<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
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(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
CMAC(R)
- --------------------------------------------------------------------------------
CMAC INVESTMENT CORPORATION
1601 Market Street
Philadelphia, PA 19103
April 7, 1997
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
CMAC Investment Corporation, which will be held at 1601 Market Street, 13th
Floor, Philadelphia, PA 19103, at 10:00 a.m. on Wednesday, May 14, 1997.
The accompanying Notice of Annual Meeting of Stockholders and Proxy
Statement describe the items to be considered and acted upon by the
stockholders.
Whether or not you plan to attend this meeting, please sign, date and
return the enclosed proxy card as soon as possible so that your shares can be
voted at the meeting in accordance with your instructions. If you attend the
meeting, you may revoke your proxy, if you wish, and vote personally. It is very
important that your stock be represented at the meeting.
Sincerely,
/s/ Thomas J. Shelly Jr.
THOMAS J. SHELLY, JR.
Secretary
<PAGE> 3
CMAC INVESTMENT CORPORATION
1601 Market Street
Philadelphia, PA 19103
------------------------
NOTICE OF 1997 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON
MAY 14, 1997
------------------------
TO THE STOCKHOLDERS OF
CMAC INVESTMENT CORPORATION:
Notice is hereby given that the annual meeting of the stockholders of CMAC
Investment Corporation, a Delaware corporation (hereinafter the "Company"), will
be held at 1601 Market Street, 13th Floor, Philadelphia, PA, on Wednesday, May
14, 1997 at 10:00 a.m., local time, for the following purposes:
1. To elect three directors for terms of three years each, and until
their successors shall be elected and qualified.
2. To ratify the appointment of Deloitte & Touche LLP as the Company's
independent auditors for the year ending December 31, 1997.
3. To transact such other business as may properly come before the
meeting or any adjournments thereof.
Only stockholders of record as of the close of business on March 17, 1997
will be entitled to notice of the annual meeting and to vote at the annual
meeting and any adjournments thereof. A list of stockholders will be available
for inspection during normal business hours from April 29, 1997 through May 14,
1997 at the offices of the Company at 1601 Market Street, 12th Floor,
Philadelphia, PA 19103.
By Order of the Board of Directors
THOMAS J. SHELLY, JR.
Secretary
Philadelphia, PA
April 7, 1997
EACH STOCKHOLDER IS URGED TO COMPLETE, SIGN AND RETURN THE ENCLOSED PROXY CARD
IN THE ENVELOPE PROVIDED, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED
STATES. THE GIVING OF SUCH PROXY DOES NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IN
THE EVENT YOU ATTEND THE MEETING. YOU MAY REVOKE YOUR PROXY AT ANY TIME BEFORE
IT IS VOTED.
<PAGE> 4
CMAC INVESTMENT CORPORATION
1601 Market Street
Philadelphia, PA 19103
------------------------
PROXY STATEMENT
FOR
1997 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON
MAY 14, 1997
------------------------
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of CMAC Investment Corporation (hereinafter
the "Company"), for use at the 1997 annual meeting of stockholders to be held at
1601 Market Street, 13th Floor, Philadelphia, PA, on Wednesday, May 14, 1997 at
10:00 a.m., local time, and at any adjournments thereof. This Proxy Statement
and the accompanying Proxy Card are expected to be distributed to stockholders
on or about April 7, 1997.
The cost of solicitation of proxies will be borne by the Company. In
addition to the use of the mails, Corporate Investor Communications, Inc.,
Carlstadt, New Jersey, a proxy solicitation firm, has been employed to solicit
proxies by mail, telephone or personal solicitation. It is anticipated that the
fees to be paid to Corporate Investor Communications by the Company will not
exceed $10,000. Proxies may also be solicited by officers and directors and a
small number of employees of the Company who will not be specially compensated
for such services. The Company will also request banks, brokers and other
custodians, nominees and fiduciaries to forward copies of the proxy material to
their principals and to request authority for the execution of proxies. The
Company will, upon request, reimburse such persons for reasonable expenses
incurred in that regard.
The Company's annual report to stockholders for the year ended December 31,
1996, including audited financial statements, is being mailed to stockholders
with this Proxy Statement but does not constitute a part of this Proxy
Statement.
PURPOSE OF THE MEETING
At the annual meeting, the stockholders will be asked to (i) elect three
directors to hold office as provided by law and the by-laws of the Company, (ii)
ratify the appointment of Deloitte & Touche LLP as the Company's independent
auditors for the year ending December 31, 1997, and (iii) transact such other
business as may properly come before the meeting.
VOTING AT THE MEETING
Holders of the shares of common stock of the Company ("Common Stock"), of
record at the close of business on March 17, 1997 are entitled to vote at the
meeting. As of that date, 22,426,504 shares of Common Stock were outstanding.
Each stockholder entitled to vote shall have the right to one vote for each
share outstanding in such stockholder's name.
The Company presently has no other class of stock outstanding and entitled
to be voted at the meeting. The holders of a majority of the shares entitled to
vote, present in person or represented by proxy, constitutes a quorum. The
affirmative vote of a plurality of the shares present in person or represented
by proxy at the meeting and entitled to vote is required for the election of
directors. The affirmative vote of a majority of the shares present in person or
represented by proxy at the meeting and entitled to vote is required to approve
and ratify (i) the appointment of Deloitte & Touche LLP, or (ii) to take action
with respect to any other matter as may be properly brought before the meeting.
1
<PAGE> 5
With regard to election of directors, votes may be cast in favor or
withheld; votes that are withheld will be excluded entirely from the vote and
will have no effect.
Abstentions may be specified on the proposals to ratify the Company's
auditors. Abstentions may not be specified for the election of directors.
Abstentions will be considered present and entitled to vote at the meeting but
will not be counted as votes cast in the affirmative.
Brokers that are member firms of the New York Stock Exchange and who hold
shares in street name for customers have the authority to vote those shares with
respect to the election of directors and the ratification of the appointment of
Deloitte & Touche LLP if they have not received instructions from a beneficial
owner. Assuming that sufficient shares are present (so that a quorum may be
obtained) for each proposal, a failure by brokers to vote those shares will have
no effect in the outcome of the election of directors or the approval of any
proposal at the meeting because such shares will not be considered shares
present and entitled to vote with respect to such matters.
Shares cannot be voted at the meeting unless the holder of record is
present in person or is represented by proxy. The enclosed Proxy Card is a means
by which a stockholder may authorize the voting of his or her shares at the
meeting. The shares of Common Stock represented by each properly executed Proxy
Card will be voted at the meeting in accordance with each stockholder's
directions. Stockholders are urged to specify their choices by marking the
appropriate boxes on the enclosed Proxy Card; if no choice has been specified,
the shares will be voted as recommended by the Board of Directors. If any other
matters are properly presented to the meeting for action, the proxy holders will
vote the proxies (which confer discretionary authority to vote on such matters)
in accordance with their best judgment.
