<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 [ ]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
MGIC Investment Corporation
- -------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
MGIC Investment Corporation
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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 transactions 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):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] 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:
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<PAGE> 2
MGIC Investment Corporation
WILLIAM H. LACY
President and Chief Executive Officer
March 24,1997
Dear Shareholder:
You are invited to attend the Annual Meeting of Shareholders of MGIC
Investment Corporation, which will be held in Vogel Hall at the Marcus Center
for the Performing Arts, 123 East State Street, Milwaukee, Wisconsin, on
Thursday, May 1, 1997, at 9:00 a.m. We look forward to greeting as many of our
shareholders as are able to be with us.
As explained in the accompanying proxy statement, this year, in addition to
the election of directors and ratification of the appointment of independent
accountants, shareholders are being asked to approve amendments to the MGIC
Investment Corporation 1991 Stock Incentive Plan. Your Board of Directors
unanimously recommends that you vote FOR the nominees for director identified in
the proxy statement and FOR both of the proposals. At the meeting, we will
report on the state of our business and there will be an opportunity for you to
ask questions.
Wayne J. Roper, who has been a director of MGIC Investment Corporation
since 1985, will be retiring from the Board of Directors at the annual meeting.
On behalf of the Board, I would like to thank Wayne for his dedicated service
and many contributions to the company.
WHETHER OR NOT YOU EXPECT TO ATTEND, TO ENSURE YOUR REPRESENTATION AT THE
MEETING AND THE PRESENCE OF A QUORUM, PLEASE COMPLETE, DATE, SIGN AND MAIL
PROMPTLY THE ENCLOSED PROXY, for which a return envelope is provided.
Sincerely,
William H. Lacy
William H. Lacy
President and Chief Executive Officer
<PAGE> 3
MGIC INVESTMENT CORPORATION
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON
MAY 1, 1997
To the Shareholders of
MGIC Investment Corporation:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of MGIC
Investment Corporation (the "Corporation"), a Wisconsin corporation, will be
held in Vogel Hall at the Marcus Center for the Performing Arts, 123 East State
Street, Milwaukee, Wisconsin, on Thursday, May 1, 1997 at 9:00 a.m., for the
following purposes:
(1) To elect a class of four directors of the Corporation to serve for
a term of three years expiring at the 2000 Annual Meeting;
(2) To consider and vote upon a proposal to amend the MGIC Investment
Corporation 1991 Stock Incentive Plan;
(3) To consider and vote upon a proposal to ratify the appointment of
Price Waterhouse LLP as independent accountants for 1997; and
(4) To consider and act upon any other matters which may properly come
before the meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on March 10, 1997,
as the record date to determine the shareholders entitled to notice of and to
vote at this meeting.
By Order of the Board of Directors
Jeffrey H. Lane, Secretary
Milwaukee, Wisconsin
March 24, 1997
YOUR VOTE IS IMPORTANT
PLEASE PROMPTLY COMPLETE, SIGN, DATE AND RETURN YOUR PROXY CARD
<PAGE> 4
MGIC INVESTMENT CORPORATION
MGIC PLAZA
POST OFFICE BOX 488
MILWAUKEE, WISCONSIN 53201
PROXY STATEMENT
This Proxy Statement and the accompanying proxy are first being mailed on
or about March 24, 1997, in connection with the solicitation of proxies on
behalf of the Board of Directors of MGIC Investment Corporation (the
"Corporation"), a Wisconsin corporation, for use at the Annual Meeting of
Shareholders to be held at 9:00 a.m., Thursday, May 1, 1997, in Vogel Hall at
the Marcus Center for the Performing Arts in Milwaukee, Wisconsin.
The record date is March 10, 1997 for determining shareholders entitled to
vote at the meeting. As of that date, 59,126,892 shares of Common Stock were
outstanding and entitled to be voted. For each matter which may come before the
meeting, shareholders will be entitled to one vote for each share of Common
Stock registered in the shareholder's name on the record date.
The enclosed proxy is solicited by the Board of Directors of the Corporation. If
the proxy is properly executed and returned, and choices are specified, the
shares represented thereby will be voted at the meeting in accordance with those
instructions. If no choices are specified, a properly executed proxy will be
voted as follows:
FOR--Election to the Board of the four individuals nominated by the Board
of Directors;
FOR--Approval of amendments to the MGIC Investment Corporation 1991 Stock
Incentive Plan; and
FOR--Ratification of the appointment of Price Waterhouse LLP as independent
accountants for the fiscal year ending December 31, 1997.
Proxies are revocable by written notice to the Secretary of the Corporation
at any time prior to their exercise and may also be revoked by signing and
delivering a proxy with a later date. Shareholders present at the meeting may
withdraw their proxies and vote in person.
Votes cast by proxy or in person at the meeting will be counted by
representatives of Firstar Trust Company, the transfer agent and registrar of
the Common Stock, which has been appointed by the Corporation to act as
inspector of election for the meeting. The inspector of election will treat
shares represented by proxies that reflect abstentions as shares that are
present and entitled to vote for purposes of determining the presence of a
quorum. Abstentions, however, do not constitute a vote "for" or "against" any
matter and thus will be disregarded in the calculation of a plurality or of
"votes cast."
A "broker non-vote" occurs when a broker (or other nominee) does not have
authority to vote on a particular matter without instructions and has not
received such instructions. The inspector of election will treat broker non-vote
shares as shares that are present and entitled to vote for purposes of
determining the presence of a quorum. However, for purposes of determining the
outcome of any matter as to which the broker has indicated on the proxy that it
does not have discretionary authority to vote, broker non-vote shares will be
disregarded in the calculation of a plurality or of "votes cast."
<PAGE> 5
The Corporation's Annual Report to Shareholders for the fiscal year ended
December 31, 1996 accompanies this Proxy Statement. However, the Annual Report
to Shareholders is not incorporated by reference into this Proxy Statement and
is not to be deemed a part of this Proxy Statement.
STOCK OWNERSHIP
The following table sets forth, as of January 31, 1997, unless otherwise
noted, certain stock ownership information regarding all shareholders known by
the Corporation to be the beneficial owners of more than 5% of the Corporation's
Common Stock, each executive officer named in the Summary Compensation Table
herein and all directors and executive officers as a group. Unless otherwise
noted, the owners have sole voting and investment power with respect to such
shares.
<TABLE>
<CAPTION>
SHARES PERCENT
BENEFICIALLY OF
NAME OWNED CLASS
---- ------------ -------
<S> <C> <C>
The Northwestern Mutual Life Insurance Company ("NML")
720 East Wisconsin Avenue
Milwaukee, Wisconsin 53202 (1)(2)......................... 10,469,500 17.7%
William H. Lacy (3)......................................... 263,205 *
Curt S. Culver (4).......................................... 70,560 *
J. Michael Lauer (5)........................................ 127,452 *
Lawrence J. Pierzchalski (6)................................ 55,946 *
Gordon H. Steinbach (7)..................................... 171,030 *
All directors and executive officers as a group (19 persons)
(8)(9).................................................... 733,403 1.2%
</TABLE>
- ------------
* Less than 1%
(1) Information with respect to ownership of the Corporation's Common Stock as
of December 31, 1996 is included in reliance upon statements filed by the
owner with the Securities and Exchange Commission pursuant to the Securities
Exchange Act of 1934.
(2) NML has sole voting and investment power as to 10,449,100 shares and shared
voting and investment power as to 20,400 shares.
(3) Includes 138,480 shares which Mr. Lacy had the vested right to acquire as of
January 31, 1997, or which become vested within sixty days thereafter
pursuant to options granted under the Corporation's 1989 Stock Option Plan
and the Corporation's 1991 Stock Incentive Plan. Excludes 3,900 shares held
directly by his children, or by Mr. Lacy as custodian for his children, as
to all of which shares Mr. Lacy disclaims beneficial ownership. Also
excludes 9,500 shares owned by a charitable foundation of which Mr. Lacy is
an officer and director, as to which shares he has shared voting and
investment powers and disclaims beneficial ownership.
(4) Includes 65,160 shares which Mr. Culver had the vested right to acquire as
of January 31, 1997, or which become vested within sixty days thereafter
pursuant to options granted under the Corporation's 1989 Stock Option Plan
and the Corporation's 1991 Stock Incentive Plan. Excludes 200 shares held by
Mr. Culver as custodian for his minor child, as to which shares Mr. Culver
disclaims beneficial ownership.
(5) Includes 5,232 shares held in the Corporation's Profit Sharing and Savings
Plan and Trust; 120,260 shares which Mr. Lauer had the vested right to
acquire as of January 31, 1997, or which become
2
<PAGE> 6
vested within sixty days thereafter pursuant to options granted under the
Corporation's 1989 Stock Option Plan and the Corporation's 1991 Stock
Incentive Plan; and 1,200 shares as to which both voting and investment
powers are shared. Excludes 2,900 shares held by Mr. Lauer as custodian for
his two children, as to which shares Mr. Lauer disclaims beneficial
ownership.
(6) Includes 2,121 shares held in the Corporation's Profit Sharing and Savings
Plan and Trust; and 53,825 shares which Mr. Pierzchalski had the vested
right to acquire as of January 31, 1997, or which become vested within sixty
days thereafter pursuant to options granted under the Corporation's 1989
Stock Option Plan and the Corporation's 1991 Stock Incentive Plan.
(7) Includes 7,870 shares held in the Corporation's Profit Sharing and Savings
Plan and Trust; 105,160 shares which Mr. Steinbach had the vested right to
acquire as of January 31, 1997, or which become vested within sixty days
thereafter pursuant to options granted under the Corporation's 1989 Stock
Option Plan and the Corporation's 1991 Stock Incentive Plan; and 10,000
shares as to which both voting and investment powers are shared. Excludes
40,000 shares owned by Mr. Steinbach's wife and 5,000 shares owned by two
trusts in which Mr. Steinbach has shared voting and investment powers, as to
all of which shares Mr. Steinbach disclaims beneficial ownership.
(8) Information with respect to the ownership of the Corporation's Common Stock
by each nominee for the Board of Directors and each director continuing in
office is set forth below under "Election of Directors."
(9) Includes 492,055 shares of Common Stock subject to acquisition upon the
exercise of employee stock options granted under the Corporation's 1989
Stock Option Plan and the Corporation's 1991 Stock Incentive Plan which were
vested as of January 31, 1997, or which become vested within sixty days
thereafter; 15,339 shares of Common Stock held in the Corporation's Profit
Sharing and Savings Plan and Trust; 20,700 shares of Common Stock as to
which both voting and investment powers are shared; 724 shares of Common
Stock as to which the beneficial owner has sole voting power; and 10,000
shares of Common Stock awarded under the Corporation's 1993 Restricted Stock
Plan for Non-Employee Directors. Excludes 93,500 shares of Common Stock
which are held individually by or as custodian for, family members, or as
trustee, or by a charitable foundation, and as to which beneficial ownership
is disclaimed by an executive officer or director, including shares
described in footnotes 3, 4, 5 and 7 above and set forth below in footnotes
3 and 5 under "Election of Directors." Also excludes 10,469,500 shares of
Common Stock held by NML. James D. Ericson and Edward J. Zore, who are
executive officers of NML and directors of the Corporation, have each
disclaimed beneficial ownership of such shares.
3
<PAGE> 7
ELECTION OF DIRECTORS
(ITEM 1)
NOMINEES FOR ELECTION
The Board of Directors is divided into three classes, with the directors of
each class serving for a term of three years. The term of office of one class of
directors expires each year in rotation so that one class is elected at each
Annual Meeting for a three-year term.
Each of the following incumbent directors whose term expires this year has
been nominated and recommended by the Board of Directors for election to serve
as a director for a three-year term of office ending at the time of the 2000
Annual Meeting and thereafter until a successor is duly elected and qualified.
Karl E. Case William A. McIntosh Leslie M. Muma Peter
J. Wallison
Each nominee has consented to being named in this Proxy Statement and has
indicated a willingness to serve if elected. However, if at the time of the
Annual Meeting any of the nominees named above is not available to serve as a
director (an event which the Board of Directors does not now anticipate), the
proxies will be voted for the election as directors of such other person or
persons as the Board of Directors may designate, unless the Board of Directors,
in its discretion, reduces the number of directors.
Wayne J. Roper, 72, a director of the Corporation since 1985, will retire
at the Annual Meeting in accordance with the Corporation's policy on retirement
of directors.
SHAREHOLDER VOTE REQUIRED
Each nominee receiving a plurality of the votes cast at the meeting will be
elected as a director. Only votes cast for a nominee will be counted. Votes cast
include votes under proxies which are signed, but which do not have contrary
voting instructions. Broker non-votes, abstentions and instructions on the
accompanying proxy card to withhold authority to vote for one or more of the
nominees will be disregarded in the calculation of a plurality of the "votes
cast."
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE
NOMINEES NAMED ABOVE, AND UNLESS A SHAREHOLDER GIVES INSTRUCTIONS ON THE PROXY
CARD TO THE CONTRARY, THE PROXY WILL BE VOTED FOR THE NOMINEES.
Set forth on the following pages for each nominee and for each director
whose term expires in a subsequent year is certain information, including age,
principal occupation, business experience for at least the past five years, the
year first elected a director of the Corporation, and the Committees of the
Board of Directors on which each director serves.
