8125 Dec 1999 Dec 2009 640,200(d)
75,000(a) 3% 67.8750 Jan 1999 Jan 2009 1,831,080(e)
Neil G. Budnick........... 41,420(b) 2% 48.8125 Dec 1999 Dec 2009 640,200(d)
150,000(a) 6% 67.8750 Jan 1999 Jan 2009 3,662,160(e)
</TABLE>
- ---------------
(a) These options have a ten-year term, and vest as follows: no vesting in years
1 to 3; if at any time during years 1 to 9 the stock has traded at $90 per
share for ten consecutive trading days (the "Trading Target"), the options
would immediately vest in full but no sooner than the third anniversary
date; if the Trading Target is not met in years 1 to 9, then the options
would vest in full on the ninth anniversary date.
(b) These options have a ten-year term and vest as follows: year 1 -- 0%; year
2 -- 40%; year 3 -- 60%; year 4 -- 80%; year 5 -- 100% (subject to certain
acceleration provisions if there occurs a change in control of the Company
or upon the death, disability or retirement of the employee).
(c) The fair value is based upon the Black-Scholes option valuation model.
Black-Scholes is a mathematical model used to estimate the theoretical price
an individual would pay for a traded option. The actual value an executive
may realize will depend on the excess of the stock price over the exercise
price. There is no assurance the value realized will be at or near the value
estimated by Black-Scholes.
(d) The fair value of the options is $15.4563 ($18.5078 for Mr. Brown) per
option based on: (1) an exercise price of $48.8125, (2) an option term of
6.05 (9.0 for Mr. Brown) years, (3) a future dividend yield of 1.68%, (4) a
risk-free interest rate of 6.285% and (5) an estimated stock price
volatility of 0.2512.
(e) The fair value of the options is $24.4144 per option based on: (1) an
exercise price of $67.875, (2) an option term of 9.0 years, (3) a future
dividend yield of 1.19%, (4) a risk-free interest rate of 4.83% and (5) an
estimated stock price volatility of 0.2392.
10
<PAGE> 14
MBIA INC.
III. AGGREGATED OPTION EXERCISES IN 1999 AND 1999 YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING OPTIONS AT IN-THE-MONEY OPTIONS AT
SHARES DECEMBER 31, 1999(#) DECEMBER 31, 1999(B)($)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#) REALIZED(A)($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Joseph W. Brown
Jr. ................ 0 $ 0 0 964,000 $ 0 $656,000
David H. Elliott...... 0 0 274,056 136,752 6,234,636 75,280
Gary C. Dunton........ 0 0 0 339,770 0 295,080
Richard L. Weill...... 0 0 222,556 75,114 5,742,661 207,839
John B. Caouette...... 35,000 1,455,284 121,178 192,025 2,541,042 173,538
Neil G. Budnick....... 0 0 41,768 215,992 664,878 187,715
</TABLE>
- ---------------
(a) The "Value Realized" is equal to the fair market value on the date of
exercise, less the exercise price, times the number of shares acquired.
(b) These values are based on $52.8125 per share, the fair market value of the
shares underlying the options on December 31, 1999, less the exercise price,
times the number of options.
MBIA INC.
IV. LONG-TERM INCENTIVE PLAN -- AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
PERFORMANCE
PERIOD UNTIL
NAME PAYOUT THRESHOLD TARGET(A) MAXIMUM
- ---- ------------ --------- ---------- ----------
<S> <C> <C> <C> <C>
Joseph W. Brown, Jr. ..................... Three years 0 $2,697,192 $5,394,384
David H. Elliott.......................... Three years 0 0 0
Gary C. Dunton............................ Three years 0 1,755,000 3,510,000
Richard L. Weill.......................... Three years 0 985,359 1,970,718
John B. Caouette.......................... Three years 0 985,359 1,970,718
Neil G. Budnick........................... Three years 0 985,359 1,970,718
</TABLE>
- ---------------
(a) The awards were made on December 9, 1999, with the payout, if any, occurring
in early 2003. The target award is based on the achievement of a projected
12% growth in the adjusted book value per share of the Company's stock,
subject to the threshold which requires an 8% growth and the maximum level
which requires an 18% growth. With respect to Mr. Brown's award, unless the
stock has traded at $90 per share for ten consecutive trading days during
the period between December 31, 1999 and December 31, 2004, he will receive
no award regardless of the growth in adjusted book value per share of the
Company's stock.