Execution of the accompanying Proxy Card will not affect a stockholder's
right to revoke it by giving written notice of revocation to the Secretary of
the Company before the proxy is voted, by voting in person at the meeting, or by
executing a later-dated proxy that is received by the Company before the
meeting.
YOUR PROXY VOTE IS IMPORTANT TO THE COMPANY. ACCORDINGLY, YOU ARE ASKED TO
COMPLETE, SIGN AND RETURN THE ACCOMPANYING PROXY CARD WHETHER OR NOT YOU PLAN TO
ATTEND THE MEETING. IF YOU PLAN TO ATTEND THE MEETING TO VOTE IN PERSON AND YOUR
SHARES ARE REGISTERED WITH THE COMPANY'S TRANSFER AGENT (THE BANK OF NEW YORK)
IN THE NAME OF A BROKER, BANK OR OTHER CUSTODIAN, NOMINEE OR FIDUCIARY, YOU MUST
SECURE A PROXY FROM SUCH PERSON ASSIGNING YOU THE RIGHT TO VOTE YOUR SHARES.
ELECTION OF DIRECTORS
The Company's Amended and Restated Certificate of Incorporation provides
that the Board of Directors of the Company is classified into three classes of
directors having staggered terms. Each class is as equal in size as possible.
Each class holds office for a term of three years and until the election and
qualification of their respective successors or until their earlier removal or
resignation.
Three directors are to be elected at the 1997 annual meeting. The terms of
three current directors, Frank P. Filipps, James C. Miller and Anthony W.
Schweiger, will expire at the 1997 annual meeting. The Board of Directors has
nominated these three current directors for election as directors of the Company
for terms of office that would expire in 2000. The remaining six directors will
continue to serve in accordance with their prior election or appointment.
The nominees have consented to be named and to serve if elected or
confirmed. Unless otherwise instructed by the stockholders, the persons named in
the proxies will vote the shares represented thereby FOR the election of such
nominees. The Board of Directors believes all nominees will be able to serve as
directors; however, if this should not be the case, the proxies may be voted for
any substitute nominee to be designated by the Board of Directors.
The three directors are to be elected by a plurality of the shares present
in person or represented by proxy at the meeting and entitled to vote. The Board
of Directors unanimously recommends a vote FOR each of the nominees.
2
<PAGE> 6
REQUIREMENTS FOR ADVANCE NOTIFICATION OF NOMINEES
Article Fifth of the Amended and Restated Certificate of Incorporation of
the Company prohibits a nominee from being elected a director unless the name of
the nominee, together with such consents and information concerning present and
prior occupations, transactions with the Company or its subsidiaries, and other
matters as may at the time be required by or pursuant to the by-laws, is filed
with the Secretary of the Company no later than the time fixed by, or pursuant
to, the by-laws immediately preceding the annual or special meeting at which
such person is to be a candidate for director.
Section 4.13(b) of the Company's by-laws provides that any stockholder
entitled to vote for the election of directors at a meeting may nominate a
director for election if written notice of the stockholder's intent to make such
a nomination is received by the Secretary of the Company not less than 14 days
nor more than 50 days prior to any meeting of the stockholders called for the
election of directors with certain exceptions. This notice must contain or be
accompanied by the following information:
(a) the name and residence of the stockholder who intends to make the
nomination;
(b) a representation that the stockholder is a holder of record of the
Company's voting stock and intends to appear in person or by proxy at the
meeting to nominate the person or persons specified in the notice;
(c) such information regarding each nominee as would be required in a
proxy statement filed pursuant to the rules of the Securities and Exchange
Commission had proxies been solicited with respect to the nominee by the
management or Board of Directors of the Company;
(d) a description of all arrangements or understandings among the
stockholder and each nominee and any other person or persons (naming such
person or persons) pursuant to which the nomination or nominations are to
be made by the stockholder; and
(e) the consent of each nominee to serve as a director of the Company.
Pursuant to the above requirements, appropriate notices in respect of
nominations for directors must be received by the Secretary of the Company no
later than April 23, 1997.
INFORMATION REGARDING NOMINEES FOR ELECTION AS DIRECTORS
AND REGARDING CONTINUING DIRECTORS
The information provided herein as to personal background has been provided
by each director and nominee as of March 15, 1997.
NOMINEES FOR ELECTION AT THE
1997 ANNUAL MEETING FOR
TERMS EXPIRING IN 2000
FRANK P. FILIPPS........... Mr. Filipps joined the Company and Commonwealth
Mortgage Assurance Company, the Company's operating
subsidiary ("CMAC"), as Senior Vice President and
Chief Financial Officer in November 1992, and
became Executive Vice President and Chief Operating
Officer of the Company and CMAC in 1994. In January
1995 he became President of the Company and
Chairman of the Board, President and Chief
Executive Officer of CMAC. In January 1996 Mr.
Filipps was named Chief Executive Officer of the
Company. From 1975 until October 1992 he was an
executive with American International Group, Inc.,
an insurance holding company, serving as Vice
President and Treasurer from 1989 to 1992. He has
been a director of Imperial Credit Mortgage
Holdings since November 1995. He has been a
director of the Company since May 1995. Age: 49.
3
<PAGE> 7
JAMES C. MILLER............ Mr. Miller was President of the Company from July
1992 through December 1994. He served as President
and Chief Operating Officer and a director of CMAC
from October 1983 until August 1992. From August
1992 through December 1994 he served as Chairman of
the Board, President and Chief Executive Officer of
CMAC. He has been a director of the Company since
July 1992. Age: 66.
ANTHONY W. SCHWEIGER....... Mr. Schweiger is an independent consultant
providing specialized management services for
turnaround situations and complex operations
problems for a variety of businesses. He was
Managing Director of the Stafford Companies, an
investment banking firm, from November 1994 until
April 1995. From November 1993 through August 1994
he served as the Executive Vice President of First
Advantage Mortgage Corporation, a mortgage banking
company. Prior to that he served as President and
Chief Executive Officer of Meridian Mortgage
Corporation, a mortgage banking company, from 1987
until December 1992. He has been a director of the
Company since November 1992. Age: 55.
DIRECTORS CONTINUING IN OFFICE
WITH TERMS EXPIRING IN 1999
DAVID C. CARNEY............ Mr. Carney has been the Executive Vice President of
Jefferson Health Systems since October 1996. From
April 1995 until October 1996 he was Chief
Executive Officer of D.C. Carney Consulting
Service. He served as Chief Financial Officer of
CoreStates Financial Corp, a banking and financial
services holding company from April 1991 until
April 1995. He has been a director of the Company
since November 1992. Age: 59.
RONALD W. MOORE............ Mr. Moore has been an Adjunct Professor of Business
Administration, Graduate School of Business
Administration, Harvard University since 1990. He
is a director of Orion Capital Corporation. Mr.
