<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:
- --------------------------------------------------------------------------------
<PAGE> 2
[RADIAN LETTERHEAD WITH LOGO]
July 30, 1999
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Radian Group Inc., which will be held at 1601 Market Street, 11th Floor,
Philadelphia, Pennsylvania 19103, at 10:00 a.m. on Tuesday, August 31, 1999. The
accompanying Notice of Annual Meeting of Stockholders and Proxy Statement
describe the items to be considered and acted upon by the stockholders.
Please note that the Annual Meeting was scheduled later than usual this
year in order to permit the completion of the merger between Radian Group Inc.
(formerly, CMAC Investment Corporation) and Amerin Corporation. We are pleased
that the merger has been successfully concluded and anticipate that next year's
Annual Meeting will be held earlier in the year.
Whether or not you plan to attend the upcoming meeting, please sign, date
and return the enclosed proxy card as soon as possible so that your shares can
be voted in accordance with your instructions. If you attend the meeting, you
may revoke your proxy, if you wish, and vote personally. Since the
representation of stockholders at the meeting is very important, we thank you in
advance for your participation.
Sincerely,
/s/ Howard S. Yaruss
HOWARD S. YARUSS
Secretary
<PAGE> 3
RADIAN GROUP INC.
1601 Market Street
Philadelphia, PA 19103
------------------------
NOTICE OF 1999 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON
AUGUST 31, 1999
------------------------
TO THE STOCKHOLDERS OF
RADIAN GROUP INC.:
Notice is hereby given that the annual meeting of the stockholders of
Radian Group Inc., a Delaware corporation (the "Company"), will be held at 1601
Market Street, 11th Floor, Philadelphia, Pennsylvania, on Tuesday, August 31,
1999 at 10:00 a.m., local time, for the following purposes:
1. To elect three directors for terms of three years each, to serve
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, 1999;
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 July 26, 1999
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 August 12, 1999 through August
31, 1999 at the offices of the Company at 1601 Market Street, 11th Floor,
Philadelphia, PA 19103.
By Order of the Board of Directors
HOWARD S. YARUSS
Secretary
Philadelphia, PA
July 30, 1999
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
RADIAN GROUP INC.
1601 Market Street
Philadelphia, PA 19103
------------------------
PROXY STATEMENT
FOR
1999 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON
AUGUST 31, 1999
------------------------
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of RADIAN GROUP INC. (the "Company"), for use
at the 1999 Annual Meeting of Stockholders to be held at 1601 Market Street,
11th Floor, Philadelphia, PA, on Tuesday, August 31, 1999 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 July 30,
1999.
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.
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, 1999, 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 July 26, 1999 are entitled to vote at the
meeting. As of that date, 36,967,216 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 vote 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.
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.
1
<PAGE> 5
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 to the contrary
from a beneficial owner.
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.
I. 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 1999 annual meeting. The terms of
three current directors, David C. Carney, Claire M. Fagin and Ronald W. Moore,
will expire at the 1999 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 2002. The remaining eleven 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.
REQUIREMENTS FOR ADVANCE NOTIFICATION OF NOMINEES
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 be
2
<PAGE> 6
required pursuant to the By-laws, is filed with the Secretary of the Company no
later than the time fixed pursuant to the By-laws.
The Company's By-laws permit any stockholder entitled to vote for the
election of directors at a meeting to nominate a director for election by giving
written notice thereof to the Secretary of the Company by August 16, 1999. 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.
The Company's Nominating Committee unanimously voted to make an exception
to the provision of the By-laws of the Company that prohibits anyone who has
reached the age of 70 from being elected to the Board of Directors in order to
permit Claire Fagin to stand for election for an additional term.
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 June 15, 1999.
NOMINEES FOR ELECTION AT THE
1999 ANNUAL MEETING FOR
TERMS EXPIRING IN 2002
DAVID C. CARNEY............ Mr. Carney served as Executive Vice President of
Jefferson Health Systems from October 1996 until
May 1999. 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. Mr. Carney is a Certified Public
Accountant and served as Philadelphia Area Managing
Partner for Ernst & Young from 1980-1991. He has
served as a director of AAA MidLantic and Keystone
Insurance Companies since 1996. He was appointed
Chairman of the Board of Directors of ImageMax,
Inc. in 1999 and has been a director of ImageMax,
Inc. since 1997. He has been a director of the
Company since November 1992. Age: 62.