4
<PAGE> 8
<TABLE>
<CAPTION>
SHARES
NAME, PRINCIPAL OCCUPATION DIRECTOR BENEFICIALLY
AND OTHER INFORMATION SINCE OWNED(1)
-------------------------- -------- ------------
<S> <C> <C> <C>
NOMINATED FOR ELECTION FOR A TERM ENDING 2000
Karl E. Case KARL E. CASE, age 50, is Marion Butler McLean
Professor of Economics at Wellesley College where he
has taught since 1976. Dr. Case has been Visiting
Scholar at the Federal Reserve Bank of Boston since
1985 and a lecturer on economics and tax policy in the
International Tax Program at the Harvard Law School
since 1980. He also is a Director of the New England
Economic Project, Inc. and Century Bank & Trust. Dr.
Case is Chairman of the Risk Management Committee of
the Board of Directors. He is a graduate of Miami
University, Oxford, Ohio, and holds M.A. and Ph.D.
degrees from Harvard University. 1991 1,000(2)
William A. McIntosh WILLIAM A. MCINTOSH, age 57, is a financial services
consultant. Mr. McIntosh was an executive committee
member and a managing director at Salomon Brothers, an
investment banking firm, when he retired in 1995 after
35 years of service. He is a member of the Management
Development and Securities Investment Committees of
the Board of Directors. Mr. McIntosh is a graduate of
Xavier University, Ohio. 1996 2,000(2)
Leslie M. Muma LESLIE M. MUMA, age 52, has been President and Chief
Operating Officer of Fiserv, Inc., a financial
industry automation products and services firm, since
1984. He is a member of the Audit Committee of the
Board of Directors. Mr. Muma holds degrees in
Theoretical Mathematics and Business from the
University of South Florida. 1995 5,000(2)
</TABLE>
5
<PAGE> 9
<TABLE>
<CAPTION>
SHARES
NAME, PRINCIPAL OCCUPATION DIRECTOR BENEFICIALLY
AND OTHER INFORMATION SINCE OWNED(1)
-------------------------- -------- ------------
<S> <C> <C> <C>
Peter J. Wallison PETER J. WALLISON, age 55, has been a partner in the
law firm of Gibson, Dunn & Crutcher since April 1987,
and before that was Counsel to the President of the
United States from March 1986 to March 1987. Mr.
Wallison is a member of the Audit Committee of the
Board of Directors. He holds a B.A. degree from
Harvard College and an L.L.B. degree from the Harvard
Law School. 1990 1,000(2)
DIRECTORS CONTINUING IN OFFICE
Term Ending 1999
Mary K. Bush MARY K. BUSH, age 48, has been President of Bush &
Company, an international financial advisory firm,
since 1991. Ms. Bush was Managing Director and Chief
Operating Officer of the Federal Housing Finance
Board, a U.S. government agency, from 1989 to 1991,
Vice President-International Finance of the Federal
National Mortgage Association, a secondary mortgage
institution, from 1988 to 1989, and served the
President of the United States as a member of the
Board of the International Monetary Fund from 1984 to
1988. She is a member of the Advisory Board of
Washington Mutual Investors Fund. Ms. Bush is a member
of the Audit Committee of the Board of Directors. Ms.
Bush is a graduate of Fisk University and holds an MBA
degree from the University of Chicago. 1991 1,000(2)
David S. Engelman DAVID S. ENGELMAN, age 59, is a private investor. Mr.
Engelman was Chairman, President and Chief Executive
Officer of UnionFed Financial Corporation from 1991
until March 1997, and he held the same positions at
its subsidiary, Union Federal Bank, until the Office
of Thrift Supervision appointed a receiver for the
Bank in August 1996. From 1989 to 1991, Mr. Engelman
was a consultant to Portland General Corporation, a
diversified public utility holding company, with
responsibility for the management and liquidation of
the real estate operations and assets. He is a member
of the Risk Management Committee of the Board of
Directors. Mr. Engelman is a graduate of the
University of Arizona. 1993 2,800(2)
</TABLE>
6
<PAGE> 10
<TABLE>
<CAPTION>
SHARES
NAME, PRINCIPAL OCCUPATION DIRECTOR BENEFICIALLY
AND OTHER INFORMATION SINCE OWNED(1)
-------------------------- -------- ------------
<S> <C> <C> <C>
Kenneth M. Jastrow, II KENNETH M. JASTROW, II, age 49, has been Chief
Financial Officer and Group Vice President of
Temple-Inland Inc., a holding company with interests
in paper, forest products and financial services,
since 1992. He also has been President of Guaranty
Federal Bank, F.S.B., a subsidiary of Temple-Inland
Inc., since 1994, and Chairman and Chief Executive
Officer of Temple-Inland Mortgage Corporation, a
subsidiary of Guaranty Federal Bank, F.S.B., since
1991. He is a member of the Risk Management Committee
of the Board of Directors. Mr. Jastrow is a graduate
of the University of Texas. 1994 1,000(2)
William H. Lacy WILLIAM H. LACY, age 52, has been President and Chief
Executive Officer of the Corporation since 1987. Mr.
Lacy is a Director of Firstar Bank Milwaukee. He is
Chairman of the Executive Committee of the Board of
Directors and a member of the Securities Investment
Committee. Mr. Lacy attended the United States Air
Force Academy and is a graduate of the University of
Wisconsin-Milwaukee. 1984 263,205(3)
DIRECTORS CONTINUING IN OFFICE
Term Ending 1998
James A. Abbott JAMES A. ABBOTT, age 57, served as President and Chief
Executive Officer of First Union Mortgage Corporation,
a mortgage banking company, from January 1980 until
his retirement in December 1994. Mr. Abbott is
Chairman of the Audit Committee of the Board of
Directors. He is a graduate of the University of North
Carolina. 1989 3,000(2)
</TABLE>
7
<PAGE> 11
<TABLE>
<CAPTION>
SHARES
NAME, PRINCIPAL OCCUPATION DIRECTOR BENEFICIALLY
AND OTHER INFORMATION SINCE OWNED(1)
-------------------------- -------- ------------
<S> <C> <C> <C>
James D. Ericson JAMES D. ERICSON, age 61, has been President and Chief
Executive Officer of The Northwestern Mutual Life
Insurance Company since October 1993, and before that
Mr. Ericson served The Northwestern Mutual Life
Insurance Company as President and Chief Operating
Officer from 1990 to 1993 and as Executive Vice
President-Investments from 1987 to 1990. He is a
Trustee of The Northwestern Mutual Life Insurance
Company and a Director of Northwestern Mutual Series
Fund, Inc., Consolidated Papers, Inc. and Green Bay
Packaging Corp. Mr. Ericson holds a B.A. degree and an
L.L.B. degree from State University of Iowa. 1985 -0-(4)
Sheldon B. Lubar SHELDON B. LUBAR, age 67, has been Chairman and Chief
Executive Officer of Christiana Companies, Inc., an
operating and investment company with interests in
logistics, public storage warehousing and
manufacturing, since 1987, and also has been Chairman
of Lubar & Co., Incorporated, a private investment
firm, since 1977. Mr. Lubar is a Director of Ameritech
Corporation, Energy Ventures, Inc., Firstar
Corporation and Massachusetts Mutual Life Insurance
Co. He is Chairman of the Securities Investment
Committee of the Board of Directors and a member of
the Executive and Management Development Committees.
Mr. Lubar holds a B.B.A. degree and an L.L.B. degree
from the University of Wisconsin-Madison. 1991 13,000(2)(5)
Edward J. Zore EDWARD J. ZORE, age 51, has been Executive Vice
President and Chief Financial Officer of The
Northwestern Mutual Life Insurance Company since
February 1995, and Chief Investment Officer of The
Northwestern Mutual Life Insurance Company since 1990.
He served as Senior Vice President of The Northwestern
Mutual Life Insurance Company from 1990 until 1995.
Mr. Zore is a Director of Northwestern Mutual
Investment Services, Inc., Northwestern Mutual Life
International, Inc., and Baird Financial Corporation,
all of which are subsidiaries of The Northwestern
Mutual Life Insurance Company. He is a member of the
Executive and Securities Investment Committees of the
Board of Directors. Mr. Zore holds a B.A. degree and
an M.S. degree from the University of
Wisconsin-Milwaukee. 1990 -0-(4)
</TABLE>
- ------------
(1) The share ownership information is as reported by directors as of January
31, 1997. Unless otherwise noted, all directors have sole voting and
investment power with respect to such shares.
8
<PAGE> 12
The amount of Common Stock of the Corporation beneficially owned by each
director represents less than 1% of the total number of shares outstanding.
(2) Includes 1,000 shares of Common Stock awarded under the Corporation's 1993
Restricted Stock Plan for Non-Employee Directors.
(3) Includes 138,480 shares which Mr. Lacy had the vested right to acquire as of
January 31, 1997, or which become vested within sixty days thereafter
pursuant to options granted under the Corporation's 1989 Stock Option Plan
and the Corporation's 1991 Stock Incentive Plan. Excludes 3,900 shares held
directly by his children, or by Mr. Lacy as custodian for his children, as
to all of which shares Mr. Lacy disclaims beneficial ownership. Also
excludes 9,500 shares owned by a charitable foundation of which Mr. Lacy is
an officer and director, as to which shares he has shared voting and
investment powers and disclaims beneficial ownership.
(4) Messrs. Ericson and Zore, as executive officers of NML, may be deemed to
have a beneficial interest in the 10,469,500 shares of Common Stock of the
Corporation beneficially owned by NML; however such individuals have each
disclaimed such beneficial ownership. See "Stock Ownership" above.
(5) Excludes 2,000 shares owned by a trust of which Mr. Lubar's wife is a
co-trustee; 6,000 shares owned by Mr. Lubar's wife; and an aggregate of
24,000 shares owned by Mr. Lubar's four adult children, as to all of which
shares Mr. Lubar disclaims beneficial ownership.
THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Board of Directors met five times during 1996, and each director
attended at least 75% of the meetings of the Board and committees of the Board
on which he or she served that were held during the period in which he or she
was a director.
The Board of Directors has established a number of committees to deal with
certain areas of responsibility, including the Audit Committee and the
Management Development Committee.
The members of the Audit Committee are Messrs. Abbot, Muma and Wallison and
Ms. Bush. The Audit Committee held five meetings during 1996. The principal
functions of the Audit Committee are to review various matters pertaining to:
the Corporation's financial statements and regulatory examinations; the
Corporation's retention of and relationship with its independent accountants;
the effectiveness of the Corporation's internal accounting controls and internal
audit function; the adequacy and appropriateness of the Corporation's accounting
and financial policies and practices; and the adequacy of statements of policy
regarding conflicts of interest and business conduct, and the means used to
monitor compliance and grant exceptions.
The members of the Management Development Committee are Messrs. Lubar,
McIntosh and Roper. The Management Development Committee held four meetings
during 1996. The principal functions of the Management Development Committee are
to: review and approve compensation for the senior management of the
Corporation, including salary changes and bonus awards; administer the
Corporation's 1989 Stock Option Plan and 1991 Stock Incentive Plan; monitor and
evaluate appointments of, and succession planning for, the senior management of
the Corporation; and make recommendations concerning the composition of the
Board of Directors and its committee structure.
The Management Development Committee will consider nominees to the Board of
Directors who are recommended by shareholders, provided that any such
recommendation is submitted in writing by December 1 of the year preceding the
year in which the applicable Annual Meeting of Shareholders occurs, accompanied
by a description of the proposed nominee's qualifications and other relevant
9
<PAGE> 13
biographical information and the consent of the proposed nominee to serve. The
recommendation should be addressed to the Management Development Committee, in
care of the Secretary of the Corporation.
COMPENSATION OF DIRECTORS
No additional compensation is paid to any director who is an employee of
the Corporation or of any of its subsidiaries. Directors who are not employees
of the Corporation or of NML receive an annual fee for their services of
$20,000, plus $2,000 for each Board of Directors meeting attended, and $1,000
for each committee meeting attended other than in connection with a Board of
Directors meeting. A director who also serves as chairperson of a committee of
the Board receives an additional $2,000 annual fee. Fees that would have been
paid by the Corporation to executive officers of NML for their services as
directors are paid to NML. The Corporation reimburses directors for travel,
lodging and related expenses incurred in connection with attending Board of
Directors and committee meetings.
Under the Corporation's Deferred Compensation Plan for Non-Employee
Directors, each director who is not an employee of the Corporation or of an
affiliate of the Corporation may elect to defer all or any part of his or her
annual retainer and meeting fees for payment on the earlier of his or her death,
disability or termination of service as a director or to a future date specified
by the participating non-employee director. A participating non-employee
director may elect to have his or her deferred compensation account either
credited quarterly with interest accrued at an annual rate equal to the
six-month U.S. Treasury Bill rate determined at the closest preceding January 1
and July 1 of each year or translated on a quarterly basis into share units.
Each share unit is equal in value to a share of the Corporation's Common Stock
and is ultimately distributed in cash only. If a director defers fees in share
units, dividend equivalents in the form of additional share units are credited
to the director's account as of the date of payment of cash dividends on the
Corporation's Common Stock. Messrs. Case, Jastrow, Lubar, Muma and Roper have
elected to participate in this plan. Mr. Lacy, because of his employment by the
Corporation, and Messrs. Ericson and Zore, because of their employment by NML,
are not eligible to participate in this plan.