Moore has been a director of the Company since
November 1992. Age: 51.
CLAIRE M. FAGIN............ Dr. Fagin is an independent consultant. She was the
Leadership Professor and Dean Emeritus of the
School of Nursing, University of Pennsylvania 1992
until June 1996. She had been associated with the
University of Pennsylvania since 1977, where she
served as Interim President from 1993 to 1994. From
1977 through 1992 she was the Dean of the School of
Nursing of the University of Pennsylvania. She is a
director of Salomon Inc and serves on the Advisory
Committee of Provident Mutual Life Insurance
Company where she retired from her directorship in
December 1996. She has been a Director of the
Company since July 1994. Age : 70.
DIRECTORS CONTINUING IN OFFICE
WITH TERMS EXPIRING IN 1998
HERBERT WENDER............. Mr. Wender has served as Chairman of the Board of
Directors of the Company since August 1992. He was
Chairman of the Board and Chief Executive Officer
of CMAC from June 1983 until July 1992. Mr. Wender
has been Chairman of the Board and Chief Executive
Officer of Commonwealth Land Title Insurance
Company ("Commonwealth"), a title insurance
company, since June 1983. He has been a director of
the Company since July 1992. Age: 59.
4
<PAGE> 8
JAMES W. JENNINGS.......... Mr. Jennings has been a partner in the Philadelphia
office of the law firm of Morgan, Lewis & Bockius
LLP (which firm is counsel to the Company) since
1970. He has been a director of the Company since
January 1993. Age: 60.
ROBERT W. RICHARDS......... Mr. Richards was Chairman of the Board of Directors
of Source One Mortgage Services Corporation, a
mortgage banking company, from 1989 to 1996. He
held a number of managerial positions with Source
One from 1971 through 1996, serving as President
from 1987 to 1989. He has been a director of the
Company since November 1992. Age: 54.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
The Company believes that during the year ended December 31, 1996 its
directors and executive officers complied with all applicable filing
requirements of Section 16(a) of the Securities Exchange Act of 1934. The
foregoing statement is based solely upon a review of copies of reports furnished
to the Company and written representations of its directors and executive
officers that no other reports were required.
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table indicates, as of February 15, 1997, information
relating to each person known to be the beneficial owner of more than five
percent (5%) of the Company's Common Stock.
<TABLE>
<CAPTION>
SHARES VOTING POWER INVESTMENT POWER
BENEFICIALLY PERCENT ------------------ ------------------
NAME AND BUSINESS ADDRESS OWNED(1)(2) OF CLASS(3) SOLE SHARED SOLE SHARED
- ----------------------------------- ----------- ----------- ------ --------- ------ ---------
<S> <C> <C> <C> <C> <C> <C>
Morgan Stanley Group Inc. ......... 1,383,410 6.18% -0- 1,383,410 -0- 1,383,410
1585 Broadway New York, New York
10036
</TABLE>
- ---------------
(1) All the information in the table is presented in reliance on information
disclosed by the named individual and group in Schedule 13G, filed with the
Securities and Exchange Commission reporting as of February 15, 1997 as
amended.
(2) Van Kampen American Capital Asset Management Incorporated, a registered
investment advisor and wholly owned subsidiary of Morgan Stanley Group Inc.
is the beneficial owner of 1,295,060 of the shares reported as a result of
serving as investment manager with respect to various investment accounts.
(3) The percentage has been determined based upon the number of shares
outstanding as of December 31, 1996.
OWNERSHIP OF COMMON STOCK BY DIRECTORS AND OFFICERS
The following table sets forth, as of January 22, 1997, all shares of
Common Stock of the Company which are deemed to be beneficially held by each
director of the Company, its Chief Executive Officer, the next four
5
<PAGE> 9
most highly compensated executive officers of the Company, and the directors and
all current executive officers of the Company as a group.
<TABLE>
<CAPTION>
NUMBER OF
SHARES PERCENTAGE
BENEFICIALLY OF
BENEFICIAL OWNER OWNED(1)(2)(4) CLASS(5)
- ----------------------------------------------------------------- -------------- -----------
<S> <C> <C>
Herbert Wender................................................... 213,500 *
Frank P. Filipps................................................. 87,951 *
James C. Miller.................................................. 58,949(3)(6) *
Douglas J. MacLeod............................................... 61,671 *
Paul F. Fischer.................................................. 68,850 *
C. Robert Quint.................................................. 42,984 *
Harry A. Levine.................................................. 16,795(7) *
David C. Carney.................................................. 14,600 *
James W. Jennings................................................ 13,600 *
Ronald W. Moore.................................................. 13,000 *
Anthony W. Schweiger............................................. 14,000 *
Robert W. Richards............................................... 12,500 *
Claire M. Fagin.................................................. 6,000 *
All directors and current executive officers as a group (14
persons)....................................................... 663,043 2.96%
</TABLE>
- ---------------
(1) Shares are "beneficially owned" by a person if such person, directly or
indirectly, has or shares (i) the voting power thereof, including the power
to vote or direct the voting of such shares, or (ii) the power to dispose or
direct the disposition of such shares. In addition, a person is deemed to
beneficially own any shares which such person has the right to acquire
beneficial ownership of within 60 days. Directors and officers have sole
voting and investment powers of the shares shown unless otherwise indicated
(2) Includes shares of Common Stock allocable to employee contributions under
the CMAC Investment Corporation Savings Incentive Plan as of January 31,
1997, as to which the employee has dispositive power, as follows: Mr.
Filipps -- 1,451 shares, Mr. MacLeod -- 1,671 shares, Mr. Fischer -- 1,850
shares, Mr. Levine -- 4,711 shares, and Mr. Quint -- 2,584 Shares, and
current executive officers as a group -- 13,910 shares.
(3) Includes shares of Common Stock allocable to employee contributions under
the CMAC Investment Corporation Savings Incentive Plan as of January 31,
1997, which Mr. Miller accumulated during his time as an employee of the
Company. Under the CMAC Investment Corporation Savings Incentive Plan Mr.
Miller has dispositive power as to 3,749 shares held therein.
(4) Shares adjusted to reflect acquisition of additional shares due to 2-for-1
stock split which occurred December 2, 1996.
(5) "*" indicates less than one percent of class.
(6) Includes 200 shares owned by Mr. Miller's daughter as to which he disclaims
beneficial ownership.
(7) Includes 1,000 shares owned by Mr. Levine as trustee for his father as to
which Mr. Levine disclaims beneficial ownership.
MEETINGS OF THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Board of Directors of the Company met on four occasions during the
period January 1, 1996 through December 31, 1996. The by-laws of the Company
provide that the Board of Directors, by a resolution adopted by a majority of
the entire Board, may designate an Executive Committee or other committees, each
of which shall consist of one or more directors. In addition to the Executive
Committee, the Board of Directors has the following standing committees: Stock
Option and Compensation Committee, Audit Committee, Nominating Committee and
Investment Committee. Each director participated in every Board of Directors
meeting held
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<PAGE> 10
during 1996. Each director participated in at least 75% of the meetings of the
committees that such director serves on.