CLAIRE M. FAGIN............ Dr. Fagin is Dean Emerita and Professor Emerita of
the School of Nursing, University of Pennsylvania
and is currently an independent consultant. She has
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 was a director of Salomon Inc.
from 1994 until the end of 1997, when it was
acquired by Travelers Group. She serves on the
Advisory Committee of Provident Mutual Life
3
<PAGE> 7
Insurance Company where she retired from her
directorship in December 1996. She has been a
Director of the Company since July 1994. Age: 72.
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: 54.
DIRECTORS CONTINUING IN OFFICE
WITH TERMS EXPIRING IN 2000
FRANK P. FILIPPS........... Mr. Filipps has been the Chairman of the Board and
Chief Executive Officer of the Company since June
1999. He joined the Company and Commonwealth
Mortgage Assurance Company, the Company's operating
subsidiary now known as Radian Guaranty Inc.
("Radian"), as Senior Vice President and Chief
Financial Officer in November 1992, and became
Executive Vice President and Chief Operating
Officer of the Company and Radian in 1994. In
January 1995 he became President of the Company and
Chairman of the Board, President and Chief
Executive Officer of Radian. 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 Impac Mortgage Holdings since
November 1995 and a director of Impac Commercial
Holdings since February 1997. He has been a
director of the Company since May 1995. Age: 52.
STEPHEN T. HOPKINS......... Mr. Hopkins is President of Hopkins and Company
LLC, a management consulting business he formed in
February 1999. From January 1976 to January 1999,
he held a number of managerial positions with
Federal Home Loan Mortgage Corporation, serving as
Senior Vice President and National Sales Director
from April 1994 through August 1998. He has been a
director of the Company since June 1999. Age: 49.
JAMES C. MILLER............ Mr. Miller was President of the Company from July
1992 until his retirement in December 1994. He
served as President and Chief Operating Officer and
as a director of Radian 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 Radian. He has been a
director of the Company since July 1992. Age: 69.
ANTHONY W. SCHWEIGER....... Mr. Schweiger is the Senior Managing Director for
The Tomorrow Group, LLC, which provides specialized
financial and management services for complex and
strategic/turnaround business issues. As a
consultant, he has served as the senior acting
manager in a variety of businesses including Acting
COO for WineAccess, a development stage infomediary
from May 1998 to March 1999 and Acting Chief
Executive Officer for Care Systems in 1995. 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 the
4
<PAGE> 8
President and Chief Executive Officer of Meridian
Mortgage Corporation, from 1987 until 1993 and the
Executive Vice President/Chief Operating Officer
from that company's inception in 1983. Age: 57.
DIRECTORS CONTINUING IN OFFICE
WITH TERMS EXPIRING IN 2001
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: 62.
ROY J. KASMAR.............. Mr. Kasmar has been President and Chief Operating
Officer of the Company since June 1999. He joined
Amerin Guaranty as Executive Vice President and
Chief Operating Officer in May 1996 and became
President and Chief Operating Officer of Amerin
Guaranty in November 1997. From 1988 to 1996 he was
a member of the Operating Committee and managing
director of Capital Markets group with Prudential
Home Mortgage. He served as Chief Operating Officer
and Vice President in charge of secondary marketing
of First Boston Capital Group from 1984 to 1988.
Prior to that he served as Vice President in charge
of secondary marketing of Chase Home Mortgage from
1981 to 1984. He has been a director of Amerin
Guaranty from since December 1996, and he was a
director of Amerin Corporation from September 1998
until it merged with and into the Company in June
1999 at which time he became a director of the
Company. Age: 43.
ROBERT W. RICHARDS......... Mr. Richards was Chairman of the Board of Directors
of Source One Mortgage Services Corporation, a
mortgage banking company, from 1989 until his
retirement in 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:
56.
LARRY E. SWEDROE........... Mr. Swedroe has been a principal of Buckingham
Asset Management, Inc., a personal investment
advisory firm, since May 1996. From January 1994 to
April 1996, he was Vice Chairman of Residential
Services Corporation of America, the holding
company for Prudential Home Mortgage and Lender's
Service, Inc. Prior thereto, he served as a
Managing Director of Residential Services
Corporation of America from November 1986 to
December 1993. He has been a director of the
Company since June 1999. Age: 47.