11
<PAGE> 15
<TABLE>
<CAPTION>
MBIA INC COMMON STOCK S&P 500 INDEX S&P FINANCIAL INDEX
--------------------- ------------- -------------------
<S> <C> <C> <C>
1994 100.00 100.00 100.00
1995 136.20 134.11 156.61
1996 187.05 166.30 205.63
1997 250.18 225.49 319.08
1998 248.43 289.93 417.52
1999 203.08 350.93 533.29
</TABLE>
12
<PAGE> 16
PROPOSAL 2:
ADOPTION OF THE MBIA INC. 2000 STOCK OPTION PLAN
INTRODUCTION
The Board of Directors has recommended, and is seeking approval of, the
adoption of the MBIA Inc. 2000 Stock Option Plan (the "Option Plan"). This
Option Plan, pursuant to which the Company will be authorized to issue options
on up to 4,900,000 shares of Common Stock, replaces the Company's existing plan
which has been in place since 1987. All awards remaining to be granted under the
existing plan will be cancelled by the new Option Plan.
The Board of Directors believes that awards made pursuant to the Option
Plan assist the Company in motivating superior performance, encourage employee
ownership in the Company and enable the Company to attract and retain a
management team and staff of exceptional ability. Additionally, the Board has
reviewed the compensation practices of competitor companies and believes that
the adoption of the Option Plan keeps the Company in line with competitive
compensation practices.
Approval of 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. A copy of the Option Plan is
attached as Exhibit A.
The closing price of a share of Common Stock on March 16 was $49.8125.
The Board of Directors unanimously recommends a vote FOR approval of the
amendment to the Option Plan.
2000 OPTION PLAN
Awards under the Option Plan may be granted in the form of (i) incentive
stock options within the meaning of Section 422 of the Code or (ii)
non-statutory stock options.
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. The
Committee has no right to reprice outstanding options, grant new options in
substitution for or upon cancellation of previously granted options or to issue
reload options.
Stock Options. Incentive stock options ("ISOs") and non-statutory stock
options 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. 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 stock option agreement,
which may not be more than 10 years after issuance. The options are
non-transferable except by will or the laws of descent; however, the Committee
may permit transfers of non-statutory options to family members. The rights of
an employee in outstanding options upon termination of his employment because of
death, disability, discharge for cause or any other reason are set forth in the
Option Plan. The Committee has discretion to modify these provisions and those
modifications would be set forth in an employee's stock option agreement.
Termination and Amendment. The Board may 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, lower the minimum
exercise price at which an option may be granted or extend the maximum term for
options granted under the Option Plan will be subject to
13
<PAGE> 17
shareholder approval. No termination, modification or amendment of the Option
Plan may be made which would adversely affect an employee's rights under any
awards theretofore granted without the consent of the employee.
Award Table. While neither the exact number of individuals who will
participate, nor the type or size of awards that will be approved by the
Committee under the Option Plan can be precisely determined, the Committee has
historically approved awards at the Vice President level and above. It is
anticipated that this practice will continue under the new Option Plan. The
following table illustrates the awards that were made in December, 1999 under
the existing plan.
AWARDS MADE IN DECEMBER 1999 UNDER THE MBIA 1987 STOCK OPTION PLAN
<TABLE>
<CAPTION>
NAME SHARES
- ---- -------
<S> <C>
Joseph W. Brown, Jr.
Chairman.................................................. 164,000
Gary C. Dunton
President................................................. 73,770
Richard L. Weill
Vice President............................................ 41,420
John B. Caouette
Vice President............................................ 41,420
Neil G. Budnick
Vice President............................................ 41,420
All Executive Policy Committee members as a group (8
persons).................................................. 420,444
All employees as a group (276 persons)...................... 876,570
</TABLE>
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-Statutory Stock Options. No income is realized by the participant at
the time a non-statutory stock option is granted. Generally upon exercise of
non-statutory stock options, 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.
14
<PAGE> 18
PROPOSAL 3:
SELECTION OF INDEPENDENT AUDITORS
PricewaterhouseCoopers LLP 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 Company's
predecessor, the Municipal Bond Insurance Association, starting in 1974. During
1999, PricewaterhouseCoopers LLP examined the accounts of the Company and its
subsidiaries and also provided tax advice, and other services to the Company in
connection with its Securities and Exchange Commission filings.
Upon recommendation of the Audit Committee, the Board has appointed
PricewaterhouseCoopers LLP as the independent auditors of the Company for 2000.
The shareholders are asked to approve this action of the Board.
It is anticipated that one or more representatives of
PricewaterhouseCoopers LLP 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 16, 2000 of more than 5% of
the outstanding shares of Common Stock.