EXECUTIVE COMMITTEE. For the year ended December 31, 1996, the Executive
Committee was composed of Messrs. Wender (Chairman), Carney, Schweiger and
Filipps. This Committee exercises such management functions as may be delegated
to it by the Board of Directors. The Executive Committee did not meet during the
period from January 1, 1996 through December 31, 1996.
STOCK OPTION AND COMPENSATION COMMITTEE. For the year ended December 31,
1996, the Stock Option and Compensation Committee was composed of three
non-employee directors, Messrs. Richards (Chairman), Moore and Dr. Fagin. This
Committee is responsible for administering the Company's 1992 Stock Option Plan
and 1995 Equity Compensation Plan, and for setting compensation for the
Company's senior managers. The Stock Option and Compensation Committee met two
times during the period January 1, 1996 through December 31, 1996.
AUDIT COMMITTEE. For the year ended December 31, 1996, the Audit Committee
was composed of three non-employee directors, Messrs. Carney (Chairman),
Jennings and Schweiger. This Committee is responsible for recommending to the
Board of Directors the independent auditors to be retained by the Company;
reviewing the financial results of the Company; reviewing with the Company's
independent auditors the scope and results of their audits; reviewing with the
independent auditors and management the Company's accounting and reporting
principles, practices and policies and the adequacy of the Company's accounting,
operating and financial controls. The Audit Committee met four times during the
period between January 1, 1996 and December 31, 1996.
NOMINATING COMMITTEE. For the year ended December 31, 1996, the Nominating
Committee was composed of four non-employee directors, Messrs. Schweiger
(Chairman), Carney, Jennings and Miller. This Committee is responsible for
identifying and recommending to the Company's stockholders nominees to the
Company's Board of Directors. The Nominating Committee considers nominees who
are recommended by stockholders as additional members of the board or to fill
vacancies on the board. Stockholders desiring to submit the names of, and any
pertinent data with respect to, such nominees should send this information, in
writing, to the Chairman of the Nominating Committee, Mr. Anthony W. Schweiger,
in care of the Company. The Nominating Committee met one time during the period
between January 1, 1996 and December 31, 1996. See "ELECTION OF
DIRECTORS -- Requirements for Advance Notification of Nominees".
INVESTMENT COMMITTEE. For the year ended December 31, 1996, the Investment
Committee was composed of Messrs. Moore (Chairman), Filipps, Miller, Richards
and Dr. Fagin. The Investment Committee is responsible for monitoring the
Company's investment portfolio. The Investment Committee met four times during
the period January 1, 1996 through December 31, 1996.
7
<PAGE> 11
EXECUTIVE OFFICERS OF THE COMPANY
Set forth below is certain information regarding each of the current
executive officers of the Company as of March 31, 1997. The executive officers
of the Company are elected annually by the Board of Directors to serve in their
respective capacities until their successors are duly elected and qualified or
until their earlier resignation or removal.
<TABLE>
<S> <C>
Herbert Wender................ Mr. Wender has served as Chairman of the Board of the
Company since August 1992. He was Chairman of the Board and
Chief Executive Officer of CMAC from June 1983 until July
1992. Mr. Wender has been Chairman of the Board and Chief
Executive Officer of Commonwealth since June 1983. He has
been a director of the Company since July 1992. Age: 59.
Frank P. Filipps.............. Mr. Filipps joined the Company and Commonwealth Mortgage
Assurance Company, the Company's operating subsidiary
("CMAC"), as Senior Vice President and Chief Financial
Officer in November 1992, and became Executive Vice
President and Chief Operating Officer of the Company and
CMAC in 1994. In January 1995 he became President of the
Company and Chairman of the Board, President and Chief
Executive Officer of CMAC. In January 1996 Mr. Filipps was
named Chief Executive Officer of the Company. From 1975
until October 1992 he was an executive with American
International Group, Inc., an insurance holding company,
serving as Vice President and Treasurer from 1989 to 1992.
He has been a director of Imperial Credit Mortgage Holdings
since November 1995. He has been a director of the Company
since May 1995. Age: 49.
Paul F. Fischer............... Mr. Fischer was named Vice President, Risk Management of
CMAC in June 1990 and was named Senior Vice President, Risk
Management in June 1991. He was named a Vice President of
the Company in January 1993. He served as Vice President,
Administration and Controller of CMAC from April 1985 until
June 1990. Age: 42.
Harry A. Levine............... Mr. Levine was named Senior Vice President of CMAC in
February 1995. From 1988 to 1995 Mr. Levine served as Vice
President, Regional Sales Manager of CMAC. From 1973 to 1988
Mr. Levine served as Vice President, Sales for Verex
Assurance, Inc., a mortgage guaranty insurer. Age: 63
Douglas J. MacLeod............ Mr. MacLeod was named as Senior Vice President, Marketing of
CMAC in January 1997. From June 1991 to January 1997 he was
Senior Vice President, Marketing and National Sales Manager
of CMAC. He was named a Vice President of the Company in
January 1993. From 1985 until March 1991 he served as a
corporate officer of Financial Insurance Guaranty Company, a
financial guaranty company, in the areas of sales, marketing
and new product development. Age: 50.
</TABLE>
8
<PAGE> 12
<TABLE>
<S> <C>
C. Robert Quint............... Mr. Quint was named Senior Vice President and Chief
Financial Officer of the Company and CMAC in January 1996.
He joined CMAC as Vice President, Administration and
Controller in August 1990. In July 1992 he became Vice
President, Administration and Controller of the Company. In
January 1995, he was named Vice President, Finance and
Controller of the Company and CMAC. From June 1987 until
August 1990 he served as an Assistant Controller for
Reliance Development Group, a commercial real estate
developer. Age: 37.
William W. Carroll............ Mr. Carroll was named Senior Vice President, National Sales
Manager of CMAC in January 1997. From 1986 through 1997 he
served various senior level positions within the mortgage
banking industry, most recently at Barnett Bank as a Senior
Consultant. Age: 59.
Thomas J. Shelly, Jr.......... Mr. Shelly joined CMAC as Vice President and Corporate
Counsel in November 1986 and was named Vice President,
Secretary and General Counsel of CMAC in June 1989. He
became Vice President, Secretary and General Counsel of the
Company in July 1992. Age: 43.
</TABLE>
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
DIRECTOR COMPENSATION
Directors of the Company who do not serve as executive officers of the
Company receive an annual fee for their services of $12,000, a $2,000 annual fee
for serving as a Chairman of a Committee, and a $1,500 fee for each Board of
Directors meeting attended. In addition, non-employee directors are reimbursed
for their out-of-pocket expenses incurred in connection with a Board of
Directors or Committee meeting. Directors who are employees do not receive
additional compensation for such service.