Under the Corporation's 1993 Restricted Stock Plan for Non-Employee
Directors, each director who is not an employee of the Corporation or of an
affiliate of the Corporation is awarded 1,000 shares of the Corporation's Common
Stock, which are restricted until the director ceases to be a director of the
Corporation by reason of death, disability or retirement. During the restricted
period, the director has the entire beneficial interest in, and all rights and
privileges of a shareholder as to, such shares, including the right to receive
dividends and the right to vote such shares, subject to the following
restrictions: (a) none of the restricted shares of Common Stock may be sold,
transferred, assigned, pledged or otherwise encumbered or disposed of during the
restricted period; and (b) all of the restricted shares of Common Stock will be
forfeited and all rights of the director to such shares will terminate when the
director ceases being a director of the Corporation other than by reason of
death, disability or retirement.
For purposes of the 1993 Restricted Stock Plan for Non-Employee Directors,
"retirement" of a director means termination of service as a director of the
Corporation, if (a) the director at the time of termination was ineligible for
continued service as a director under the Corporation's retirement policy for
directors, or (b) the director had served as a director of the Corporation for
at least three years from the date restricted shares of Common Stock were
awarded to such director, and such termination is (i) due to the director's
taking a position with or providing services to a governmental, charitable or
educational institution whose policies prohibit continued service on the Board
of the Corporation, (ii) due to the fact that continued service as a director
would be a violation of law, or (iii) not due to the voluntary resignation or
refusal to stand for reelection by the director.
10
<PAGE> 14
When a director ceases to be a director by reason of death, disability or
retirement, all restrictions applicable to the shares of Common Stock lapse. Mr.
Lacy, because of his employment by the Corporation, and Messrs. Ericson and
Zore, because of their employment by NML, are not eligible to participate in
this plan.
Subject to approval of the amendments to the Corporation's 1991 Stock
Incentive Plan at the Annual Meeting (see "Amendments to the MGIC Investment
Corporation 1991 Stock Incentive Plan"), the 1993 Restricted Stock Plan for
Non-Employee Directors has been terminated by the Board of Directors and no new
awards of Common Stock will be made under such plan. Termination of the plan
will not affect any prior awards of restricted shares under such plan.
REPORT OF THE MANAGEMENT DEVELOPMENT COMMITTEE OF THE BOARD OF DIRECTORS ON
EXECUTIVE COMPENSATION
This report is submitted by the Management Development Committee of the
Board of Directors ("Committee"), comprised of three non-employee directors. The
Committee administers the Corporation's executive compensation program for the
five most highly compensated executive officers named in the tables below and
other senior executives of the Corporation. In addition, the Committee
administers the Corporation's 1989 Stock Option Plan and its 1991 Stock
Incentive Plan, monitors and evaluates the appointment of senior executives, and
reviews the management succession plans for the Corporation.
Compensation Philosophy
The Corporation's compensation program is designed to motivate and reward
executives for attaining the financial and strategic objectives essential to the
Corporation's long-term success and continued growth in shareholder value. The
program is intended to provide a competitive level of total compensation and to
offer incentive and equity ownership opportunities directly linked to the
Corporation's performance and shareholder return. Key principles underlying the
design of the program include emphasis on cash compensation tied to performance
and stock-based incentive opportunities tied to shareholder value over fixed
pay, and a belief in pay based on performance rather than entitlements tied to
one's position.
The objectives of the Committee in structuring and administering the
Corporation's executive compensation program are to:
- maintain a strong and direct link between the Corporation's financial
goals and the executive compensation program;
- motivate executives to achieve key financial goals through emphasis on
performance-based compensation;
- align the interest of executives with those of the Corporation's
shareholders by providing a substantial portion of compensation in the
form of the Corporation's stock; and
- provide competitive total compensation opportunities to attract and
retain high-caliber executives critical to the long-term success of the
Corporation.
Competitive Benchmarks
In its annual review of executive compensation, the Committee is guided by
data derived from compensation surveys prepared by independent consultants. The
surveys provide the Committee with
11
<PAGE> 15
competitive data on overall compensation levels, changes in pay levels, and the
mix of compensation elements for senior executives in a variety of companies.
The Committee believes that the Corporation's competitors for executive talent
are not limited to the six companies which, in addition to the Corporation,
comprise the Standard & Poor's 500 Financial (Diversified) Index, which is the
peer group used for the performance graph comparison of shareholder return.
Therefore, the companies used for comparison purposes in analyzing the
Corporation's executive compensation program represent a significantly broader
group of firms than the companies included in the index.
In January, 1996, the Committee obtained information from an independent
compensation and benefits consulting firm on salary range movement projected for
the year for senior executives in a broad range of companies selected from four
industry groups: financial institutions; property and casualty insurers; life
and health insurers; and other insurance companies. The Committee used this
information to update comprehensive compensation data obtained from the
consultant the previous year for a broad range of publicly-traded companies
selected from financial services and insurance industry groups, from companies
based in Milwaukee, the location of the Corporation's headquarters, and from
published surveys of salary information.
Executive Compensation Program
The Corporation's executive compensation program consists of an annual cash
component, which includes base salary and a variable performance incentive
bonus, and a long-term incentive component, consisting of periodic stock option
awards.
Base Salary
The Committee reviews base salary ranges and salary levels of the
Corporation's senior executives each year, taking into consideration individual
performance, level of responsibility, scope and complexity of the position,
internal equity, comparative compensation data, and, for executives other than
Mr. Lacy, the recommendations of Mr. Lacy. The Committee's review of Mr. Lacy's
compensation is discussed below under "Compensation of the Chief Executive
Officer."
In 1995, the Committee adjusted the salary ranges for the senior executives
of the Corporation to establish as the midpoint for each position the median
compensation level for the comparable position within a comparative group of
companies selected objectively by the consultant on the basis of similar market
capitalization. For 1996, the Committee decided to maintain the salary range
midpoint at the 50th percentile of competitive levels, consistent with the
Committee's belief that a substantial portion of the senior executives' annual
pay should remain "at risk" and linked to the achievement of corporate
objectives and increases in shareholder value. Therefore, in January, 1996, the
Committee increased the salary range midpoints of the senior executives by 3%,
representing the average salary range movement reflected in the updated
compensation survey data, and increased the salaries of the senior executives
who were below their adjusted salary midpoints to approximate the new midpoint
for their respective positions. The salaries shown in the Summary Compensation
Table for 1996 for the named officers reflect payment for the first three months
of the year at the salary rates in effect prior to the adjustments which became
effective in April, 1996. The 1996 salaries for Messrs. Culver and Pierzchalski
shown in the table also reflect mid-year salary increases made by the Committee
as a result of their promotions and additional responsibilities.
12
<PAGE> 16
Annual Performance Incentive Bonus
The purpose of the annual variable performance incentive program is to
provide a direct financial incentive in the form of a cash bonus to senior
executives who achieve key objectives during the year. Under the program, the
amount of the Corporation's net income must exceed a threshold before any cash
bonuses can be paid and must equal or exceed a net income target in order for
senior executives to be eligible for maximum bonus awards. The amounts of the
net income threshold and net income target are subjectively determined by the
Committee at the beginning of each year based on the Committee's assessment of
the business environment and the Corporation's financial plan for that year.
Usually the net income target is an amount equal to the net income projected to
be earned in the Corporation's financial plan for the year and the net income
threshold is 80% to 90% of that amount. The net income target for 1996 was set
by the Committee in January, 1996, at an amount equal to the net income
projected in the Corporation's 1996 financial plan and the net income threshold
was set at 85% of that amount.
The Committee has established four tiers applicable to senior executives'
bonus opportunities, with maximums ranging from 40% to 80% of base salary in
effect at the time of bonus award. In January, 1996, upon Mr. Lacy's
recommendation, the Committee approved placement of the senior executives in the
bonus tiers. Mr. Lacy's recommendation to the Committee regarding placement of
the senior executives in the bonus tiers was based upon his subjective judgment
as to the ability of each senior executive to influence the Corporation's
competitiveness and profitability under the existing business climate.
The bonus amounts paid to the senior executives were decided in January,
1997, when Mr. Lacy submitted to the Committee for approval his recommendations
as to the bonus awards. Mr. Lacy based his recommendations upon a subjective
evaluation of the executive's contribution to the Corporation's competitiveness
in the marketplace, quality of execution of functional duties and
responsibilities, effective management of expenses, success in improving
productivity, and achievement of annual goals jointly established by Mr. Lacy
and each executive. No specific weight was assigned to any of these factors, nor
was any specific weight assigned to any combination of such factors with the
Corporation's performance. The Committee approved the recommended bonus amounts
without change.
Stock Option Program
The long-term incentive component of the Corporation's executive
compensation program provides for the award of stock options, designed to
encourage significant ownership interest by the senior executives in the
Corporation with the intent of aligning the interest of the senior executives
with those of the other shareholders. Under the Corporation's stock option plan,
stock options are granted at the market value on the date of grant. As a result,
senior executives will realize a gain from the options only to the extent that
shareholders are similarly benefitted by future increases in the price of the
Corporation's stock.
Stock options were granted to Mr. Lacy and other senior executives in 1994.
Information regarding the stock options held by Mr. Lacy and the four other
highest paid executive officers at December 31, 1996 is set forth in the table
under "Executive Compensation -- Aggregated Stock Option Exercises in the Last
Fiscal Year and Option Values at December 31, 1996." Unlike prior awards which
vested solely upon continuation of employment, vesting of the options granted to
the Corporation's senior executives in 1994 depends upon the achievement of
corporate performance goals as measured by earnings per share. This strict
vesting requirement reflects the Committee's belief in pay-for-performance and
linkage
13
<PAGE> 17
to increases in shareholder value. Any portion of the options awarded in 1994
which do not vest by performance within five years of the grant date will vest
after the ninth year and will be exercisable at an amount more than two times
the market price at grant. The number of options granted in 1994 reflected the
Committee's intent not to grant additional options to the senior executives who
participated in the 1994 grant prior to 1997, and no stock options were granted
to any of these senior executives during 1995 or 1996.
Compensation of the Chief Executive Officer
The compensation of Mr. Lacy, President and Chief Executive Officer of the
Corporation, is comprised of the same elements as the compensation of other
senior executives: base salary, annual performance incentive bonus and periodic
stock option awards. The Committee reviews Mr. Lacy's total compensation
annually, and evaluates adjustments based upon a variety of factors, including
the comparative survey data.
Mr. Lacy's salary range midpoint was set by the Committee in 1995 at the
50th percentile of salary levels reported for the highest paid officers in the
comparative group of companies selected by the consultant. For 1996, the
Committee increased the salary range midpoint for Mr. Lacy by 3%, the average
salary range movement in the updated compensation survey information. However,
at Mr. Lacy's request, his base salary of $500,000, which was at the midpoint of
his adjusted salary range, was not increased in 1996.
In determining the variable performance incentive bonus to be paid to Mr.
Lacy, the Committee considers the Corporation's net income in relation to the
net income target established by the Committee and the Committee's evaluation of
Mr. Lacy's overall contributions to the Corporation, although no specific weight
or ranking is assigned to these factors in the Committee's subjective
determination of the bonus amount to be paid to Mr. Lacy. In January, 1996, the
Committee assigned Mr. Lacy to the bonus tier with the highest bonus
opportunity, 80% of base salary. The Committee's decision to assign Mr. Lacy to
this category was based on the Committee's subjective evaluation of Mr. Lacy's
ability to influence the Corporation's profitability.
In January, 1997, the Committee determined that the bonus award to be paid
to Mr. Lacy was $400,000, an amount equal to 80% of his base salary rate then in
effect. That determination was based on the fact that the Corporation's net
income for 1996 exceeded the net income target that was established by the
Committee in January, 1996, although no specific weight was given to the amount
by which the net income exceeded the net income target.
For the reasons explained above, the Committee did not award any stock
options to Mr. Lacy during 1996.
Tax Deductibility Limit
Under Section 162(m) of the Internal Revenue Code of 1986, as amended,
applicable to publicly-held corporations, the annual corporate federal income
tax deduction for compensation paid to any of the five most highly compensated
executive officers is limited to $1 million, unless certain requirements are
met. No senior executive of the Corporation received compensation in excess of
$1 million during 1996, other than as a result of exercise of stock options,
compensation from which was not subject to the Section 162(m) limit. With regard
to non-option compensation, the Committee does not anticipate it would reduce
compensation that would otherwise be payable under the Committee's compensation
14
<PAGE> 18
philosophy to conform to the tax deductibility limit or seek to structure such
compensation so that it would not be subject to such limit.
Members of the Management Development Committee:
Wayne J. Roper, Chairman
Sheldon B. Lubar
William A. McIntosh
PERFORMANCE GRAPH
The following graph compares the cumulative total stockholder return on the
Corporation's Common Stock for the last five fiscal years with the cumulative
total return on the Standard & Poor's 500 Stock Index and the Standard & Poor's
500 Financial (Diversified) Index. The graph assumes $100 was invested on
December 31, 1991, in the Corporation's Common Stock, the Standard & Poor's 500
Stock Index and the Standard & Poor's 500 Financial (Diversified) Index, and
that all dividends were reinvested.