<TABLE>
<CAPTION>
SHARES OF COMMON
NAME AND ADDRESS STOCK BENEFICIALLY PERCENT
OF BENEFICIAL OWNER OWNED OF CLASS
- ------------------- ------------------ --------
<S> <C> <C>
Sanford C. Bernstein & Co., Inc.(1)....................... 7,627,858 7.7%
767 Fifth Avenue
New York, N.Y. 10153
FMR Corp.(2).............................................. 7,178,522 7.2%
82 Devonshire Street
Boston, MA 02109
J.P. Morgan & Co. Incorporated(3)......................... 5,802,374 5.8%
60 Wall Street
New York, N.Y. 10260
</TABLE>
- ---------------
(1) Information as to the beneficial ownership of shares of Common Stock is
based on the February 8, 2000 Schedule 13G filed by Sanford C. Bernstein &
Co., Inc. with the SEC. Such filing indicates that Bernstein has sole voting
power with respect to 3,803,048 of these shares and sole dispositive power
with respect to 7,627,858.
(2) Information as to the beneficial ownership of shares of Common Stock is
based on the February 14, 2000 Schedule 13G filed by FMR Corp. with the
Securities and Exchange Commission ("SEC"). Such filing indicates that FMR
has sole voting power with respect to 573,512 of these shares and sole
dispositive power with respect to 7,178,522.
(3) Information as to the beneficial ownership of shares of Common Stock is
based on the February 14, 2000 Schedule 13G filed by J.P. Morgan & Co.
Incorporated with the SEC. Such filing indicates that Morgan has sole voting
power with respect to 4,183,082 of these shares and sole dispositive power
with respect to 5,584,001.
15
<PAGE> 19
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth, as of March 16, 2000, the beneficial
ownership of shares of Common Stock of each Director, each Executive Officer
named in the Summary Compensation Table above, and all Directors and Executive
Officers of the Company, as a group.
<TABLE>
<CAPTION>
SHARES TOTAL
SHARES ACQUIRABLE SHARES
BENEFICIALLY UPON EXERCISE BENEFICIALLY
NAME OWNED OF OPTIONS(2) OWNED(3)
- ---- ------------ ------------- ------------
<S> <C> <C> <C>
Directors
Joseph W. Brown, Jr.(4)..................... 319,760(1) -- 319,760
David C. Clapp(4)........................... 8,424 -- 8,424
Gary C. Dunton.............................. 46,924(1) 20,000 66,924
David H. Elliott(4)......................... 84,269(1) 274,056 358,325
Claire L. Gaudiani(4)....................... 5,833 -- 5,833
William H. Gray, III(4)..................... 3,212 -- 3,212
Freda S. Johnson(4)......................... 11,331 -- 11,331
Daniel P. Kearney(4)........................ 9,344 -- 9,344
James A. Lebenthal(4)....................... 11,551 -- 11,551
John A. Rolls(4)............................ 15,630 -- 15,630
Executive Officers
Richard L. Weill............................ 49,500(1) 219,556 269,056
John B. Caouette............................ 55,763 121,178 176,941
Neil G. Budnick............................. 19,972(1) 41,768 61,740
All of the above and other Executive Policy
Committee members as a group............. 682,480(1) 746,764 1,429,244
</TABLE>
- ---------------
(1) This number includes shares held by the Executive Officers under the
Company's exempt 401(k) Plan and includes restricted shares awarded annually
to certain of the Executive Officers.
(2) This column indicates the number of shares that are presently exercisable or
will become exercisable on or before May 15, 2000 under the Company's stock
option program.
(3) The percentage of shares of Common Stock beneficially owned by all Directors
and Executive Officers as a group is 1.5% of the shares of Common Stock
outstanding.
(4) This number includes (a) Common Stock equivalent deferral units held under
the Company's Deferred Compensation and Stock Ownership Plan for
Non-Employee Directors and (b) Common Stock units awarded under the
restricted stock compensation plan. (See the discussion of these plans under
"The Board of Directors and its Committees").
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Ownership of and transactions in the Company's stock by executive officers
and Directors of the Company are required to be reported to the Securities and
Exchange Commission pursuant to Section 16 of the Securities Exchange Act of
1934. To the Company's knowledge all such required filings were made on a timely
basis, except for one filing related to the exercise of options by Mr. Caouette.
16
<PAGE> 20
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
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.
EXECUTIVE LOANS
CapMAC Holdings Inc., which the Company acquired in a stock-for-stock
merger in February of 1998, had an executive loan program. Under that program,
John B. Caouette, former CEO of CapMAC Holdings, has a $500,000.00 loan
outstanding with a 5-year term and an interest rate of 6.75% which is the rate
that CapMAC Holdings could have invested its funds at April 24, 1996, the date
the loan was made.
SHAREHOLDER PROPOSALS
Shareholder proposals for the 2001 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 17, 2000, 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 $6,000 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
MARKETING 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
17
<PAGE> 21
EXHIBIT A
MBIA INC.
2000 STOCK OPTION PLAN
ARTICLE 1.