Each new non-employee director automatically receives, at the time of such
director's election, an option to acquire 4,500 shares of Common Stock of the
Company at the fair market value of such Common Stock on the date of the grant.
Thereafter, non-employee directors receive an additional grant of options to
purchase 4,500 shares for each three-year period of service on the board of
directors completed. These options become vested and exercisable in 1,500 share
installments on each of the first, second and third anniversaries of the date of
the grant, provided that the optionee is a director of the Company on such
anniversary dates. Options are exercisable for ten years after the date of the
grant, provided that the optionee remains a director of the Company. The
exercise price of such options is 100% of the fair market value of the Common
Stock on the date of the grant.
9
<PAGE> 13
EXECUTIVE COMPENSATION
The following table sets forth certain information for the years ended
December 31, 1994, 1995 and 1996 as to the compensation of (i) the Chief
Executive Officer of the Company, and (ii) the four most highly compensated
executive officers of the Company other than the Chief Executive Officer.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
------------
AWARDS
------------
ANNUAL COMPENSATION SECURITIES ALL OTHER
NAME AND --------------------- UNDERLYING COMPEN-
PRINCIPAL POSITION YEAR SALARY(1) BONUS OPTIONS(2) SATION(3)
- ----------------------------------------- ---- --------- -------- ------------ ---------
<S> <C> <C> <C> <C> <C>
Frank P. Filipps......................... 1996 $ 250,000 $250,000 0 $ 7,500
President & CEO 1995 $ 219,038 $265,000 40,000 $ 7,500
1994 $ 158,462 $200,000 105,000 $ 7,500
Douglas J. MacLeod....................... 1996 $ 185,000 $173,000 0 $ 7,500
Sr. V.P. Marketing -- CMAC 1995 $ 174,224 $210,000 20,000 $ 7,500
1994 $ 158,462 $170,000 80,000 $ 7,500
Paul F. Fischer.......................... 1996 $ 165,000 $165,000 0 $ 7,500
Sr. V.P. Risk Management -- CMAC 1995 $ 149,417 $180,000 20,000 $ 7,471
1994 $ 118,000 $120,000 80,000 $ 5,900
Harry A. Levine.......................... 1996 $ 168,000 $151,200 0 $ 7,500
Sr. V.P. -- CMAC 1995 $ 152,498 $160,000 16,000 $ 7,500
C. Robert Quint.......................... 1996 $ 160,000 $160,000 0 $ 7,500
Sr. V.P. 1995 $ 119,541 $108,000 16,000 $ 5,977
1994 $ 94,769 $ 60,000 40,000 $ 4,738
</TABLE>
- ---------------
(1) Includes salary deferrals and employee contributions to the Company's
Savings Incentive Plan.
(2) Previously granted shares have been adjusted to reflect the 2-for-1 stock
dividend that occurred December 2, 1996.
(3) Includes matching contributions by the Company under the Savings Incentive
Plan.
The following table sets forth certain information concerning exercises of
stock options during the year ended December 31, 1996 and the value of
unexercised stock options at December 31, 1996 for (i) the Chief Executive
Officer of the Company, and (ii) the four most highly compensated executive
officers of the Company other than the Chief Executive Officer.
AGGREGATED OPTION/EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR END OPTION/VALUES(1)
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING OPTIONS AT IN-THE-MONEY OPTIONS AT
SHARES DECEMBER 31, 1996 DECEMBER 31, 1996
ACQUIRED VALUE -------------------------- ----------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------- ----------- ----------- ----------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Frank P. Filipps...... 0 $ 0 71,250 118,750 $1,829,765.63 $2,328,046.88
Paul F. Fischer....... 0 $ 0 56,000 80,000 $ 1,441,500 $ 1,620,000
Harry A. Levine....... 3,000(2) $ 64,687.50 9,334 25,000 $ 242,112.25 $ 433,031.25
Douglas J. MacLeod.... 10,000(2) $200,625.00 50,000 80,000 $ 1,275,000 $ 1,620,000
C. Robert Quint....... 0 $ 0 34,000 46,000 $ 887,250 $ 897,750
</TABLE>
- ---------------
(1) At December 31, 1996 the closing price of a share of Common Stock on the New
York Stock Exchange was $36.75.
(2) Previously granted shares have been adjusted to reflect the 2-for-1 stock
dividend that occurred December 2, 1996.
10
<PAGE> 14
CHANGE OF CONTROL AGREEMENTS
See "CERTAIN TRANSACTIONS" for a description of change of control
agreements between the Company and its executive officers.
PENSION PLAN
The Board of Directors of the Company has established the CMAC Investment
Corporation Pension Plan (the "Pension Plan").
The Pension Plan is intended to be tax-qualified under Section 401(a) of
the Internal Revenue Code. All salaried and hourly employees of the Company are
eligible to participate in the Pension Plan upon the attainment of 20 1/2 years
of age and one year of eligibility service. A participant is generally fully
vested after five years of service subsequent to age 18.
The amount of the annual normal retirement benefit of a participant is the
sum of (i) 1.1% of his average base salary for the five consecutive calendar
years for which such average is highest ("Average Annual Salary") multiplied by
his number of years of credited service not in excess of 35 years, plus (ii)
0.5% of the participant's Average Annual Salary in excess of the average of the
annual Social Security taxable wage bases in effect for each of the 35 calendar
years ending with the calendar year in which he attains Social Security
retirement age multiplied by his number of years of credited service not in
excess of 35 years, plus (iii) 0.5% of the participant's Average Annual Salary
multiplied by his number of years of credited service in excess of 35 years.
The following table sets forth the approximate annual pension that a
full-time employee, including an executive officer, may receive under the
Pension Plan, assuming selection of a single life annuity and retirement at age
65, based on the indicated assumptions as to Average Annual Salary and years of
credited service. The following table assumes that the Company was in existence
for the entire year of 1992.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF REMUNERATION
CREDITED ---------------------------------------------------------------------------------------------------
SERVICE $100,000 $125,000 $150,000 $175,000 $200,000 $225,000 $250,000 $275,000
- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
5 7,250 9,250 11,250 12,050 12,050 12,050 12,050 12,050
10 14,500 18,500 22,500 24,100 24,100 24,100 24,100 24,100
15 21,750 27,750 33,750 36,150 36,150 36,150 36,150 36,150
20 29,000 37,000 45,000 48,200 48,200 48,200 48,200 48,200
25 36,250 46,250 56,250 60,250 60,250 60,250 60,250 60,250
30 43,500 55,050 67,500 72,300 72,300 72,300 72,300 72,300
35 50,750 64,750 78,750 84,350 84,350 84,350 84,350 84,350
</TABLE>
For the year ended December 31, 1996, the base salary for purposes of the
Pension Plan for the executive officers named in the Summary Compensation Table
is set forth in the salary column of the Summary Compensation Table. The
credited years in service as of December 31, 1996 for each such executive
officer is as follows: Mr. Filipps -- 4 years; Mr. Fischer -- 20 years; Mr.