<TABLE>
<CAPTION>
MEASUREMENT PERIOD MGIC S&P 500 S&P 500
(FISCAL YEAR COVERED) INVESTMENT FINANCIAL
CORPORATION (DIVERSIFIED)
<S> <C> <C> <C>
12/31/91 $100 $100 $100
12/31/92 123 118 108
12/31/93 142 140 118
12/31/94 161 135 120
12/31/95 265 218 165
12/31/96 373 280 203
</TABLE>
15
<PAGE> 19
EXECUTIVE COMPENSATION
The following tables provide information concerning compensation,
aggregated stock option exercises, and descriptions of the Corporation's Pension
Plan ("Pension Plan") and Supplemental Executive Retirement Plan ("Supplemental
Plan") as they relate to the Chief Executive Officer and the four other most
highly compensated executive officers of the Corporation.
Summary Compensation Table
The following table summarizes information concerning compensation of the
Chief Executive Officer and the four other most highly compensated executive
officers of the Corporation or of Mortgage Guaranty Insurance Corporation
("MGIC") for fiscal year 1996 and for the previous two fiscal years.
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
----------------------------------- ------------
OTHER SECURITIES
ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL COMPEN- STOCK COMPEN-
POSITION YEAR SALARY($) BONUS($) SATION($)(1) OPTIONS(#) SATION($)(2)
------------------ ---- --------- -------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
William H. Lacy 1996 500,000 400,000 1679 -0- 69,768
President and Chief Executive 1995 486,542 400,000 1101 -0- 74,590
Officer of the Corporation 1994 450,000 225,000 832 120,000 74,586
and Chairman and Chief
Executive Officer of MGIC
Curt S. Culver 1996 276,740 240,000 335 -0- 40,216
Executive Vice President of 1995 219,769 184,000 156 -0- 16,317
the Corporation and President 1994 189,346 96,000 66 40,000 16,266
and Chief Operating Officer of
MGIC
J. Michael Lauer 1996 227,308 184,000 737 -0- 28,390
Executive Vice President 1995 217,846 121,000 346 -0- 28,503
and Chief Financial Officer 1994 212,000 106,000 171 40,000 28,438
of the Corporation and MGIC
Lawrence J. Pierzchalski 1996 203,366 172,000 198 -0- 21,511
Executive Vice President -- 1995 157,500 144,000 64 -0- 9,802
Risk Management of MGIC 1994 151,142 50,490 13 25,000 9,594
Gordon H. Steinbach 1996 195,000 126,750 272 -0- 39,571
Executive Vice President -- 1995 195,000 107,250 206 -0- 39,598
Credit Policy of MGIC 1994 195,000 87,750 121 40,000 39,584
</TABLE>
- ------------
(1) The 1996 amounts shown in this column represent reimbursements during the
fiscal year for the payment of taxes related to income imputed in connection
with the Supplemental Plan. Other Annual Compensation for 1996 and for the
years 1995 and 1994 does not include perquisites and other personal benefits
because the aggregate amount of such compensation for each of the named
individuals in each year did not exceed the lesser of (a) $50,000 or (b) 10%
of the combined salary and bonus for the named individual in each year.
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<PAGE> 20
(2) The 1996 amounts included in "All Other Compensation" consist of:
<TABLE>
<CAPTION>
1996 VALUE OF SPLIT GROUP SUPPLEMENTAL
PROFIT SHARING MATCHING DOLLAR LIFE LIFE LONG TERM
CONTRIBUTIONS 401(K) INSURANCE INSURANCE DISABILITY TOTAL OTHER
NAME PAID IN 1997 CONTRIBUTIONS PREMIUMS(a) PREMIUMS INSURANCE COMPENSATION
---- -------------- ------------- -------------- --------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
William H. Lacy $7,500 $1,600 $52,827 $-0- $7,841 $69,768
Curt S. Culver 7,500 1,600 31,116 -0- -0- 40,216
J. Michael Lauer 7,500 1,600 19,290 -0- -0- 28,390
Lawrence J. Pierzchalski 7,500 1,600 11,582 829 -0- 21,511
Gordon H. Steinbach 7,500 1,600 30,471 -0- -0- 39,571
</TABLE>
- ------------
(a) The amount shown represents the full dollar amount paid by or on behalf of
MGIC for the whole life portion of the split-dollar life insurance. The
premium attributed to the term portion of such insurance was paid by the
named individuals. MGIC will be reimbursed for premiums paid upon the sooner
of the retirement or termination of employment of each of the insureds.
Aggregated Stock Option Exercises in the Last Fiscal Year and Option Values at
December 31, 1996
The following table summarizes information with respect to stock options
held at December 31, 1996, and stock options exercised during 1996 by the Chief
Executive Officer of the Corporation and the four other most highly compensated
executive officers of the Corporation or MGIC.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS AT
DECEMBER 31, 1996 DECEMBER 31, 1996
SHARES ACQUIRED VALUE --------------------------- ---------------------------
ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
NAME DURING 1996(#) ($)(1) (#) (#)(2) ($)(2) ($)(2)(3)
---- --------------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
William H. Lacy 50,000 2,880,255 170,400 75,600 10,694,143 3,383,100
Curt S. Culver 20,000 1,010,080 54,800 25,200 3,426,504 1,127,700
J. Michael Lauer 28,900 1,706,749 109,900 25,200 7,234,195 1,127,700
Lawrence J.
Pierzchalski 5,000 177,810 46,830 28,270 2,521,147 1,407,067
Gordon H. Steinbach 40,000 2,169,682 94,800 25,200 6,190,708 1,127,700
</TABLE>
- ------------
(1) Value realized is the difference between the exercise price and the market
value at the close of business on the date immediately preceding the date of
exercise.
(2) The Corporation's stock option agreements for all options granted under the
Corporation's 1989 Stock Option Plan and 1991 Stock Incentive Plan provide
that the options shall become immediately exercisable upon a change in
control of the Corporation or, as and to the extent determined by the
Management Development Committee, upon the occurrence of certain specified
corporate transactions affecting the Corporation.
(3) Value is based on the closing price of $76.00 for the Corporation's Common
Stock on the New York Stock Exchange on December 31, 1996, less the exercise
price.
Pension Plan
The Corporation maintains a Pension Plan for the benefit of substantially
all employees of the Corporation, including executive officers. The Pension Plan
is a noncontributory defined benefit pension
17
<PAGE> 21
plan intended to qualify under Section 401(a) of the Internal Revenue Code of
1986, as amended (the "Code"). Each eligible employee, including the executive
officers named in the above tables, earns an annual pension credit for each year
of service equal to 2% of such employee's total cash compensation for that year,
except that, in accordance with applicable requirements of the Code,
compensation in excess of $150,000 is disregarded. At retirement, the employee's
annual pension credits are added together to determine the employee's accrued
pension benefit. Eligible employees with credited service for employment prior
to October 31, 1985 also receive a "past service benefit," which is generally
equal to the difference between the amount of pension the employee would have
been entitled to receive with respect to service prior to October 31, 1985 under
the terms of a prior plan had such plan continued, and the amount the employee
is actually entitled to receive under an annuity contract purchased when the
prior plan was terminated.
Retirement benefits vest on the basis of a graduated schedule over a
seven-year period of service. Full pension benefits are payable upon retirement
at or after age 65 (age 62 if the employee has completed at least seven years of
service), and reduced benefits are payable beginning at age 55. The Code places
a maximum limitation on the amount of annual benefits that may be paid under the
Pension Plan, which was $112,000 for 1996 for persons born between 1938 and 1954
and retiring at or after age 65, indexed for cost-of-living increases. The
estimated annual benefits payable upon normal retirement to Messrs. Lacy,
Culver, Lauer, Pierzchalski and Steinbach as of December 31, 1996 were $112,000,
$99,495, $66,499, $89,313 and $104,121 respectively, after giving effect to the
limitation imposed by the Code.
Supplemental Executive Retirement Plan
The Corporation maintains an unfunded, nonqualified Supplemental Plan for
designated employees (including executive officers), under which an eligible
employee, whose benefits from the Pension Plan are affected by the Code's
limitations on annual benefits and compensation that may be considered, is paid
the difference between the amounts the employee would have received from the
Pension Plan in the absence of such limitations and the amounts the employee is
actually entitled to receive from the Pension Plan. Benefits under the
Supplemental Plan are payable in the same manner, at the same time and in the
same form as the benefits paid under the Pension Plan. At December 31, 1996,
Messrs. Lacy, Culver, Lauer, Pierzchalski and Steinbach would have been entitled
to receive supplementary annual benefits under the Supplemental Plan of
$112,713, $12,050, $14,288, $5,732 and $10,448 respectively.
OTHER INFORMATION
The Corporation has an agreement with Northwestern Mutual Investment
Services, Inc., a subsidiary of NML (the "NML subsidiary"), pursuant to which
the NML subsidiary was retained (i) to manage the Corporation's long-term
investment portfolio, and (ii) to provide investment, accounting and reporting
services to the Corporation. The agreement is cancelable by the Corporation upon
90 days prior written notice and by the NML subsidiary upon 180 days prior
written notice. The Corporation paid the NML subsidiary $937,079 in fees during
1996 under the agreement. The Corporation believes the terms of the agreement
are no less favorable to the Corporation than could have been obtained from an
unaffiliated third party. It is expected that the Corporation will continue to
use the services of the NML subsidiary during 1997.
During 1996, the Corporation's principal subsidiary, MGIC, purchased
long-term disability coverage for its employees from NML, and MGIC paid NML an
aggregate of $226,835 in premiums for such
18
<PAGE> 22
coverage. The premiums paid were based on NML's published rates and the
Corporation believes that the terms of this insurance are no less favorable to
MGIC than could have been obtained from an unaffiliated third party. At the
inception of the coverage in July, 1988, the terms thereof were at least as
favorable as the coverage provided by the predecessor policy which had been
issued by an insurer unaffiliated with the Corporation. The Corporation has not
made subsequent inquiries or contacts with unaffiliated third party insurers
regarding the terms.
During 1996, MGIC paid an aggregate of $145,286 to NML in split-dollar life
insurance premiums for the whole life portion of the life insurance coverage
issued by NML on Messrs. Lacy, Culver, Lauer, Pierzchalski and Steinbach
pursuant to a split-dollar collateral assignment program. The premiums paid were
determined by NML's published rates and will be repaid to MGIC upon the sooner
of the retirement or termination of employment of each of the insureds. Although
neither the Corporation nor MGIC contacted unaffiliated third party life
insurers regarding the availability of terms, the Corporation believes that the
terms of this insurance are no less favorable to MGIC than could have been
obtained from an unaffiliated third party.
The Corporation filed consolidated federal income tax returns with NML and
its subsidiaries from 1986 through August 13, 1991 pursuant to a tax sharing
agreement. While the Corporation is no longer a member of NML's consolidated tax
group, it has a continuing obligation to reimburse NML for the tax effect of any
changes in the taxable income of the Corporation relating to periods during
which the Corporation and its subsidiaries were included as part of that
consolidated group. During 1996, the Corporation did not make any reimbursements
to NML under the tax sharing agreement.
During 1996, MGIC paid NML $113,399 in rent and expenses pursuant to a
lease agreement for office space in a Bellevue, Washington commercial office
building owned by NML. The Corporation believes the terms of the lease agreement
are no less favorable to MGIC than could have been obtained from an unaffiliated
third party.
Pursuant to a Common Stock Purchase Agreement entered into in 1984 between
the Corporation and NML, NML has the right under certain conditions to require
the Corporation to file a registration statement under the Securities Act of
1933 for the sale of its shares of the Corporation's Common Stock, or to
participate in a registration of Common Stock otherwise initiated by the
Corporation. The Corporation is generally required to pay all costs associated
with any such registration (other than applicable underwriting commissions and
discounts) and to indemnify NML against certain liabilities under the Securities
Act of 1933.
Mr. Wallison is a partner in the law firm of Gibson, Dunn & Crutcher,
which, from time to time, performs legal services for the Corporation.
During 1996, MGIC sold mortgage insurance and paid mortgage insurance
claims to unaffiliated companies of which certain of the Corporation's
non-employee directors were executive officers or directors. Such transactions
were made in the ordinary course of MGIC's business at its established premium
rates and in accordance with its standard policy terms and are not considered
material.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Corporation's executive officers and directors, and persons who beneficially own
more than ten percent of the Corporation's Common Stock, to file initial reports
of ownership and reports of changes in ownership with the Securities and
Exchange Commission and the New York Stock Exchange. Executive officers,
directors and greater than
19
<PAGE> 23
ten percent beneficial owners are required by SEC regulations to furnish the
Corporation with copies of all Section 16(a) forms they file.
To the Corporation's knowledge, based solely on a review of the copies of
such reports furnished to the Corporation or written representations from the
Corporation's executive officers, directors and greater than ten percent
beneficial owners, such persons complied with all Section 16(a) filing
requirements in 1996.
AMENDMENTS TO THE MGIC INVESTMENT CORPORATION
1991 STOCK INCENTIVE PLAN
(ITEM 2)
INTRODUCTION
The Board of Directors has adopted and recommended for shareholder approval
amendments to the MGIC Investment Corporation 1991 Stock Incentive Plan, which
was last amended and approved by shareholders in May 1994.
Set forth below are a summary of the MGIC Investment Corporation 1991 Stock
Incentive Plan (the "Plan") and a summary of the proposed amendments to the Plan
(the "Amendment"). Each of the following summaries is qualified in all respects
by reference to Exhibit A to this Proxy Statement, which contains a copy of the
Plan incorporating the provisions of the Amendment. In Exhibit A, the provisions
added to the Plan by the Amendment are printed within brackets [], and the
provisions deleted by the Amendment are printed within slash marks //.