HERBERT WENDER............. Mr. Wender has been Lead Director and Chairman of
the Executive Committee of the Company since June
1999. He served as Chairman of the Board of
Directors of the Company from August 1992 to June
1999. He was Chairman of the Board and Chief
Executive Officer of Radian from June 1983 until
July 1992. Mr. Wender has been a director of
LandAmerica Financial Group, Inc. since February
1998 and served as its Vice Chairman from February
1998 through May 1999. He was Chairman of the Board
and Chief Executive Officer of Commonwealth Land
Title Insurance Company ("Commonwealth"), a title
insurance company, from June 1983 until February
1998. He has been a director of the Company since
July 1992. Age: 62.
5
<PAGE> 9
DIRECTORS CONTINUING IN OFFICE
WITH TERMS EXPIRING IN 2002
HOWARD B. CULANG........... Mr. Culang has been President of Laurel
Corporation, a financial services firm, since
January 1996. He has been President of
Worldstories, LLC, a development stage Internet
company since February 1999. From January 1994 to
December 1995, he was Vice Chairman of Residential
Services Corporation of America, the holding
company for Prudential Home Mortgage, Lender's
Service, Inc. and Prudential Real Estate
Affiliates. He has been a director of Smart Storage
Inc. since 1997. He has been a director of the
Company since June 1999. Age: 52.
ROSEMARIE GRECO............ Ms. Greco served as President of CoreStates
Financial Corp. from May 1996 until July 1997 and
President and Chief Executive Officer of CoreStates
Bank from August 1994 to August 1997. She also
served as Chief Banking Officer of CoreStates
Financial Corp. from August 1994 to May 1996, and
as Chief Retail Services Officer from October 1993
to August 1994. She was a bank director from April
1992 to August 1997. Ms. Greco is also a director
of Sunoco, Inc., PECO Energy Company and
Preit-Rubin Inc. She has been a director of the
Company since June 1999. Age: 53.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
The Company believes that during the year ended December 31, 1998, its
directors and executive officers complied with all applicable filing
requirements of Section 16(a) of the Securities Exchange Act of 1934 with the
exception of William Carroll, who, failed to file a Form 4 timely when he sold
shares of Common Stock in the Company in April, 1998 and James Miller who failed
to file a Form 4 when he sold shares of Common Stock in the Company in November,
1998. 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 May 6, 1999, 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>
INVESTMENT
SHARES VOTING POWER POWER
BENEFICIALLY PERCENT ---------------- ----------------
NAME AND BUSINESS ADDRESS OWNED(1) OF CLASS(2) SOLE SHARED SOLE SHARED
------------------------- ------------ ----------- ---- ------ ---- ------
<S> <C> <C> <C> <C> <C> <C>
T. Rowe Price Associates................ 2,357,897 6.39% -0- 2,357,897 -0- 2,357,897
100 E. Pratt Street
Baltimore, MD 21202
</TABLE>
- ---------------
(1) All the information in the table is presented in reliance on information
disclosed by the named individual as of May 6, 1999.
(2) The percentage has been determined based upon the number of shares
outstanding as of May 6, 1999.
OWNERSHIP OF COMMON STOCK BY DIRECTORS AND OFFICERS
The following table sets forth, as of June 10, 1999, 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
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<PAGE> 10
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) CLASS(5)
---------------- ------------ ----------
<S> <C> <C>
Herbert Wender.............................................. 261,500 *
Roy J. Kasmar............................................... 178,336 *
Frank P. Filipps............................................ 167,234 *
C. Robert Quint............................................. 65,267 *
James C. Miller............................................. 44,995(4)(6) *
Albert Will................................................. 24,710 *
David C. Carney............................................. 20,600 *
James W. Jennings........................................... 19,600 *
Ronald W. Moore............................................. 19,000 *
Anthony W. Schweiger........................................ 19,000 *
Robert W. Richards.......................................... 18,500 *
Claire M. Fagin............................................. 15,000 *
Larry E. Swedroe............................................ 2,725 *
William Carroll............................................. 2,231 *
Howard B. Culang............................................ 0 *
Rosemarie B. Greco.......................................... 0 *
Stephen T. Hopkins.......................................... 0 *
858,698
All directors and current executive officers as a group (19
persons).................................................. 881,707 2.39%
</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 Company's Savings Incentive Plan as of May 6, 1999, as to which the
employee has dispositive power, as follows: Mr. Filipps -- 1,984 shares, Mr.