PURPOSE
The purpose of the "MBIA INC. 2000 STOCK OPTION PLAN" (the "Plan") is to
foster and promote the long-term financial success of the Company and materially
increase shareholder value by (a) motivating superior performance by means of
performance-related incentives, (b) encouraging and providing for the
acquisition of an ownership interest in the Company by the Company's and its
Subsidiaries' employees and (c) enabling the Company to attract and retain the
services of an outstanding management team upon whose judgment, interest, and
special effort the successful conduct of its operations is largely dependent.
ARTICLE 2.
DEFINITIONS
(a) Definitions. Whenever used herein, the following terms shall have the
respective meanings set forth below:
(1) "Act" means the Securities Exchange Act of 1934, as amended.
(2) "Board" means the Board of Directors of the Company.
(3) "Cause" means (i) the willful failure by the Participant to
perform substantially his duties as an Employee of the Company (other than
due to physical or mental illness) after reasonable notice to the
Participant of such failure, (ii) the Participant's engaging in serious
misconduct that is injurious to the Company or any Subsidiary in any way,
including, but not limited to, by way of damage to their respective
reputations or standings in their respective industries, (iii) the
Participant's having been convicted of, or entered a plea of nolo
contendere to, a crime that constitutes a felony or (iv) the breach by the
Participant of any written covenant or agreement with the Company or any
Subsidiary not to disclose or misuse any information pertaining to, or
misuse any property of, the Company or any Subsidiary or not to compete or
interfere with the Company or any Subsidiary.
(4) "Change of Control" shall be deemed to have occurred if:
(i) any person (within the meaning of Section 3(a)(9) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")),
including any group (within the meaning of Rule 13d-5(b) under the
Exchange Act), but excluding any of the Company, any Subsidiary or any
employee benefit plan sponsored or maintained by the Company or any
Subsidiary, acquires "beneficial ownership" (within the meaning of Rule
13d-3 under the Exchange Act), directly or indirectly, of securities of
the Company representing 25% or more of the combined Voting Power (as
defined below) of the Company's securities; or
(ii) within any 24-month period, the persons who were directors of
the Company at the beginning of such period (the "Incumbent Directors")
shall cease to constitute at least a majority of the Board or the board
of directors of any successor to the Company; provided, however, that
any director elected to the Board, or nominated for election, by a
majority of the Incumbent Directors then still in office shall be deemed
to be an Incumbent Director for purposes of this subclause (ii); or
A-1
<PAGE> 22
(iii) upon the consummation of a merger, consolidation, share
exchange, division, sale or other disposition of all or substantially
all of the assets of the Company which has been approved by the
shareholders of the Company (a "Corporate Event"), and immediately
following the consummation of which the stockholders of the Company
immediately prior to such Corporate Event do not hold, directly or
indirectly, a majority of the Voting Power of (x) in the case of a
merger or consolidation, the surviving or resulting corporation, (y) in
the case of a share exchange, the acquiring corporation or (z) in the
case of a division or a sale or other disposition of assets, each
surviving, resulting or acquiring corporation which, immediately
following the relevant Corporate Event, holds more than 25% of the
consolidated assets of the Company immediately prior to such Corporate
Event.
(5) "Change of Control Price" means the highest price per share of
Common Stock offered in conjunction with any transaction resulting in a
Change of Control (as determined in good faith by the Committee if any part
of the offered price is payable other than in cash) or, in the case of a
Change of Control occurring solely by reason of a change in the composition
of the Board, the highest Fair Market Value of the Common Stock on any of
the 30 trading days immediately preceding the date on which a Change of
Control occurs.
(6) "Code" means the Internal Revenue Code of 1986, as amended.
(7) "Committee" means the Compensation and Organization Committee of
the Board or such other committee of the Board as the Board shall designate
from time to time, which committee shall consist of three or more members.
Each of the Committee members shall be a "Non-Employee Director" within the
meaning of Rule 16b-3, as promulgated under the Act, and an "outside
director" within the meaning of section 162(m) of the Code and the Treasury
Regulations promulgated thereunder.
(8) "Common Stock" means the common stock of the Company, par value
$1.00 per share.
(9) "Company" means MBIA Inc., a Connecticut corporation, and any
successor thereto.
(10) "Disability" has the meaning given in the Company's long-term
disability insurance policy or program as in effect from time to time.
(11) "Employee" means any employee (including each officer) of the
Company or any Subsidiary (as determined by the Committee in its sole
discretion).
(12) "Fair Market Value" means, on any date, the closing price of the
Common Stock as reported on the consolidated tape of the New York Stock
Exchange (or on such other recognized quotation system on which the trading
prices of the Common Stock are quoted at the relevant time) on such date.
In the event that there are no Common Stock transactions reported on such
tape (or such other system) on such date, Fair Market Value shall mean the
closing price on the immediately preceding date on which Common Stock
transactions were so reported.
(13) "Family Member" means, as to a Participant, any (i) child,
stepchild, grandchild, parent, stepparent, grandparent, spouse, sibling,
mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law,
or sister-in-law (including adoptive relationships), of such Participant,
(ii) trusts for the exclusive benefit of such persons and (iii) other
entity owned solely by such persons.