SUMMARY OF CURRENT PLAN
Except as set forth below, the provisions described in the following
summary of the Plan will continue in force regardless of whether shareholders
approve the Amendment.
The purpose of the Plan is to provide the benefits of additional incentive
inherent in ownership of the Corporation's Common Stock by executive officers
and certain key employees of the Corporation who are important to the success
and growth of the business of the Corporation. The Plan permits the Corporation
to compete with other organizations offering similar plans in obtaining and
retaining the services of key executives and employees.
The maximum number of shares of Common Stock which may be issued under the
Plan is 2,000,000. As of January 31, 1997, after giving effect to the 1,511,203
shares subject to outstanding Options and Restricted Stock (as defined below),
370,842 shares remained available for issuance under the Plan. In the case of
Options that terminate or expire and Restricted Stock that is forfeited, the
shares covered thereby may be reissued under the Plan. Options and Restricted
Stock may be awarded under the Plan until January 27, 2004. On March 14, 1997,
the last reported sale price of the Common Stock on the New York Stock Exchange
was $80.375.
Administration
The Plan is administered by the Stock Award Committee (the "Committee").
Currently, the Management Development Committee is serving as the Committee. The
Committee currently is comprised of three (3) directors, each of whom qualifies
as a "Non-Employee Director" within the meaning of Rule 16b-3 under the
Securities Exchange Act of 1934 (the "Exchange Act") and as an "outside
director" for purposes of Section 162(m) of the Internal Revenue Code of 1986,
as amended
20
<PAGE> 24
(the "Code"). Among other functions, the Committee has the authority to (a)
establish rules for the administration of the Plan, (b) select the key employees
and executive officers ("Participants") of the Corporation and its subsidiaries
to whom stock options ("Options") will be granted or Restricted Stock will be
awarded, including under the Deposit Share Program described below, (c)
determine whether the Options to be granted will be incentive stock Options
("ISOs") meeting the requirements of Section 422 of the Code, or nonstatutory
Options, (d) determine the number of shares covered by such Options or
Restricted Stock, and (e) within the limits of the Plan, set the terms and
conditions of such Options and Restricted Stock.
Options
The exercise price per share of Common Stock subject to an Option will be
determined by the Committee, provided that the exercise price may not be less
than the fair market value of a share of Common Stock on the date of grant. The
term of an Option granted under the Plan will be determined by the Committee,
but may not be less than seven nor more than ten years. Options granted under
the Plan vest and become exercisable on such conditions as are determined by the
Committee. In the past, the Committee has granted Options that vest based on the
percentage that the Corporation's earnings per share for each of the next five
fiscal years, beginning with the year of the grant, are of a predetermined
five-year aggregate earnings target, subject to a specified minimum increase in
earnings per share before there is any vesting for a year. Options that have not
vested under this performance standard during the five-year period vest on the
ninth anniversary of the grant. In the past, the Committee has also granted
Options that vest over a five-year period at the rate of 20% per year on each
anniversary of the date of the grant. Since 1993, all Options granted to senior
officers of the Corporation have been subject to performance-based vesting as
described above other than an Option granted to a newly hired senior officer.
The Committee may also provide that all Options granted shall become vested
immediately upon a change of control of the Corporation, as defined by the
Committee. Options are to be exercised by payment in full of the exercise price,
either in cash or its equivalent, as determined by the Committee.
Options which have not vested terminate as of the date of termination of
the Participant's employment with the Corporation other than by reason of death
occurring after the year in which the grant is made. In the case of such death,
Options become fully vested. Options which have become vested terminate at the
earliest to occur of (a) 30 days following termination of a Participant's
employment with the Corporation for any reason other than death, retirement
after age 55 with at least seven years of employment, or an approved leave of
absence, (b) 365 days following termination of a Participant's employment by
reason of the Participant's death or retirement after age 55 with at least seven
years of employment, (c) expiration of the term of the Option, or (d) at such
earlier time as the Committee provides at the date of grant. As to Options
outstanding prior to January 1, 1994, upon the death of a Participant, the
Participant's representative or person who succeeds to the Participant's rights
in an Option may surrender the Option to the Corporation at a price equal to the
difference between the aggregate Option exercise price and the fair market value
of the Common Stock subject to the Option at the time of the Participant's
death.
Restricted Stock
The Plan authorizes the award of up to 100,000 shares of restricted Common
Stock ("Restricted Stock"), including the Restricted Stock used in the Deposit
Share Program described below. Shares of Restricted Stock will be subject to
such restrictions as the Committee may impose, provided that, notwithstanding
such restrictions, shares of Restricted Stock will include the right to vote and
receive
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<PAGE> 25
dividends. The restrictions imposed on the shares of Restricted Stock may lapse
separately or in combination at such time or times, or in such installments or
otherwise, as the Committee deems appropriate. Except as otherwise determined by
the Committee, upon termination of a Participant's employment during the
applicable restriction period for any reason other than death, all shares of
Restricted Stock still subject to restriction will be forfeited. Upon death of a
Participant, the restrictions still in effect will immediately lapse and the
person receiving such shares under the deceased Participant's will or the laws
of descent and distribution will take such shares free and clear of any transfer
or other restriction. The Committee also has the authority, in its discretion,
to waive in whole or in part, any or all remaining restrictions with respect to
shares of Restricted Stock granted to a Participant.
Deposit Share Program
The Plan also includes a deposit share program ("Deposit Share Program")
which allows Participants to elect to purchase shares of Common Stock, at the
fair market value of such shares, in an amount equal to all or a portion of
their cash bonuses under the Corporation's incentive compensation program, which
amount is determined by the Committee. The fair market value is determined
immediately after the end of the period for making the election. Shares so
purchased are deposited with the Corporation. The Corporation shall match each
share deposited with up to one share of Restricted Stock, as determined by the
Committee. The shares of Restricted Stock deposited by the Corporation shall
vest and be delivered to the Participant in accordance with vesting provisions
determined by the Committee. Shares deposited by the Participant may be
withdrawn, at which time the Participant's right to a proportional amount of
shares of Restricted Stock deposited under the Deposit Share Program shall
terminate, unless such shares have vested. Upon a Participant's termination of
employment with the Corporation for any reason other than death, the unvested
shares of Restricted Stock deposited with the Corporation shall be forfeited
unless the Committee determines otherwise. If a Participant dies, all shares of
Restricted Stock shall vest.
Adjustments
In the event of any change in the outstanding shares of the Corporation,
including any stock dividend, stock split, recapitalization, merger,
consolidation or other similar event, the Committee will generally have the
authority, in such manner as it deems equitable, to adjust the number and type
of shares subject to the Plan, and in the case of Options, the exercise price,
in order to prevent dilution or enlargement, as the case may be, of the benefits
or potential benefits intended to be made available under the Plan.
Limits on Awards and Transferability
No Participant may receive shares under the Plan (including shares subject
to Options) in excess of 20% of the shares of Common Stock for which awards or
grants may be made under the Plan, including any shares of Restricted Stock
which are forfeited or shares subject to Options granted to the Participant
which are subsequently terminated. No Option or Restricted Stock granted under
the Plan may be assigned, sold, transferred or encumbered by any Participant
other than by will, by designation of a beneficiary, or by the laws of descent
and distribution.
Amendment and Termination
The Committee may amend, suspend or terminate the Plan at any time, except
that no such action may adversely affect any Option granted or Restricted Stock
awarded and then outstanding thereunder
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<PAGE> 26
without the approval of the respective Participant. Amendments that increase the
number of shares available under the Plan require the approval of the
shareholders.
Withholding
Not later than the date as of which an amount first becomes includable in
the gross income of a Participant for Federal income tax purposes with respect
to any Option (or exercise thereof) under the Plan, the Participant is required
to pay to the Corporation or make arrangements satisfactory to the Corporation
regarding the payment of any Federal, state, local or foreign taxes of any kind
required by law to be withheld with respect to such amount. Unless otherwise
determined by the Committee, withholding obligations arising with respect to
Options (or exercises thereof) under the Plan may be settled with shares of
Common Stock, including shares of Common Stock that are part of, or received
upon exercise of the Option which gives rise to the withholding requirement. The
obligations of the Corporation under the Plan are conditional on such payment or
arrangements, and the Corporation has, to the extent permitted by law, the right
to deduct any such taxes from any payment otherwise due to the Participant.
Certain Federal Income Tax Consequences of Options
The grant of an Option under the Plan will create no income tax
consequences to the Participant or the Corporation. A Participant who is granted
a nonstatutory Option will generally recognize ordinary income at the time of
exercise in an amount by which the fair market value of the Common Stock at such
time exceeds the exercise price. The Corporation will be entitled to a deduction
in the same amount and at the same time as ordinary income is recognized by the
Participant. A subsequent disposition of the Common Stock will give rise to
capital gain or loss to the extent the amount realized from the sale differs
from the tax basis, i.e., the fair market value of the Common Stock on the date
of exercise. This capital gain or loss will be a long-term capital gain or loss
if the Common Stock has been held for more than one year from the date of
exercise.
In general, if a Participant holds the shares of Common Stock acquired
pursuant to the exercise of an ISO for at least two years from the date of grant
and one year from the date of exercise, the Participant will recognize no income
or gain as a result of the exercise (except that the alternative minimum tax may
apply). Any gain or loss realized by the Participant on the disposition of the
Common Stock will be treated as a long-term capital gain or loss. No deduction
will be allowed to the Corporation. If these holding period requirements are not
satisfied, the Participant will recognize ordinary income at the time of the
disposition equal to the lesser of (a) the gain realized on the disposition, or
(b) the difference between the exercise price and the fair market value of the
shares of Common Stock on the date of exercise. The Corporation will be entitled
to a deduction in the same amount and at the same time as ordinary income is
recognized by the Participant. Any additional gain realized by the Participant
over the fair market value at the time of exercise will be treated as capital
gain. This capital gain will be a long-term capital gain if the Common Stock had
been held for more than one year from the date of exercise.
Certain Federal Income Tax Consequences of Restricted Stock
A Participant will not recognize income upon the award of Restricted Stock
unless the election described below is made. However, a Participant who has not
made such an election will recognize ordinary income at the end of the
applicable restriction period in an amount equal to the fair market value of the
Restricted Stock at such time. Subject to any limitation on such deduction under
Section 162(m) of the Code, the Corporation will be entitled to a corresponding
deduction in the same amount and at the same time as the Participant recognizes
income. An otherwise taxable disposition of the Restricted Stock
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<PAGE> 27
after the end of the applicable restriction period will result in capital gain
or loss (long-term or short-term depending on the length of time the Restricted
Stock is held after the end of the applicable restriction period). Dividends
paid in cash and received by a Participant prior to the end of the applicable
restriction period will constitute ordinary income to the Participant in the
year paid. The Corporation will be entitled to a corresponding deduction for
such dividends. Any dividends paid in stock will be treated as an award of
additional Restricted Stock subject to the tax treatment described herein.
A Participant may, within thirty days after the date of the award of
Restricted Stock, elect to recognize ordinary income as of the date of the award
in an amount equal to the fair market value of such Restricted Stock on the date
of the award, determined without regard to any of the restrictions. Subject to
any limitation on such deduction under Section 162(m) of the Code, the
Corporation will be entitled to a corresponding deduction in the same amount and
at the same time as the Participant recognizes income. If the election is made,
any cash dividends received with respect to the Restricted Stock will be treated
as dividend income to the Participant in the year of payment and will not be
deductible by the Corporation. An otherwise taxable disposition of the
Restricted Stock (other than by forfeiture) will result in capital gain or loss
(long-term or short-term depending on the holding period). If a Participant who
has made an election subsequently forfeits the Restricted Stock, the Participant
will not be entitled to deduct any loss. In addition, the Corporation would then
be required to include as ordinary income the amount of the deduction it
originally claimed with respect to such shares.
SUMMARY OF THE AMENDMENT
Increase in Number of Shares of Common Stock Which May be Issued Under the
Plan
The Amendment increases, from 2,000,000 to 3,500,000 shares, the number of
shares of Common Stock which may be issued under the Plan. The Amendment also
increases the number of shares of Restricted Stock for which awards may be
granted from 100,000 to 200,000 shares. The number of shares of Restricted Stock
that may be awarded does not increase the maximum number of shares which may be
issued under the Plan (3,500,000 shares under the Amendment). The 1,500,000
additional shares of Common Stock included in the Amendment represent
approximately 2.5% of the outstanding shares of Common Stock at January 31,
1997. The number of shares subject to the Plan may be increased for changes in
the outstanding shares of Common Stock as described under "Summary of Current
Plan--Adjustments" above.
Approximately 75 employees are eligible for grants of Options and awards of
Restricted Stock under the Plan and there are currently nine Non-Employee
Directors who will be eligible for awards of Restricted Stock under the Deposit
Share Program upon approval of the Amendment. The number of Options and shares
of Restricted Stock that may be granted or awarded to any of such persons is not
presently determinable.