MacLeod -- 5 years; Mr. Levine -- 9 years; Mr. Quint -- 7 years.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1996, Robert W. Richards, a member of the Stock Option and
Compensation Committee of the Board of Directors was Chairman of the Board of
Directors of Source One Mortgage Services Corporation, a mortgage banking
company and a customer of CMAC. In 1996 CMAC received premiums (net of refunds)
of approximately $93,900 relating to loans originated by Source One Mortgage
Services Corporation (and affiliates).
11
<PAGE> 15
EXECUTIVE COMPENSATION
STOCK OPTION AND COMPENSATION COMMITTEE REPORT ON COMPENSATION OF EXECUTIVE
OFFICERS OF THE COMPANY
The Stock Option and Compensation Committee (the "Committee") has provided
the following report on executive compensation for the year ended December 31,
1996:
COMPENSATION PHILOSOPHY
The Committee believes that the Company's executive compensation program
should be closely related to the services that the executives deliver to the
Company and the value such services bring to the stockholders of the Company.
The Committee believes an executive's compensation should be based, in
part, on the achievement by the Company of certain specified financial
objectives and, in part, on the achievement by the executive of specific,
individual objectives. The Company's financial objectives are recommended by
management and are approved by the Stock Option and Compensation Committee and
further ratified by the full Board of Directors. Achievement of both the
corporate and individual objectives should lead to improved performance and
greater value to the stockholders.
EXECUTIVE OFFICERS
The Company's executive compensation program is comprised of three
components: (i) annual base salary; (ii) annual bonus; and (iii) long-term
equity incentives. The variable portions of the executive compensation program
(annual bonus and stock options) are directly tied to the Company's results of
operations. The annual bonus has been designed to recognize shorter-term results
while awards of stock options have been implemented to recognize sustained
corporate growth and profitability. The annual bonus plan is designed to reflect
the achievement of specific individual and corporate goals and objectives
including specific net income and return on equity targets. The amount of the
annual bonus actually awarded to an executive officer is dependent on the
meeting or exceeding of specific targets which are developed at the beginning of
each year by the executive and the Company. Failure to reach the targeted goals
results in lower annual bonus awards and may, in the appropriate circumstances,
result in no award. Since the attainment of the goals and objectives of the
Company leads to increased stockholder returns, the annual bonus plan creates a
direct relationship between executive compensation and the creation of
additional value for the stockholders.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
Mr. Filipps' annual compensation is fixed by the Committee. The Committee
may grant periodic salary increases, if warranted, after a review of Mr.
Filipps' performance and an assessment of the competitiveness of Mr. Filipps'
current base salary. The award of an annual bonus recognizes Mr. Filipps'
contributions to the Company's overall results. Contributions are measured
against specific goals and objectives which are established by the Committee at
the beginning of each year. The Committee considers the Company's return on
equity, combined ratio, market share, growth in earnings and revenue, reduction
in expenses, increases in profitability, as well as Mr. Filipps' individual
goals and objectives.
ANNUAL BASE SALARY
The annual base salary levels for the Company's executive officers
(excluding the Chairman of the Board) are intended to be competitive with
salaries for executive officers in comparable industries with similar levels of
responsibility. The Company believes the salaries are competitive. Salaries paid
to executive officers are fixed by the Committee. The Committee grants periodic
salary increases, if warranted, after a review of individual performance and an
assessment of the competitiveness of the executive's current salary.
12
<PAGE> 16
ANNUAL BONUS
The award of an annual bonus recognizes the individual contributions of an
executive officer to the Company's overall results of operations. Contributions
are measured against specific goals and objectives established at the beginning
of the year for each executive officer and the Company. Among the factors
considered are the Company's return on equity, combined ratio, market share,
growth in earnings and revenue, reduction in expenses, increases in
productivity, etc. Individual objectives are based on the executive's position
with the Company or an affiliate.
The President and the next three most highly compensated executive officers
of the Company are eligible for bonuses of 100% of their annual base salary. A
bonus in excess of 100% may be awarded at the discretion of the Board of
Directors.
In addition to the bonus eligibility of the highly compensated executive
officers as indicated above, the remaining executive officers of the Company
have the opportunity to earn annual bonuses ranging from 50% to 75% of their
annual base salary.
The Chairman and the President of the Company review the performance of all
executive officers and make specific recommendations to the Committee regarding
the amount of annual bonus, if any, to be awarded. The amount of the annual
bonus is dependent upon achieving specific goals and objectives.
LONG-TERM EQUITY INCENTIVE
The Company's 1992 Stock Option Plan and 1995 Equity Compensation Plan
provide the Company the opportunity to reward the contributions of key
employees -- executive officers and others. In 1994, the Company undertook a
review of the compensation practices of corporations similar in size and/or
business to the Company. Based on this review, the Chief Executive Officer and
the President determined that the use of stock option awards based on salary
levels was the best method of long-term incentive compensation of executive
officers, and one that would ensure that the executive officers hold equity
stakes in the Company. The Company's management modified the existing stock
option grant guidelines and suggested that the Committee adopt these
modifications. Based upon the review and management's recommendations, the
Committee approved guidelines that provide for stock option grants to executive
officers (and key employees) upon the occurrence of one (or more) of the
following events: (i) initial employment, (ii) promotion to a new, higher level
position with increased responsibility and accountability, and/or (iii) the
attainment of specific goals and objectives by an executive officer and the
Company. Pursuant to these guidelines, the President recommends the number of
stock options to be granted to an executive officer (or key employee) and
presents this recommendation to the Committee along with supporting data for its
review and approval. The President may make a recommendation to the Committee
that deviates from the guidelines in appropriate circumstances.
The Committee reviews the individual performance of Messrs. Wender and Mr.
Filipps. Mr. Filipps reviews the performances of Messrs. Fischer, Levine,
MacLeod and Quint, and the performances of the remaining executive officers of
the Company and makes specific recommendations to the Committee regarding
eligibility for and the amount of stock options to be granted to those executive
officers (and key employees) of the Company he feels have made significant
contributions to the Company's results of operations.
The Committee evaluates the performance of the Company during a calendar
year by examining a number of factors including the Company's competitive
position in the mortgage insurance industry, growth in earnings, return on
equity and other specific corporate goals and objectives. The Committee also
examines the recommendations of the Chief Executive Officer. The Committee
grants, subject to approval and ratification by the Board of Directors, stock
options to the Chief Executive Officer and other executive officers and key
employees.