(14) "Option" means the right to purchase Common Stock at a stated
price for a specified period of time. For purposes of the Plan, an Option
may be either (i) an "Incentive Stock Option" (ISO) within the meaning of
Section 422 of the Code or (ii) an option which is not an Incentive Stock
Option (a "Nonstatutory Stock Option" (NSO)).
(15) "Participant" means any Employee designated by the Committee to
participate in the Plan.
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(16) "Subsidiary" means any corporation or partnership in which the
Company owns, directly or indirectly, 50% or more of the total combined
voting power of all classes of stock of such corporation or of the capital
interest or profits interest of such partnership or in which the Company
has, either directly or indirectly, a material equity interest and which
the Committee has designated as a "Subsidiary" for purposes of this
definition.
(17) "Voting Power" when used in the definition of Change in Control
shall mean such specified number of the Voting Securities as shall enable
the holders thereof to cast such percentage of all the votes which could be
cast in an annual election of directors and "Voting Securities" shall mean
all securities of a company entitling the holders thereof to vote in an
annual election of directors.
(18) Gender and Number. Except when otherwise indicated by the
context, words in the masculine gender used in the Plan shall include the
feminine gender, the singular shall include the plural, and the plural
shall include the singular.
ARTICLE 3.
POWERS OF THE COMMITTEE
(a) Power to Grant. The Committee shall determine those Employees to whom
Options shall be granted and the terms and conditions of any and all such
Options. The Committee may establish different terms and conditions for
different Participants and for the same Participant for each Option such
Participant may receive, whether or not granted at different times.
(b) Administration.
(1) Rules, Interpretations and Determinations. The Plan shall be
administered by the Committee. The Committee shall have full authority to
interpret and administer the Plan, to establish, amend, and rescind rules
and regulations relating to the Plan, to provide for conditions deemed
necessary or advisable to protect the interests of the Company, to construe
the respective option agreements and to make all other determinations it
determines necessary or advisable for the administration and interpretation
of the Plan in order to carry out its provisions and purposes.
Determinations, interpretations, or other actions made or taken by the
Committee shall be final, binding, and conclusive for all purposes and upon
all persons.
(2) Agents and Expenses. The Committee may appoint agents (who may be
officers or employees of the Company) to assist in the administration of
the Plan and may grant authority to such persons to execute agreements or
other documents on its behalf. The Committee may employ such legal counsel,
consultants and agents as it may deem desirable for the administration of
the Plan and may rely upon any opinion received from any such counsel or
consultant and any computation received from any 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.
(3) Delegation of Authority. The Committee may delegate to the
Company's Chief Executive Officer the power and authority to make awards
under the Plan with respect to individuals who are at or below the position
of Senior Managing Director (or analogous title), pursuant to such
conditions and limitations as the Committee may establish; provided that
only the Committee or the Board may select, and grant Options to,
Participants who are subject to Section 16 of the Act.
(c) Certain Rules Relating to Grants.
(1) Maximum Individual Grants. During any 12 month period, no
individual Participant may be granted Options to acquire more than 500,000
shares of Common Stock. It is understood that this provision is subject to
the adjustment provided for in Section 4(c).
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(2) Repricing or Substitution of Options. The Committee shall not
have the right to reprice outstanding Options or to grant new Options under
the Plan in substitution for or upon the cancellation of Options previously
granted. Additionally, the Committee shall not have the right to grant
reload options under the Plan.
ARTICLE 4.
COMMON STOCK SUBJECT TO PLAN
(a) Number. Subject to the provisions of Section 4(c), the number of
shares of Common Stock issuable under the Plan shall not exceed 4,900,000
shares. Any shares which, as of the effective date of the Plan, remain available
for awards under the Company's 1987 Stock Option Plan shall, upon approval of
the Plan by the Company's shareholders, be canceled and no longer available for
awards. The shares to be delivered under the Plan may consist, in whole or in
part, of treasury Common Stock or authorized but unissued Common Stock, not
reserved for any other purpose.
(b) Canceled, Terminated, or Forfeited Options. Any shares of Common Stock
subject to an Option which for any reason is canceled, terminated or otherwise
settled without the issuance of any Common Stock (and, except with respect to
ISO's, including, but not limited to, shares tendered to exercise outstanding
Options or shares tendered or withheld for taxes) shall again be available for
Options under the Plan.
(c) Adjustment in Capitalization. In the event of any Common Stock
dividend or Common Stock split, recapitalization (including, but not limited, to
the payment of an extraordinary dividend), merger, consolidation, combination,
spin-off, distribution of assets to stockholders (other than ordinary cash
dividends), exchange of shares, or other similar corporate change, the aggregate
number of shares of Common Stock available for Options under Sections 3(c)(1)
and 4(a) or subject to outstanding Options and the respective exercise prices
applicable to outstanding Options may be appropriately adjusted by the
Committee, in its discretion, and the Committee's determination shall be
conclusive.