Participation by Non-Employee Directors in the Deposit Share Program
The Amendment provides for the award of shares of Restricted Stock under
the Deposit Share Program to Non-Employee Directors in order to further align
the interests of such directors and shareholders and to attract and retain the
services of qualified directors. Other than under the Deposit Share Program,
directors of the Corporation who are not also executive officers or key
employees of the Corporation will not be eligible to participate in the Plan. A
Non-Employee Director is a director of the Corporation who is not an employee of
the Corporation or any affiliate and is not a representative of a holder of the
Corporation's securities. Each Non-Employee Director will be entitled to
purchase at fair market value shares of Common Stock with a fair market value
equal to up to 50% of the compensation of such Non-Employee Director for service
as a director of the Corporation, including as a member of a
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<PAGE> 28
committee of the Board of Directors, during the preceding calendar year. Shares
of Common Stock so purchased are deposited with the Corporation, and the
Corporation shall match each share deposited with one share of Restricted Stock.
One-half of the shares of Restricted Stock shall vest on the third anniversary
date of the award and the remaining one-half of the shares of Restricted Stock
shall vest on the sixth anniversary of the award date.
Awards of Restricted Stock that have not vested shall be forfeited upon the
Non-Employee Director ceasing to be a director of the Corporation for any
reason, other than by reason of death or a "Permissible Event," unless otherwise
provided by the Committee. In the event of the death of a Non-Employee Director,
all shares of Restricted Stock shall vest. A Permissible Event is termination of
service as a director of the Corporation by reason of (a) the Non-Employee
Director being ineligible for continued service as a director of the Corporation
under the Corporation's retirement policy, which currently provides that no
director may stand for election or reelection after attaining age 70, or (b) the
Non-Employee Director's taking a position with or providing services to a
governmental, charitable or educational institution whose policies prohibit
continued service on the Board, or due to the fact that continued service as a
director would be a violation of law. If a Non-Employee Director ceases to be a
director by reason of a Permissible Event, the Restricted Stock shall vest, at
the date the Non-Employee Director ceases to be a director, in a percentage
equal to the number of days elapsed from award of the Restricted Stock to the
date the Non-Employee Director ceases to be a director, divided by the number of
days in the applicable three or six year vesting period. All other shares of
Restricted Stock are forfeited unless otherwise determined by the Committee. The
Committee, in its discretion, may also provide that some or all of the shares of
Restricted Stock shall immediately become vested upon a change in control of the
Corporation as defined by the Committee.
Upon approval of the Amendment, the 1993 Restricted Stock Plan for
Non-Employee Directors, under which each director is awarded 1,000 shares of
Restricted Stock upon joining the Board, will be terminated and no awards to new
directors will be made. Termination will not affect any prior awards of
Restricted Stock under the 1993 Restricted Stock Plan for Non-Employee
Directors.
Other Items to be Amended
As a result of a 1996 change in Rule 16b-3 under the Exchange Act, which no
longer requires that shareholders approve certain amendments to stock option and
restricted stock plans in order for the exemptions of Rule 16b-3 to be
available, the Amendment eliminates a requirement that no amendment to the Plan
cause the Plan not to qualify under Rule 16b-3. The Amendment conforms certain
of the terms of the Plan to current administrative practices and makes various
other changes to the Plan which are not viewed as material. All of the changes
made by the Amendment are indicated in Exhibit A.
Certain Federal Income Tax Consequences
Under present Federal tax laws and regulations, the Federal income tax
consequences of participation by Non-Employee Directors in the Deposit Share
Program are the same as for participation by Participants as described above.
SHAREHOLDER VOTE REQUIRED
The affirmative vote of a majority of the votes cast on the Amendment is
required for adoption of the Amendment, provided that the total votes cast on
the Amendment equal at least 50% of the number of
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<PAGE> 29
shares entitled to vote at the Annual Meeting. Shares represented by proxies
that reflect abstentions and shares referred to as "broker non-votes" will not
be treated as "votes cast."
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR APPROVAL
OF THE AMENDMENT TO THE 1991 STOCK INCENTIVE PLAN. UNLESS INDICATED OTHERWISE ON
THE PROXY, THE SHARES WILL BE VOTED FOR THIS AMENDMENT.
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
(ITEM 3)
The Board of Directors, upon recommendation of its Audit Committee, has
reappointed the accounting firm of Price Waterhouse LLP as independent
accountants of the Corporation for the fiscal year ending December 31, 1997. The
shareholders are being asked to ratify such appointment at the Annual Meeting. A
representative of Price Waterhouse LLP is expected to attend the meeting, will
be afforded an opportunity to make a statement if the representative desires to
do so, and will be available to respond to appropriate questions by
shareholders.
SHAREHOLDER VOTE REQUIRED
The affirmative vote of a majority of the votes cast on this matter is
required for the ratification of the appointment of Price Waterhouse LLP as
independent accountants. Shares represented by proxies that reflect abstentions
and shares referred to as "broker non-votes" will not be treated as "votes
cast."
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR
RATIFICATION OF THE APPOINTMENT OF PRICE WATERHOUSE LLP AS INDEPENDENT
ACCOUNTANTS. UNLESS INDICATED OTHERWISE ON THE PROXY, THE SHARES WILL BE VOTED
FOR RATIFICATION.
PROPOSALS OF SHAREHOLDERS
Proposals intended for presentation by shareholders at the 1998 Annual
Meeting, in addition to meeting the shareholder eligibility and other
requirements of the Securities and Exchange Commission's rules governing such
proposals, must be received by the Corporation on or before November 24, 1997,
to be included in the 1998 Proxy Statement and proxy relating to the 1998 Annual
Meeting.
MANNER AND COST OF PROXY SOLICITATION
The cost of solicitation of proxies will be borne by the Corporation. In
addition to the solicitation of proxies by use of the mails, officers, directors
and regular employees of the Corporation, acting on its behalf, may solicit
proxies by telephone, telegraph or personal interview. Also, the Corporation has
retained D.F. King & Co., Inc. to aid in the solicitation of proxies for which
the Corporation will pay a fee estimated to be $5,500, plus expenses. The
Corporation will, at its expense, request brokers and other custodians, nominees
and fiduciaries to forward proxy soliciting material to the beneficial owners of
shares held of record by such persons.
OTHER BUSINESS
The Board of Directors knows of no other business to be presented at the
Annual Meeting, but if other matters do properly come before the Annual Meeting,
it is intended that the persons named in the proxy will vote on such matters in
accordance with their best judgment.
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EXHIBIT A
MGIC INVESTMENT CORPORATION
1991 STOCK INCENTIVE PLAN[, AS PROPOSED TO BE AMENDED]
1. PURPOSE. The purpose of the MGIC Investment
Corporation 1991 Stock /Option Plan, as proposed to be amended/ [Incentive
Plan, as amended to March 6, 1997 and as proposed to be further amended in
accordance with amendments adopted by the Board (as hereinafter defined) on
March 6, 1997] (the "Amended Plan"), is to secure for MGIC Investment
Corporation (the "Company") and its subsidiaries /and affiliates,/ the benefits
of the additional incentive inherent in the ownership of the Company's Common
Stock, $1.00 par value (the "Common Stock")[,] by certain key employees and
executive officers of the Company and its subsidiaries [and directors of the
Company,] who are important to the success and the growth of the business of
the Company and to help the Company secure and retain the services of such
persons. In addition to granting stock options ("Options"), the Amended Plan
provides for a deposit share program ("Deposit Share Program") and for the
award of Common Stock, subject to certain terms, conditions and restrictions
("Restricted Stock"). It is intended that certain of the Options issued
pursuant to the Amended Plan will constitute incentive stock Options
("Incentive Stock Options") within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"), and the remainder of the Options
issued pursuant to the Amended Plan will constitute nonstatutory Options. The
Options and Restricted Stock are hereinafter referred to collectively as
"Awards". /The Amended Plan shall be known as the "MGIC Investment Corporation
1991 Stock Incentive Plan."/
2. ADMINISTRATION.
(a) Stock Award Committee. The Amended Plan shall be
administered under the supervision of the Board of Directors of the Company
(the "Board"), which shall exercise its powers, to the extent herein provided,
through the agency of the Stock Award Committee (the "Committee"), which shall
/be appointed from among its members who are not officers or employees of the
Company./ [consist of at least two members and shall be appointed from among
the members of the Board who are "Non-Employee Directors," as that term is
defined in Rule 16b-3 under the Securities Exchange Act of 1934, as amended, or
any substitute provision therefor ("Rule 16b-3").] Any member of the Committee
may resign or be removed by the Board and new members may be appointed by the
Board. /Members of the Committee shall be disinterested persons as that term
is defined in Subsection (c) of Section 240.16b-3 of the Code of Federal
Regulations or any substitute provision therefor ("Rule 16b- 3")./
Additionally, the Committee shall be constituted so as to satisfy at all times
the outside director requirement of Code Section 162(m) and the regulations
thereunder/, taking into account any transitional rules/ [or any substitute
provision therefor.]
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(b) Rules and Regulations. The Committee, from time to
time, may adopt rules and regulations for carrying out the provisions and
purposes of the Amended Plan. The interpretation and construction of any
provision of the Amended Plan by the Committee shall be final, conclusive and
binding on all interested parties. In order to carry out its responsibilities,
the Committee may execute such documents and enter into such agreements and
make all determinations deemed necessary or advisable to effectuate the
purposes of the Amended Plan.
(c) Authority. The Committee shall have all the
powers vested in it by the terms of the Amended Plan, such powers to include
exclusive authority (/within the limitation/[subject to the terms] of the
Amended Plan and applicable law) to select the persons to be granted Awards
under the Amended Plan, to determine the type, size and terms of Awards to be
made to each person selected, to determine the time when Awards will be granted
and to establish objectives and conditions for earning Awards. The Committee
shall determine which Options are to be Incentive Stock Options and which are
to be nonstatutory Options and shall in each case enter into a written Option
agreement with the recipient thereof (an "Option Agreement") setting forth the
terms and conditions of the grant and the exercise of the subject Option, as
determined by the Committee in accordance with the Amended Plan. To the extent
that the aggregate fair market value of Common Stock with respect to which
Incentive Stock Options under the Amended Plan and any other plans of the
Company or its subsidiaries are exercisable by an /employee/[Employee (as
hereinafter defined)] for the first time during any calendar year exceeds
$100,000, such Options shall be treated as Options which are not Incentive
Stock Options. To the extent the Code is amended from time to time to provide
additional or different limitations on the grant of Incentive Stock Options,
the foregoing limitation shall be considered to be amended accordingly. The
Committee shall have full power and authority to administer and interpret the
Amended Plan and to adopt such rules, regulations, agreements, guidelines and
instruments for the administration of the Amended Plan and for the conduct of
its business as the Committee deems necessary or advisable. The Committee's
interpretation of the Amended Plan, and all actions taken and determinations
made by the Committee pursuant to the powers vested in it, shall be conclusive
and binding on all parties concerned, including the Company, its subsidiaries,
its shareholders, Participants (as defined in Section 4 below) and any employee
of the Company or its subsidiaries. The Committee may delegate duties to any
person or persons; provided, that, no delegation of duties is permitted /which
would cause the Amended Plan not to satisfy the disinterested administration
requirement of Rule 16b-3/ [with respect to (i) any grant, award or other
acquisition from the Company if the person or persons to whom duties are
delegated would not satisfy the standard of Rule 16b-3(d)(1)] or the
requirements of Section 162(m) of the Code/, taking into account any applicable
transitional rules./ [and (ii) any disposition to the Company if the person or
persons to whom duties are delegated would not satisfy the standard of Rule
16b-3(d)(1).]
(d) Records. The Committee shall maintain a written
record of its proceedings. A majority of the Committee members shall
constitute a quorum for any meeting. Any determination or action of the
Committee may be made or taken by a majority of the members
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<PAGE> 32
present at any such meeting, or without a meeting by a resolution or written
memorandum concurred in by all of the members then in office.
3. STOCK SUBJECT TO /OPTION/[AWARDS]. The aggregate
number of shares of Common Stock for which Awards may be granted under the
Amended Plan shall not exceed /2,000,000/ [3,500,000] shares, subject to
adjustment as provided in /paragraph/ [Section] 8 below. If, and to the extent
that, Options granted under the Amended Plan terminate or expire without having
been exercised, or shares of Restricted Stock under the Amended Plan are
forfeited, the shares covered by such terminated or expired Options or
forfeited Restricted Stock, as the case may be, may be the subject of further
grants under the Amended Plan. Restricted Stock granted under the Amended Plan
and shares issued upon the exercise of any Option granted under the Amended
Plan may be, at the Company's discretion, shares of authorized and unissued
Common Stock, shares of issued Common Stock held in the Company's treasury or
reacquired shares or any combination thereof. The foregoing notwithstanding,
the maximum number of shares of Restricted Stock for which Awards may be
granted is /100,000/ [200,000] shares.
4. /EMPLOYEES/ [PERSONS] ELIGIBLE. Under the Amended
Plan, [(i)] Awards may be granted to any key employee or executive officer of
the Company who is an employee of the Company or its subsidiaries[, including
any employee who is also a member of the Board (an "Employee") and (ii) shares
of Restricted Stock shall be awarded to each Non-Employee Director under the
Deposit Share Program, as provided herein. "Non-Employee Director" means a
member of the Board who is not an employee of the Company or of any person,
directly or indirectly, controlling, controlled by or under common control with
the Company and is not a member of the Board representing a holder of any class
of securities of the Company]. In determining the /person/ [Employees] to whom
Awards are to be granted and the number of shares to be covered by an Award,
the Committee shall take into consideration the /person/ [Employee]'s present
and potential contribution to the success of the Company and such other factors
as the Committee may deem proper and relevant. /A person/ [An Employee]
receiving an Award [, and a Non- Employee Director receiving shares of
Restricted Stock] under the Amended Plan /is/ [are individually] hereinafter
referred to as a "Participant". In no event may Awards be granted to any one
Participant for more than twenty percent (20%) of the aggregate number of
shares of Common Stock for which Awards may be granted under the Amended Plan,
including for this purpose Awards granted to such Participant which are
subsequently cancelled, forfeited or otherwise terminated.