None of the executive officers named in the "Summary Compensation Table"
received a stock option grant during the year ended December 31, 1996. However,
on January 20, 1997, the following executive officers of the Company were
granted options to purchase shares of Common Stock: Mr. Filipps -- 25,000
13
<PAGE> 17
shares, Mr. Fischer -- 16,500 shares, Messrs. MacLeod and Quint -- 15,000 shares
each, and Mr. Levine -- 10,000 shares. The executive officers of the Company as
a group were granted options to purchase 85,500 shares in total. These options
vest 25% per year beginning January 21, 1999, and were granted at an option
price of $32.50 per share, the closing price of the Common Stock on the New York
Stock Exchange on January 20, 1997.
COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(M)
Section 162(m) of the Internal Revenue Code, enacted in 1993, generally
disallows a tax deduction to public companies for compensation over $1 million
paid to a corporation's Chief Executive Officer and the four next most highly
compensated executive officers except to the extent that any amount in excess of
such limit is paid pursuant to a plan containing a performance standard or a
stock option plan that meets certain requirements. The amendments for the 1992
Stock Option Plan approved at the 1995 Annual Meeting were designed to bring the
1992 Stock Option Plan into compliance with Section 162(m). The 1995 Equity
Compensation Plan, approved at the 1995 Annual Meeting, was drafted to comply
with Section 162(m). The Company currently has no other executive compensation
programs that would be impacted by Section 162(m).
MEMBERS OF THE STOCK OPTION AND COMPENSATION COMMITTEE
Robert W. Richards (Chairman)
Claire M. Fagin
Ronald W. Moore
TOTAL STOCKHOLDER RETURN GRAPH
The Securities and Exchange Commission requires that the Company's total
return to its stockholders be compared to a relevant market index and a similar
industry index for the last five years or such shorter period of time as the
Company has been publicly traded. The Company became a publicly-traded company
on October 30, 1992 when its initial public offering commenced. The following
compares the total return to stockholders of (i) a $100 investment in the
Company's Common Stock, (ii) the Standard and Poor's 500, and (iii) a peer group
constructed by the Company for the period October 30, 1992 through December 31,
1996. The three companies in the peer group, MGIC Investment Corporation, a
publicly-traded mortgage insurance company, Fannie Mae and the Federal Home Loan
Mortgage Corporation ("Freddie Mac") have been selected because their core
businesses involve residential mortgage lending.
Total stockholder return is determined by dividing (i) the sum of the
cumulative amount of dividends for a given period (assuming dividend
reinvestment) and the difference between the share price at the end of the
beginning of the period, by (ii) the share price at the end of the period.
14
<PAGE> 18
TOTAL SHAREHOLDER RETURNS
(DIVIDENDS REINVESTED)
<TABLE>
<CAPTION>
MEASUREMENT PERIOD CMAC INVESTMENT
(FISCAL YEAR COVERED) CORPORATION S&P 500 PEER GROUP
<S> <C> <C> <C>
10-30-92 100 100 100
1992 145.83 104.67 114.31
1993 155.25 115.22 120.70
1994 162.72 116.74 119.10
1995 249.16 160.61 205.49
1996 417.63 197.49 263.23
</TABLE>
(1) 1992 Returns were calculated from October 31, 1992 to December 31, 1992.
Prepared by Standard & Poor's Compustat, a division of McGraw-Hill, Inc.
(2) Assumes a starting price of $9.00 per share for the Common Stock of the
Company which is equal to the initial public offering price of the Common
Stock on October 30, 1992, as adjusted to reflect the 2-for-1 stock dividend
that occurred December 2, 1996.
(3) The return for the peer group for the periods shown assumes the base period
of October 30, 1992 to be equal to $100.00 and is calculated by weighing the
returns for each company in the peer group by the market capitalization at
the beginning of the periods shown.
(4) Past total stockholder returns may not be indicative of returns to be
achieved in the future or for periods of time longer than the periods shown
in the above graph.
CERTAIN TRANSACTIONS
Prior to the Company's initial public offering in October 1992 (the
"Offering"), the Company and CMAC were indirect subsidiaries of Reliance Group
Holdings, Inc. ("Reliance"). Mr. Wender, Chairman of the Board of the Company,
is Chairman of the Board and Chief Executive Officer of Commonwealth, an
indirect subsidiary of Reliance.
Concurrently with the Offering, Commonwealth purchased 800,000 shares of
the Company's $4.125 Preferred Stock (the "Preferred Stock") for an aggregate
purchase price of $40.0 million. Dividends on the Preferred Stock are payable
quarterly and for the year ended December 31, 1996 totaled $3.3 million. The
Preferred Stock is redeemable at the option of the Company at $54.125 per share
beginning August 15, 2002 and declining to $50.00 per share, in ten annual
installments of 72,000 shares beginning in 2002 and the remaining 80,000 shares
in 2012. In the event that dividends on the Preferred Stock are in arrears and
unpaid in an amount equal to six quarterly dividends, the size of the Company's
Board of Directors will be increased by two to permit the holders of the
Preferred Stock, voting separately as a class, to elect two directors. These
voting rights may not be exercised by Reliance or any affiliate thereof. The
Company may not consummate any Fundamental Transaction (defined as a merger,
consolidation, sale of assets or similar transaction on which the holders of the
Common Stock are entitled to vote) unless such transaction is approved by two-
thirds of the outstanding shares of the Preferred Stock. In connection with the
sale of Preferred Stock, the
15
<PAGE> 19
Company granted to Commonwealth certain rights to register the Preferred Stock
under the Securities Act of 1933, as amended.
In July 1992, the Company entered into an agreement with Commonwealth for
the sublease of approximately 19,000 square feet of office space in Philadelphia
for the Company's headquarters. In August 1993, the Company relocated its
operations in Philadelphia to a new location. In connection with the relocation,
the Company and Commonwealth entered into an agreement under which the Company
leased the 19,000 square feet of office space back to Commonwealth. The
Company's obligation to Commonwealth under these arrangements terminated in May,
1996 with a net cost for 1996 to the Company of $95,165.
The Company has entered into change of control agreements with each of
Messrs. Filipps, Fischer, Levine, MacLeod, Quint and Shelly effective January
25, 1995. The change of control agreements have initial terms of three years and
upon expiration of such period will be automatically extended for successive
one-year terms, unless terminated by either party.
The change of control agreements provide that in the event that, within two
years after a "change in control" or "merger" (as defined in the agreements) of
the Company or CMAC, the executive's employment is terminated (i) by the Company
for any reason other than (1) the executive's continued illness, injury or
incapacity for a period of twelve consecutive months or (2) for "cause", which
shall mean misappropriation of funds, habitual insobriety, substance abuse,
conviction of a crime involving moral turpitude, or gross negligence in the
performance of duties, which gross negligence has had a material adverse effect
on the business, operations, assets, properties or financial condition of the
Company and its subsidiaries taken as a whole, or (ii) by the executive in the
event of relocation or certain specified adverse changes in employment status
and compensation, the executive would be entitled to a lump-sum cash payment
equal to 2.0 times (1) the executive's average annual cash compensation for the
immediately preceding five-year period plus (2) the maximum bonus eligibility
for the year in which a termination occurs. Additionally, upon a change of
control (as defined in the agreements), all options not then vested would fully
vest, and any restricted stock previously granted to the executive which has not
yet vested or become freely transferable would become fully vested and freely
transferable.