ARTICLE 5.
STOCK OPTIONS
(a) Grant of Options. Subject to the provisions of Section 4(a), Options
may be granted to Participants at such time or times as shall be determined by
the Committee. Options granted under the Plan may be of two types: (i) Incentive
Stock Options and (ii) Nonstatutory Stock Options. Except as otherwise provided
herein, the Committee shall have complete discretion in determining the number
of Options, if any, to be granted to a Participant, except that Incentive Stock
Options may only be granted to Employees who are common law employees of the
Company or one of its majority owned subsidiaries (within the meaning of Section
424 of the Code). Each Option shall be evidenced by an Option agreement that
shall specify the type of Option granted, the exercise price, the duration of
the Option, the number of shares of Common Stock to which the Option pertains,
and such other terms and conditions as the Committee shall determine which are
not inconsistent with the provisions of the Plan.
(b) Option Price. Nonstatutory Stock Options and Incentive Stock Options
granted pursuant to the Plan shall have an exercise price no less than the Fair
Market Value of a share of Common Stock on the date on which the Option is
granted.
(c) Exercise of Options. Unless the Committee shall, at grant, impose an
alternative exercise schedule with respect to Options granted hereunder, 40% of
each Nonstatutory Stock Option or Incentive Stock Option granted pursuant to the
Plan shall become exercisable on the second anniversary of the date such Option
is granted and the remaining 60% of each Option shall become exercisable in
equal 20% installments on each of the third, fourth and fifth anniversaries of
the Option
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grant date; provided that the Committee may at any time accelerate the
exercisability of all or any portion of any Option at its discretion. Subject to
the provisions of this Article 5, once any portion of any Option has become
exercisable it shall remain exercisable for its full term. The Committee shall
determine the term of each Nonstatutory Stock Option or Incentive Stock Option
granted, but in no event shall any such Option be exercisable for more than 10
years after the date on which it is granted.
(d) Payment. The Committee shall establish procedures governing the
exercise of Options. No shares shall be delivered pursuant to any exercise of an
Option unless arrangements satisfactory to the Committee have been made to
assure full payment of the option price therefor. Without limiting the
generality of the foregoing, payment of the option price may be made (i) in cash
or its equivalent, (ii) by exchanging shares of Common Stock owned by the
optionee (which are not the subject of any pledge or other security interest),
(iii) through an arrangement with a broker approved by the Company whereby
payment of the exercise price is accomplished with the proceeds of the sale of
Common Stock or (iv) by any combination of the foregoing; provided that the
combined value of all cash and cash equivalents paid and the Fair Market Value
of any such Common Stock so tendered to the Company, valued as of the date of
such tender, is at least equal to such option price.
(e) Incentive Stock Options. Notwithstanding anything in the Plan to the
contrary, no Option that is intended to be an Incentive Stock Option may be
granted after the tenth anniversary of the effective date of the Plan and no
term of this Plan relating to Incentive Stock Options shall be interpreted,
amended or altered, nor shall any discretion or authority granted under the Plan
be so exercised, so as to disqualify the Plan under Section 422 of the Code, or,
without the consent of any Participant affected thereby, to disqualify any
Incentive Stock Option under such Section 422.
(f) Termination of Employment.
(1) Due to Death or Disability. In the event a Participant's
employment terminates by reason of death or Disability, any Options granted
to such Participant shall become immediately exercisable in full and may be
exercised by the Participant's designated beneficiary, and if none is
named, in accordance with Section 8(b), at any time prior to the earlier of
(i) the first anniversary of the Participant's death or termination of
employment due to Disability or (ii) the expiration of the term of the
Options.
(2) Termination of Employment For Cause. In the event a Participant's
employment is terminated by the Company or any Subsidiary for Cause, any
Options granted to such Participant that are then not yet exercised shall
be forfeited.
(3) Termination of Employment for Any Other Reason. Unless otherwise
determined by the Committee at or following the time of grant, in the event
the employment of the Participant shall terminate for any reason other than
one described in Section 5(f)(1) or (2), any Options granted to such
Participant which are exercisable at the date of the Participant's
termination of employment may be exercised at any time prior to the
expiration of the term of the Options or the ninetieth day following the
Participant's termination of employment, whichever period is shorter, and
any Options that are not exercisable at the time of termination of
employment shall be forfeited.