5. PROVISIONS APPLICABLE TO OPTIONS.
(a) Price and Type of Options. The purchase price of
each share of Common Stock under any Option granted under the Amended Plan
shall be as determined by the Committee in its sole discretion, but shall not
be less than the /fair market value/ [Fair Market Value] thereof [(determined
in a manner equivalent to the determination under Section 6(e), unless in the
case of Incentive Stock Options, the Code requires a different method, in which
case the method required
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by the Code shall be followed for Incentive Stock Options)] on the date of
grant. The type of Option granted shall be as determined by the Committee, but
any Incentive Stock Options granted shall be subject to such terms and
conditions as are required for the qualification as such by the Code on the
date of grant. Any Options granted under the Amended Plan shall be clearly
identified as Incentive Stock Options or nonstatutory stock Options.
(b) Exercisability of Options. The Committee shall
determine when and to what extent an Option shall be vested; and may provide
for Options to be vested based upon such performance related goals as the
Committee in its sole discretion deems appropriate ("Performance Goals"). The
Committee may, in its sole discretion, also provide that some or all Options
granted shall immediately become vested or exercisable as of a date fixed by
the Committee upon a change in control of the Company as defined by the
Committee or in the event of a sale, lease or transfer of all or substantially
all of the Company's assets, equity securities or businesses, or merger,
consolidation or other business combination of the Company. The Committee may
also if it so elects make any such action contingent upon consummation of the
event which prompted the action.
(c) Termination of Options. The unexercised portion of
any Option granted under the Amended Plan shall automatically and without
notice terminate and become null and void at the time of the earliest to occur
of the following:
(i) Thirty (30) days after the termination of the
Participant's employment with the Company [and all
subsidiaries thereof] for any reason (including, without
limitation, disability, or termination by the Company /or
a subsidiary/ [and all subsidiaries] thereof, with or
without cause) other than by reason of the Participant's
death, retirement from the Company [and all subsidiaries
thereof] after reaching age 55 and after having been
employed by the Company [or any subsidiary thereof] for
at least seven (7) years or [a] /an approved/ leave of
absence [approved by the Company];
(ii) Three Hundred Sixty-Five (365) days after the
termination of the Participant's employment with the
Company [and all subsidiaries thereof] by reason of the
Participant's death, or by reason of the Participant's
retirement from the Company [and all subsidiaries
thereof] after reaching age 55 and after having been
employed by the Company [or any subsidiary thereof] for
at least seven (7) years;
[(iii) Thirty (30) days after expiration or
termination of a leave of absence approved by the
Company unless the Participant becomes reemployed with
the Company or any subsidiary prior to such 30-day period
in which event the Option shall continue in effect in
accordance with its terms;]
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[(iv)] The expiration of the Option Period [(]as
hereinafter defined[)]; or
[(v)] In whole or in part, at such earlier time
or upon the occurrence of such earlier event as the
Committee in its discretion may have provided upon the
granting of such Option.
(d) Term of Options. The term of each Option granted under
the Amended Plan will be for such period (herein referred to as the "Option
Period") of not less than seven (7) years and not more than ten (10) years as
the Committee shall determine. With respect to Incentive Stock Options, such
term may not exceed ten (10) years or such other term provided in the Code.
Each Option shall be subject to earlier termination as described under
"Termination of Options" in subparagraph (c) above. An Option shall be
considered granted on the date the Committee acts to grant the Option or such
date thereafter as the Committee shall specify.
(e) Exercise of Options. Options granted under the Amended
Plan may be exercised by the Participant, as to all or part of the shares
covered thereby, in accordance with the terms of such Participant's Option
Agreement. A partial exercise of an Option may not be made with respect to
fewer than ten (10) shares unless the shares purchased are the total number
then available for purchase under the Option. A Participant shall exercise
such Option by delivering ten (10) days' [(or such shorter period as the
Company shall permit)] prior written notice of the exercise thereof on a form
prescribed by the Company to the Secretary of the Company at its principal
office, specifying the number of shares to be purchased. The purchase price of
the shares as to which an Option shall be exercised shall be paid in full in
cash or its equivalent at the time of exercise.
The Participant shall be responsible for paying all
withholding taxes[, if any,] applicable to any Option exercise and the Company
shall have the right to take any action necessary to insure that the
Participant pays the required withholding taxes. Upon payment of the Option
purchase price and the required withholding taxes, the Company shall cause a
certificate for the shares so purchased to be delivered to the Participant.
(f) Stock Withholding. Notwithstanding the terms of
subparagraph (e) above, a Participant shall be permitted to satisfy the
Company's withholding tax requirements by electing to have the Company withhold
shares of Common Stock otherwise issuable to the Participant or to deliver to
the Company shares of Common Stock having a fair market value on the date
income is recognized pursuant to the exercise of an Option equal to the amount
required to be withheld. The election shall be made in writing and shall be
made according to such rules and in such form as the Committee may determine.
(g) Exercise of Options following Participant's Death. If a
Participant dies ("Deceased Participant") while in the employ of the Company,
and if the Deceased Participant's
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<PAGE> 35
death occurs after the fiscal year in which the Option is granted and prior to
the date the Option terminates, regardless of whether the Option is subject to
exercise under the terms of the Option, such Option shall become immediately
vested and exercisable by the personal representative of the Deceased
Participant or the person to whom the Deceased Participant's rights under the
Option would be transferred by law or applicable laws of descent and
distribution. The Committee may also provide as to Options outstanding as of
/the Effective Date/ [January 1, 1994] for a right to surrender the Option to
the Company at a price equal to the difference between the aggregate Option
price and the fair value of the Common Stock subject to the Option as of the
Deceased Participant's death. The surrender shall also be subject to such
terms and conditions as are determined by the Committee and set forth in the
Option Agreement.
(h) Non-Transferability of Options. An Option /granted under
the Amended Plan/ or any right evidenced thereby shall not be transferable
otherwise than by will or the laws of descent and distribution, and shall be
exercisable during the Participant's lifetime only by him or by his guardian or
legal representative.
(i) Rights of Participant. The Participant shall have none
of the rights of a shareholder of the Company with respect to the shares
subject to any Option granted under the Amended Plan until a certificate or
certificates for such shares shall have been issued upon the exercise of any
Option.
6. RESTRICTED STOCK AWARDS. The Committee may make awards of
Restricted Stock ("Restricted Stock Awards") to Participants [who are
Employees, and shall make Awards to Non-Employee Directors], subject to the
provisions of this Section 6 /and Section 13/.
(a) Restricted Stock Agreements. Restricted Stock Awards
shall be evidenced by Restricted Stock agreements ("Restricted Stock
Agreements") which shall conform to the requirements of the Amended Plan and
may contain such other provisions (such as provisions for the protection of
Restricted Stock in the event of mergers, consolidations, dissolutions and
liquidations affecting either the Restricted Stock Agreement or the Common
Stock issued thereunder) as the Committee shall deem advisable.
(b) Payment of Restricted Stock Awards. Restricted Stock
Awards shall be made by delivering to the Participant or an Escrow Agent (as
defined below) a certificate or certificates for such shares of Restricted
Stock of the Company, as determined by the Committee ("Restricted Shares"),
which Restricted Shares shall be registered in the name of such Participant.
The Participant shall have all of the rights of a holder of Common Stock with
respect to such Restricted Shares except as to such restrictions as appear on
the face of the certificate. The Committee may designate the Company or one or
more of its employees to act as custodian or escrow agent for the certificates
("Escrow Agent").
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<PAGE> 36
(c) Terms, Conditions and Restrictions. Restricted Shares
shall be subject to such terms and conditions, including vesting and forfeiture
provisions, if any, and to such restrictions against resale, transfer or other
disposition [as may be provided in this Amended Plan and, consistent
therewith,] as may be determined by the Committee at such time as it grants a
Restricted Stock Award to a Participant. Any new or different Restricted
Shares or other securities resulting from any adjustment of such Restricted
Shares pursuant to Section 8 hereof shall be subject to the same terms,
conditions and restrictions as the Restricted Shares prior to such adjustment.
The Committee may in its discretion, remove, modify or accelerate the release
of restrictions on any Restricted Shares as it deems appropriate. In the event
of the Participant's death, all transfers or other restrictions to which the
Participant's Restricted Shares are subject shall immediately lapse, and the
Deceased Participant's legal representative or person receiving such Restricted
Shares under the Deceased Participant's will or under the laws of descent and
distribution shall take such Restricted Shares free of any such transfer or
other restrictions.
(d) Dividends and Voting Rights. Except as otherwise
provided by the Committee, during the restricted period the Participant shall
have the right to receive dividends from and to vote the Participant's
Restricted Shares.
(e) Deposit Share Program. Subject to the provisions set
forth below and subject to rules established by the Committee, /Participants
may,/ pursuant to the Company's Deposit Share Program, [(1) Employees may]
elect to /receive/ [acquire] shares of Common Stock /in lieu/ [with a Fair
Market Value up to a percentage designated by the Committee] of cash bonuses
under the Company's incentive compensation programs designated by the Committee
/("Bonus Shares")/ [, and (2) Non-Employee Directors shall be entitled to
acquire shares of Common Stock with a Fair Market Value equal to up to 50% of
the compensation of such Non-Employee Director for service as a director of the
Company, including for service as a member of a Committee of the Board, during
the preceding calendar year (in each case, "Deposit Shares").] /Bonus/
[Deposit] Shares shall be issued in an amount /equal to the dollar amount of
bonuses/ [which] the Deposit Share Participant (as defined in Section 6(e)(i)
below) elects to /receive in Common Stock (subject to Committee limits as
provided for in Section 6(e)(i) below/ [use to acquire Common Stock (subject to
limits provided in this Section 6(e))] divided by the Fair Market Value of a
share of Common Stock on the Award Date (as defined in Section 6(e)(ii) below).
For purposes hereof, the term "Fair Market Value" shall be as determined by the
Committee, except that during any period the Common Stock is traded on a
recognized exchange, Fair Market Value shall be based upon the /average of the
highest and lowest market prices of/ [last] sales [price] of Common Stock on
the principal securities exchange on which the same is traded on the Award Date
or if no sales of Common Stock have taken place on such date, the /average of
the highest and lowest market prices/ [last sales price] on the first date
following the Award Date on which /selling prices are quoted/ [sales occur].
Deposit Share Participants electing to deposit /Bonus/ [Deposit] Shares with
the Company under the Deposit Share Program and receive Restricted Stock Awards
in connection therewith shall do so as follows:
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<PAGE> 37
(i) The Committee shall notify each
Participant [who is an Employee] selected to participate in
the Deposit Share Program [and each Non-Employee Director
(such Employees and Non-Employee Directors together referred
to as] "Deposit Share Participant[s]") of the maximum [amount]
/number (and any lesser number) of Bonus Shares/ [which] they
are permitted to /acquire and deposit/ [use to acquire Common
Stock to be deposited] with the Escrow Agent, and Deposit
Share Participants may choose to deposit any number of /Bonus/
[Deposit] Shares they are permitted to deposit under the
Committee rules (/Bonus/ [Deposit] Shares so acquired and
deposited are herein sometimes referred to as the "Original
Deposit"). /If the Amended Plan is not approved by the
Company's shareholders as provided in Section 13, any election
by a Deposit Share Participant to acquire Bonus Shares shall
be cancelled, the Bonus Shares shall be returned to the
Company, together with any dividends paid thereon (including
Common Stock acquired with dividends paid thereon), and the
Participant shall receive the cash amount used to acquire
Bonus Shares together with interest determined by the
Committee as appropriate. Such cancellation shall also cause
a cancellation of any Restricted Shares deposited by the
Company and a forfeiture of any dividends paid on the
Restricted Shares (including Common Stock acquired with
dividends paid on Restricted Shares)./
(ii) Deposit Share Participants must make
their irrevocable election on or before the date
designated by the Committee or if no date is designated, then
at least thirty (30) days prior to the Award Date. The Award
Date ("Award Date") for each year in which a Deposit Share
Participant is eligible to receive [Deposit ] /Bonus/ Shares
shall be February 15, or the Monday following February 15 in
any year in which February 15 falls on a Saturday or Sunday,
unless the Committee designates a different Award Date. [The
Award Date for Employees and Non-Employee Directors need not
be the same.] /Deposit Share Participants who are subject to
the provisions of Section 16 of the Securities and Exchange
Act of 1934, as amended, must make their irrevocable election
on or before the date designated by the Committee or if no
such date is designated, then before July 15 of the year
preceding the Award Date, but in any event at least six (6)
months prior to the Award Date unless the Committee
establishes a different date./ The Committee shall have the
discretion to waive any date or deadline established pursuant
to this section. The Committee may also allow a Deposit Share
Participant [who is an Employee to acquire Deposit Shares in
lieu of a bonus, or] to deliver a check equal to the dollar
amount of bonuses for which the Deposit Share Participant
/elects to receive/ [may purchase Deposit] /Bonus/ Shares, in
which case the full amount of the cash bonus (less applicable
withholding) will be paid to the /Deposit Share Participant
and the Deposit Share Participant/ [Employee and the Employee]
shall deliver a check to the Company, subject to the
limitations established by the Committee.