The Company entered into an employment agreement with Mr. Wender effective
August 2, 1992. This agreement had an initial term of two years and upon the
expiration of such period is automatically extended for successive one year
terms unless terminated by either party. Mr. Wender will receive a base salary
of $100,000, subject to periodic increase at the discretion of the Board of
Directors; Mr. Wender is also entitled to such incentive compensation as the
Board of Directors may elect. This agreement may be terminated by the Company in
the event (i) the death of Mr. Wender, (ii) the continued mental or physical
incapacity of Mr. Wender over a period of six months, (iii) a material breach by
Mr. Wender of the employment agreement, (iv) willful and material misconduct by
Mr. Wender, or (v) willful failure of Mr. Wender to perform his duties after a
written demand for substantial performance. Mr. Wender may also terminate his
employment agreement in certain limited circumstances, such as demotion,
involuntary transfer or diminution of bonus or incentive programs. The Company
has agreed to indemnify Mr. Wender against suits based on his actions as a
director of the Company to the fullest extent permitted by Delaware law,
including the advancement of expenses in certain circumstances. Mr. Wender's
employment agreement provides that in the event of a "change of control" or
"merger" (as defined in the agreement) of the Company or CMAC, Mr. Wender's
employment is terminated (i) by the Company for any reason other than those set
forth above or (ii) by Mr. Wender in the event of relocation or certain
specified adverse changes in employment status and compensation, Mr. Wender
would be entitled to a lump-sum cash payment equal to 200% of his then current
base salary.
16
<PAGE> 20
STOCKHOLDER APPROVAL OF SELECTION
OF INDEPENDENT AUDITORS
On January 21, 1997, the Board of Directors of the Company, acting upon the
recommendation of the Audit Committee, selected the firm of Deloitte & Touche
LLP as the independent auditors to audit the books, records and accounts of the
Company for the current fiscal year, subject to ratification by the Company's
stockholders. Deloitte & Touche LLP also served as the Company's independent
auditors for the year ended December 31, 1996.
Adoption of this proposal requires the affirmative vote of a majority of
the shares present in person or represented by proxy at the meeting and entitled
to vote. The Board of Directors unanimously recommends a vote FOR this proposal.
It is understood that even if the selection of Deloitte & Touche LLP is
ratified, the Board, at its discretion, may direct the appointment of a new
independent auditing firm at any time during the year if the Board determines
that such a change would be in the best interests of the Company and its
stockholders.
The Company has requested that a representative of Deloitte & Touche LLP
attend the 1997 annual meeting of stockholders. Such representative will have an
opportunity to make a statement, if he or she desires, and will be available to
respond to appropriate stockholder's questions.
OTHER MATTERS
The Board of Directors is not aware of any matters not set forth herein
that may come before the meeting. If, however, further business properly comes
before the meeting, the persons named in the proxies will vote the shares
represented thereby in accordance with their best judgment.
STOCKHOLDER PROPOSALS FOR THE
1998 ANNUAL MEETING
Stockholders may submit proposals on matters appropriate for stockholder
action at annual meetings in accordance with regulations adopted by the
Securities Exchange Commission. To be considered for inclusion in the Proxy
Statement and form of proxy relating to the 1998 annual meeting, such proposals
must be received by the Company not later than December 4, 1997. Proposals
should be directed to the attention of the Secretary of the Company.
ANNUAL REPORT ON FORM 10-K
The Company will furnish, without charge, to each person whose proxy is
being solicited, upon the written request of such person, a copy of the
Company's annual report on Form 10-K for the year ended December 31, 1996,
including financial statements and schedules thereto, but excluding exhibits.
Requests for copies of such report should be directed to C. Robert Quint, Senior
Vice President, Chief Financial Officer, CMAC Investment Corporation, 1601
Market Street, Philadelphia, PA 19103.
By Order of the Board of Directors
THOMAS J. SHELLY, JR.
Secretary
17
<PAGE> 21
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
(1) Election of Directors FOR all nominees /X/ WITHHOLD AUTHORITY to vote /X/ *EXCEPTIONS /X/
listed below for all nominees listed below
</TABLE>
Nominees: Frank P. Filipps, James C. Miller and Anthony W. Schweiger
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, mark
the "Exceptions" box and write that nominee's name in the space provided
below).
*Exceptions
------------------------------------------------------------------
(2) Ratification of the selection of Deloitte & Touche as the Company's
Independent Auditors.
FOR /X/ AGAINST /X/ ABSTAIN /X/
(3) In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournment thereof.
Change of Address and
or Comments Mark Here /X/
Please sign exactly as name or names
appear on this proxy. If stock is
held jointly, each holder should
sign. If signing as attorney,
trustee, executor, administrator,
custodian, guardian, or authorized
officer, please give full title.
DATED , 1997
----------------------
SIGNED
----------------------------
----------------------------------
VOTES MUST BE INDICATED
(X) IN BLACK OR BLUE INK. /X/
SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
- --------------------------------------------------------------------------------
<PAGE> 22
- --------------------------------------------------------------------------------
CMAC INVESTMENT CORPORATION
PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 14, 1997
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby authorizes Frank P. Filipps, Thomas J. Shelly, Jr.
and C. Robert Quint, and each of them, individually, with power of
substitution, to vote and otherwise represent all of the shares of Common Stock
of the CMAC Investment Corporation, (the "Company"), held of record by the
undersigned, at the Annual Meeting of Stockholders of the Company to be held at
the Company's offices, 1601 Market St., 13th Floor, Philadelphia, PA, on
Wednesday, May 14, 1997 at 10:00 a.m. local time, and any adjournment(s)
thereof, as indicated on the reverse side hereof.
The undersigned acknowledges receipt of the Notice of Annual Meeting of
Stockholders and Proxy Statement dated in each case April 7, 1997. All
other proxies heretofore given by the undersigned to vote shares of the
Company's Common Stock are expressly revoked.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DESCRIBED ON THE
REVERSE HEREOF BY THE STOCKHOLDER. IF NOT OTHERWISE DIRECTED, THIS PROXY WILL
BE VOTED FOR THE ELECTION AS DIRECTORS OF ALL NOMINEES NOMINATED IN ITEM 1, FOR
THE PROPOSAL REFERRED TO IN ITEM 2.
CMAC INVESTMENT CORPORATION
P.O. BOX 11024
NEW YORK, N.Y. 10203-0024
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