(g) Restrictive Covenants and Other Conditions. Without limiting the
generality of the foregoing, the Committee may condition the grant of any Option
under the Plan upon the Employee to whom such Option would be granted agreeing
in writing to certain conditions in addition to the provisions regarding
exercisability of the Option (such as restrictions on the ability to transfer
the underlying shares of Common Stock) or covenants in favor of the Company
and/or one or more Subsidiaries (including, without limitation, covenants not to
compete, not to solicit employees and customers and not to disclose confidential
information, that may have effect following the termination of the Employee's
employment with the Company and its Subsidiaries and after the Option has been
exercised, including, without limitation, the requirement that the Employee
disgorge any profit, gain
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<PAGE> 26
or other benefit received in respect of the exercise of the Option prior to any
breach of any such covenant by the Employee).
ARTICLE 6.
CHANGE OF CONTROL
(a) Accelerated Vesting and Payment. Subject to the provisions of Section
6(b), in the event of a Change of Control each Option shall be fully exercisable
regardless of the exercise schedule otherwise applicable to such Option and, in
connection with such a Change of Control, the Committee may, in its discretion,
provide that each Option shall, upon the occurrence of such Change of Control,
be canceled in exchange for a payment in an amount equal to the excess, if any,
of the Change of Control Price over the exercise price for such Option.
(b) Alternative Awards. Notwithstanding Section 6(a), no cancellation,
acceleration of exercisability, vesting, cash settlement or other payment shall
occur with respect to any Option if the Committee reasonably determines in good
faith prior to the occurrence of a Change of Control that such Option shall be
honored or assumed, or new rights substituted therefor (such honored, assumed or
substituted award hereinafter called an "Alternative Award"), by a Participant's
employer (or the parent or an affiliate of such employer) immediately following
the Change of Control; provided that any such Alternative Award must:
(1) be based on stock which is traded on an established securities
market, or that the Committee reasonably believes will be so traded within
60 days after the Change in Control;
(2) provide such Participant with rights and entitlements
substantially equivalent to or better than the rights, terms and conditions
applicable under such Option, including, but not limited to, an identical
or better exercise or vesting schedule and identical or better timing and
methods of payment;
(3) have substantially equivalent economic value to such Option
(determined at the time of the Change in Control); and
(4) have terms and conditions which provide that in the event that the
Participant's employment is involuntarily terminated or constructively
terminated, any conditions on a Participant's rights under, or any
restrictions on transfer or exercisability applicable to, each such
Alternative Award shall be waived or shall lapse, as the case may be.
For this purpose, a constructive termination shall mean a termination of
employment by a Participant following a material reduction in the Participant's
base salary or a Participant's incentive compensation opportunity or a material
reduction in the Participant's responsibilities, in either case without the
Participant's written consent.
ARTICLE 7.
AMENDMENT, MODIFICATION, AND TERMINATION OF PLAN
The Board at any time may terminate the Plan, and from time to time may
amend or modify the Plan; provided, however, that any amendment which would (i)
increase the number of shares available for issuance under the Plan, (ii) lower
the minimum exercise price at which an Option may be granted or (iii) extend the
maximum term for Options granted hereunder shall be subject to the approval of
the Company's shareholders. No amendment, modification, or termination of the
Plan shall in any manner adversely affect any Option theretofore granted under
the Plan, without the consent of the Participant.
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ARTICLE 8.
MISCELLANEOUS PROVISIONS
(a) Transferability of Options. No Options granted under the Plan may be
sold, transferred, pledged, assigned, or otherwise alienated or hypothecated,
other than by will or by the laws of descent and distribution; provided that the
Committee may, in the Option agreement or otherwise, permit transfers of
Nonstatutory Stock Options to Family Members (including, without limitation,
transfers effected by a domestic relations order).
(b) Beneficiary Designation. Each Participant under the Plan may from time
to time name any beneficiary or beneficiaries (who may be named contingently or
successively) to whom any benefit under the Plan is to be paid or by whom any
right under the Plan is to be exercised in case of his death. Each designation
will revoke all prior designations by the same Participant, shall be in a form
prescribed by the Committee, and will be effective only when received by the
Committee in writing during his lifetime. In the absence of any such effective
designation, benefits remaining unpaid at the Participant's death shall be paid
to or exercised by the Participant's surviving spouse, if any, or otherwise to
or by his estate.
(c) Deferral of Payment. The Committee may, in the Option agreement or
otherwise, permit a Participant to elect, upon such terms and conditions as the
Committee may establish, to defer receipt of shares of Common Stock that would
otherwise be issued upon exercise of a Nonstatutory Stock Option.
(d) No Guarantee of Employment or Participation. Nothing in the Plan shall
interfere with or limit in any way the right of the Company or any Subsidiary to
terminate any Participant's employment at any time, nor confer upon any
Participant any right to continue in the employ of the Company or any Subsidiary
or any other affiliate of the Company. No Employee shall have a right to be
selected as a Participant, or, having been so selected, to receive any future
Options.