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<PAGE> 38
(iii) All elections shall be in writing and
filed with the Committee or its designee. Such elections may,
if permitted by the Committee, also specify one of the
following alternatives regarding the manner in which dividends
are paid on all deposited stock (including /Bonus/ [Deposit]
Shares, shares purchased with dividends, if any, and matching
Restricted Shares (but only if the Committee allows dividends
on such Restricted Shares to be paid and credited)):
(1) Dividends shall be accumulated by
the Escrow Agent for the purchase of additional shares for
the Deposit Share Participant's account; or
(2) Dividends shall be paid currently
to the Deposit Share Participant.
/Prior to the date the Amended Plan is approved by the
Company's shareholders, dividends shall be accumulated by the
Escrow Agent for the purchase of additional shares of Common
Stock for the Deposit Share Participant's account. Subsequent
to the date of shareholder approval, a/ [A] Deposit Share
Participant shall be deemed to have elected Alternative (1)
unless or until the Deposit Share Participant delivers written
notice to the /Vice President-Human Resources/ [Company]
selecting Alternative (2) as the method by which dividends are
to be paid and credited.
(iv) As soon as practicable following an Original
Deposit, the Company shall match the /Bonus/ [Deposit]
Shares deposited with the Escrow Agent for the Deposit Share
Participant's account by depositing [(1) for an Employee,] up
to one (1) Restricted Share for each /Bonus/[Deposit] Share in
the Original Deposit, as determined by the Committee /.The/
[, and (2) for a Non-Employee Director, One (1) Restricted
Share for each Deposit Share in the Original Deposit.
Restricted Shares shall be distributed to the Deposit Share
Participant entitled thereto as promptly as practicable after
they vest.]
[(v) With respect to Employee, the] /The/ Restricted
Shares deposited by the Company shall vest in accordance with
the schedule determined by the Committee. /Restricted Shares
shall be distributed promptly as they vest./ [With respect to
Non- Employee Directors, one-half of the Restricted Shares
shall vest on the third anniversary of the date of the Award
and the remaining one-half of the Restricted Shares shall vest
on the sixth anniversary of the date of the Award. Awards of
Restricted Stock shall be forfeited upon the Non-Employee
Director ceasing to be a director of the Company for any
reason, except in the case of death, as hereinafter provided
in Section 6(e)(ix), except in the case of a Permissible Event
(as hereinafter defined) or except as otherwise provided by
the Committee. If a
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<PAGE> 39
Non-Employee Director ceases to be a director by reason of a
Permissible Event, the Restricted Shares shall vest, with
respect to each vesting period as established under the Award,
at the date the Non-Employee Director ceases to be a director
(the "Termination Date") in a percentage (computed to the
nearest whole percent) equal to the number of days elapsed
from the Award Date to the Termination Date, divided by the
number of days in the applicable vesting period. Any
Restricted Shares that do not vest by reason of a Permissible
Event shall be forfeited unless otherwise provided by the
Committee. A Permissible Event shall be any termination of
service as a director of the Company by reason of:]
[(1) the Non-Employee Director being
ineligible for continued service as a director of the
Company under the Company's retirement policy; or]
[(2) the Non-Employee Director's taking a
position with or providing services to a governmental,
charitable or educational institution whose policies prohibit
continued service on the Board or due to the fact that
continued service as a director would be a violation of law.]
[The Committee may, in its sole discretion, provide that some
or all Restricted Stock shall immediately become vested in the
circumstances with respect to immediate vesting of Options
contemplated by Section 5(b).]
/(v)/ [(vi)] Shares purchased with dividends
paid on deposited stock (Original Deposit, Restricted Stock or
any shares purchased with dividends) may be withdrawn from a
Deposit Share Participant's account at any time /subsequent to
the date the Amended Plan is approved by the Company's
shareholders/.
/(vi)/ [(vii)] A Deposit Share Participant's
interests in the Original Deposit or the Restricted Stock may
not be sold, pledged, assigned or transferred in any manner,
other than by will or the laws of descent and distribution, so
long as such shares are held by the Escrow Agent, and any such
sale, pledge, assignment or other transfer shall be null and
void; provided, however, a pledge of the Deposit Share
Participant's interest in the Original Deposit may be
permitted in accordance with rules which the Committee may
establish. [To the extent Restricted Shares become vested, at
the same time as Restricted Shares are released by the Escrow
Agent, the Escrow Agent shall also release a percentage
(computed to the nearest whole percent) of the Original
Deposit equal to the number of Restricted Shares then being
released, divided by the number of Restricted Shares deposited
by the Company with respect to the Original Deposit.]
/(vii)/ [(viii)] /Subsequent to the approval
of the Amended Plan by the Company's shareholders as provided
for in Section 13, any/ [Any] or all of the
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<PAGE> 40
Original Deposit may be withdrawn at any time. Such
withdrawal shall cause a forfeiture of any non-vested
Restricted Shares attributable to the /Bonus/ [Deposit] Shares
being withdrawn. Any /Bonus/ [Deposit] Shares withdrawn shall
be deemed to have been withdrawn under /paragraph 6(e)(v)/
[Section 6(e)(vi)] to the extent there are any such shares,
and then under this /paragraph 6(e)(v)/ [Section 6(e)(viii)].
/(viii)/ [(ix)] In the event the /Deposit
Share Participant's/ employment with the Company or its
subsidiaries [of a Deposit Share Participant who is an
Employee] is terminated during the vesting period by reason of
the Deposit Share Participant's death, the vesting
requirements shall be deemed fulfilled upon the date of such
termination of employment/, subject to approval of the Amended
Plan by the Company's shareholders prior to September 1,
1994/. [In the event a Non-Employee Director's service as a
director of the Company is terminated during the vesting
period by reason of the Non- Employee Director's death, the
vesting requirements shall be deemed to be fulfilled on the
date of such termination of service.]
/(ix)/ [(x)] In the event /of/ [the]
/Deposit Share Participant's termination of/ employment
with the Company and its subsidiaries [of a Deposit Share
Participant who is an Employee is terminated] during the
vesting period for any reason other than death, the Restricted
Shares, to the extent not otherwise vested, shall
automatically be forfeited and returned to the Company unless
the Committee shall, in its sole discretion, otherwise
provide.
7. RIGHT TO TERMINATE EMPLOYMENT. Nothing in the Amended
Plan or in any Award granted under the Amended Plan [to a Participant who is an
Employee] shall confer upon any [such] Participant the right to continue in the
employment of the Company or affect the right of the Company to terminate
[such] a Participant's employment at any time, nor cause any Award granted to
become exercisable as a result of the election by the Company of its right to
terminate at any time the employment of [such] a Participant subject, however,
to the provisions of any agreement of employment between the Company and /the/
[such] Participant. [Nothing in the Amended Plan or in any Award of Restricted
Stock under the Amended Plan to a Participant who is a Non-Employee Director
shall confer upon such Director the right to continue as a member of the
Board.]
8. DILUTION AND OTHER ADJUSTMENTS. In the event of any
change in the outstanding shares of the Company ("capital adjustment") for any
reason including, but not limited to, any stock split, stock dividend,
recapitalization, merger, consolidation, reorganization, combination or
exchange of shares or other similar event, an adjustment in the number or kind
of shares of Common Stock subject to, the Option price per share under, and (if
appropriate) the terms and conditions of, any outstanding Award, shall be
modified or provided for by the Committee in a manner consistent with such
capital adjustment, and the shares reserved for issuance under this
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<PAGE> 41
Amended Plan shall likewise be modified. The determination of the Committee as
to any such adjustment shall be conclusive and binding for all purposes of the
Amended Plan.
9. FORM OF AGREEMENTS WITH PARTICIPANTS. Each Option
Agreement and/or Restricted Stock Agreement to be executed by a Participant
shall be in such form as the Committee shall in its discretion determine.
10. LEGEND ON CERTIFICATES; RESTRICTIONS ON TRANSFER. The
Company may, to the extent deemed necessary or advisable, endorse an
appropriate legend referring to any restrictions imposed by state law or the
Securities Act of 1933, as amended, upon the certificate or certificates
representing any shares issued or transferred to the Participant /upon the
exercise of any option granted under the Amended Plan/ [pursuant to Awards].
11. SECURITIES ACT COMPLIANCE. Notwithstanding any provision
of the Amended Plan to the contrary, the Committee shall take whatever action
it may consider necessary or appropriate to comply with the Securities Act of
1933, as amended, or any other then applicable securities law, including
limiting the granting and exercise of Options or the issuance of shares
thereunder.
12. AMENDMENT, EXPIRATION AND TERMINATION OF THE AMENDED
PLAN. Under the Amended Plan, Awards may be granted at any time and from time
to time before the tenth anniversary date of adoption of amendments to this
/Amended/ Plan by the Company's Board of Directors [on January 27, 1994 (the
date on which this Plan was last previously amended)] at which time the Amended
Plan will expire, except as to Awards then outstanding. The foregoing
notwithstanding, no Incentive Stock Options may be granted after January 1,
2001. The Amended Plan will remain in effect with respect to outstanding
Awards until such Awards have been exercised or have expired, as the case may
be. The Amended Plan may be terminated or modified at any time by the Board of
Directors before the expiration of the Amended Plan, except with respect to any
Awards then outstanding under the Amended Plan, provided that /no such
amendment may be adopted that would cause the Amended Plan not to qualify under
Rule 16b-3, and that/ any increase in the maximum number of shares subject to
Awards specified in Section 3 or in Section 4 hereof shall be subject to the
approval of the Company's shareholders unless made pursuant to the provisions
of Section 8 hereof. No amendment of the Amended Plan shall adversely affect
any right of any Participant with respect to any Award theretofore granted
under the Amended Plan.
13. EFFECTIVE DATE. /The Effective Date of the Amended Plan
is January 1, 1994, subject to approval of the amended Plan by the Company's
shareholders prior to September 1, 1994./ If the Amended Plan is not approved
by the Company's shareholders prior to September 1, /1994/ [1997], the MGIC
Investment Corporation 1991 Stock /Option/ [Incentive] Plan as in effect
immediately prior to /the Effective Date/ [March 6, 1997] shall remain in
effect and shall not be deemed to have been amended.
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<PAGE> 42
14. GOVERNING LAW. The Amended Plan and any Option Agreement
and/or Restricted Stock Agreement shall be governed by and construed in
accordance with the internal substantive laws, and not the choice of law rules,
of the State of Wisconsin.
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<PAGE> 43
MGIC INVESTMENT CORPORATION
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD MAY 1, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS OF MGIC INVESTMENT CORPORATION
The undersigned hereby appoints WILLIAM H. LACY and SHELDON B. LUBAR, and
either one of them, as proxy and attorney-in-fact of the undersigned, with full
power of substitution, to represent and vote, as designated below, all shares
of Common Stock of MGIC Investment Corporation which the undersigned is
entitled to vote at the Annual Meeting of Shareholders of such Corporation to
be held in Vogel Hall, Marcus Center for the Performing Arts, 123 East State
Street, Milwaukee, Wisconsin, on Thursday, May 1, 1997, 9:00 a.m. Central Time,
and at any adjournment thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDERS. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR ALL NOMINEES LISTED IN ITEM 1 AND FOR ITEMS 2 AND 3.
The undersigned acknowledges receipt of the Annual Report of the
Corporation and the Notice of the Annual Meeting and accompanying Proxy
Statement of the Corporation.
DETACH BELOW AND RETURN USING THE ENVELOPE PROVIDED
MGIC INVESTMENT CORPORATION ANNUAL MEETING
The Board of Directors recommends a vote FOR all nominees listed in Item 1 and
FOR Items 2 and 3.
<TABLE>
<S><C>
1. ELECTION OF DIRECTORS 1 - KARL E. CASE 2 - WILLIAM A. MCINTOSH / /FOR all listed nominees
3 - LESLIE M. MUMA 4 - PETER J. WALLISON / / WITHHOLD AUTHORITY to vote for all listed nominees
(Instructions: To withhold authority to vote for any indicated
nominee, write the number(s) of the nominee(s) in the box provided to
the right.) / /
2. Approve amendments to the MGIC Investment Corporation 1991 Stock Incentive Plan. / /FOR / /AGAINST / /ABSTAIN
3. Ratify the appointment of Price Waterhouse LLP as the independent accountants of the
Corporation. / /FOR / /AGAINST / /ABSTAIN
4. In his discretion, each Proxy is authorized to vote upon such other business as may properly come before the meeting
or any adjournment thereof.
</TABLE>
<TABLE>
<S><C>
Address Change? Date _______________________ NO. OF SHARES
MARK BOX / / / /
Indicate changes below:
SIGNATURE(S) IN BOX
NOTE: Please sign exactly as your name appears hereon. Joint owners should
each sign personally. A corporation should sign full corporate name by duly
authorized officers and affix corporate seal. When signing as attorney,
executor, administrator, trustee or guardian, give full title as such.
</TABLE>