(e) Tax Withholding. The Company shall have the power to withhold, or
require a Participant to remit to the Company, an amount sufficient to satisfy
Federal, state, and local withholding tax requirements on any Option under the
Plan, and the Company may defer issuance of Common Stock until such requirements
are satisfied. The Committee may, in its discretion, permit a Participant to
elect, subject to such conditions as the Committee shall impose, (i) to have
shares of Common Stock otherwise issuable under the Plan withheld by the Company
or (ii) to deliver to the Company previously acquired shares of Common Stock
having a Fair Market Value sufficient to satisfy such withholding tax obligation
associated with the transaction.
(f) Indemnification. Each person who is or shall have been a member of the
Committee or of the Board shall be indemnified and held harmless by the Company
against and from any loss, cost, liability, or expense that may be imposed upon
or reasonably incurred by him in connection with or resulting from any claim,
action, suit, or proceeding to which he may be made a party or in which he may
be involved by reason of any action taken or failure to act under the Plan (in
the absence of bad faith) and against and from any and all amounts paid by him
in settlement thereof, with the Company's approval, or paid by him in
satisfaction of any judgment in any such action, suit, or proceeding against
him; provided that he or she shall give the Company an opportunity, at its own
expense, to handle and defend the same before he undertakes to handle and defend
it on his own behalf. The foregoing right of indemnification shall not be
exclusive and shall be independent of any other rights of indemnification to
which such person may be entitled under the Company's Certificate of
Incorporation or By-Laws, by contract, as a matter of law, or otherwise.
(g) No Limitation on Compensation. Nothing in the Plan shall be construed
to limit the right of the Company to establish other plans if and to the extent
permitted by applicable law.
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<PAGE> 28
(h) Requirements of Law. The granting of Options and the issuance of
shares of Common Stock shall be subject to all applicable laws, rules, and
regulations, and to such approvals by any governmental agencies or national
securities exchanges as may be required.
(i) Term of Plan. The Plan shall be effective on May 11, 2000, the date of
its approval by the Company's shareholders. The Plan shall expire on the tenth
anniversary of such date, provided that any awards granted prior to the
expiration of this Plan may extend beyond that date.
(j) Governing Law. The Plan, and all agreements hereunder, shall be
construed in accordance with and governed by the laws of the State of
Connecticut, without regard to principles of conflict of laws.
(k) No Impact On Benefits. Except as may otherwise be specifically stated
under any employee benefit plan, policy or program, Options shall not be treated
as compensation for purposes of calculating an Employee's right under any such
plan, policy or program.
(l) No Constraint on Corporate Action. Nothing in this Plan shall be
construed (i) to limit, impair or otherwise affect the Company's right or power
to make adjustments, reclassifications, reorganizations or changes of its
capital or business structure, or to merge or consolidate, or dissolve,
liquidate, sell, or transfer all or any part of its business or assets or (ii)
except as provided in Article 7, to limit the right or power of the Company or
any of its Subsidiaries to take any action which such entity deems to be
necessary or appropriate.
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<PAGE> 29
MBIA INC.
ANNUAL MEETING OF SHAREHOLDERS--THURSDAY, MAY 11, 2000
THE PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS OF MBIA INC.
The undersigned hereby appoints James A. Lebenthal and Freda S. Johnson 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, 2000, 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: Joseph W. Brown, Jr., David C. Clapp, Gary C.
Dunton, David H. Elliott, Claire L. Gaudiani, William H. Gray, III, Freda S.
Johnson, Daniel P. Kearney, James A. Lebenthal, and John A. Rolls.
(Continued and to be signed on reverse side)
- FOLD AND DETACH HERE -
<PAGE> 30
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 AND 3.
Please mark your votes as indicated in this example /X/
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2 AND 3.
1. ELECTION OF DIRECTORS
FOR WITHHOLD
ALL AUTHORITY FOR
NOMINEES ALL NOMINEES
/ / / /
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NAME ON THE LINE PROVIDED BELOW.)
2. APPROVAL OF MBIA INC. 2000 STOCK OPTION PLAN
FOR AGAINST ABSTAIN
/ / / / / /
3. APPROVAL OF APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT
AUDITORS.
FOR AGAINST ABSTAIN
/ / / / / /
PLEASE RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
SIGNATURE SIGNATURE DATE
NOTE: PLEASE SIGN EXACTLY AS NAME APPEARS HEREON. JOINT OWNERS SHOULD EACH SIGN.
WHEN SIGNING AS ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE
GIVE FULL TITLE AS SUCH.
- FOLD AND DETACH HERE -
MBIA INC.
ANNUAL MEETING OF SHAREHOLDERS
THURSDAY, MAY 11, 2000
10:00 A.M.
Corporate Headquarters
MBIA INC.
113 King Street
Armonk, New York 10504