Quint -- 3,117 shares, Mr. Carroll -- 356 shares, and current executive
officers as a group -- 7,591 shares.
(3) Includes shares that may be acquired within 60 days after the ownership date
reflected, upon exercise of employee and director stock options. Options are
included for the following individuals: Mr. Wender, 235,500 shares; Mr.
Filipps, 161,250 shares; Mr. Kasmar, 166,691; Mr. Will, 24,710; Mr. Quint,
60,750 shares; Mr. Carroll, 1,875; Messrs. Carney, Moore, and Richards
18,000 shares each; Mr. Schweiger, 13,500 shares; Mr. Jennings, 17,000
shares; Mr. Miller, 6,000; Dr. Fagin, 15,000 shares; Mr. Swedroe, 1,066; and
all current directors and executive officers as a group, 778,217 shares.
(4) Includes shares of Common Stock allocable to employee contributions under
the Company's Savings Incentive Plan as of January 31, 1999, which Mr.
Miller accumulated during his time as an employee of the Company. Under the
Company's Savings Incentive Plan, Mr. Miller has dispositive power as to
3,795 shares held therein.
(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
<PAGE> 11
MEETINGS OF THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Board of Directors of the Company met on six occasions during the
period January 1, 1998 through December 31, 1998. 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 during 1998. 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, 1998, the Executive
Committee was composed of Messrs. Wender (Chairman), Carney, Filipps and
Schweiger. This Committee exercises such management functions as may be
delegated to it by the Board of Directors. The Executive Committee met once
during the period from January 1, 1998 through December 31, 1998.
STOCK OPTION AND COMPENSATION COMMITTEE. For the year ended December 31,
1998, the Stock Option and Compensation Committee was composed of three
non-employee directors, Mr. Richards (Chairman), Dr. Fagin and Mr. Moore. 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 five
times during the period January 1, 1998 through December 31, 1998.
AUDIT COMMITTEE. For the year ended December 31, 1998, 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 three times during the
period between January 1, 1998 and December 31, 1998.
NOMINATING COMMITTEE. For the year ended December 31, 1998, 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 two times during the period
between January 1, 1998 and December 31, 1998. See "ELECTION OF
DIRECTORS -- Requirements for Advance Notification of Nominees."
INVESTMENT COMMITTEE. For the year ended December 31, 1998, the Investment
Committee was composed of Mr. Moore (Chairman), Dr. Fagin, Messrs. Filipps,
Miller, and Richards. The Investment Committee is responsible for monitoring the
Company's investment portfolio. The Investment Committee met four times during
the period January 1, 1998 through December 31, 1998.
8
<PAGE> 12
EXECUTIVE OFFICERS OF THE COMPANY
Set forth below is certain information regarding each of the current
executive officers of the Company as of June 9, 1999. 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.
Frank P. Filipps........... Mr. Filipps has been the Chairman of the Board and
Chief Executive Officer since June 1999. He joined
the Company and Radian, as Senior Vice President
and Chief Financial Officer in November 1992, and
became Executive Vice President and Chief Operating
Officer of the Company and Radian in 1994. In
January 1995 he became President of the Company and
Chairman of the Board, President and Chief
Executive Officer of Radian. 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 Impac Mortgage Holdings since
November 1995 and a director of Impac Commercial
Holdings since February 1997. He has been a
director of the Company since May 1995. Age: 52.
Roy J. Kasmar.............. Mr. Kasmar has been President and Chief Operating
Officer of the Company since June He joined Amerin
Guaranty as Executive Vice President and Chief
Operating Officer in May 1996 and became President
and Chief Operating Officer of Amerin Guaranty in
November 1997. From 1988 to 1996 he was a member of
the Operating Committee and managing director of
Capital Markets group with Prudential Home
Mortgage. He served as Chief Operating Officer and
Vice President in charge of secondary marketing of
First Boston Capital Group from 1984 to 1988. Prior
to that he served as Vice President in charge of
secondary marketing of Chase Home Mortgage from
1981 to 1984. He has been a director of Amerin
Guaranty from since December 1996, and he was a
director of Amerin Corporation from September 1998
until it merged with and into the Company in June
1999 at which time he became a director of the
Company. Age: 43.
William W. Carroll......... Mr. Carroll was named Executive Vice President,
National Sales Manager of Radian in April 1999. He
was Senior Vice President, National Sales Manager
of Radian from January 1997 to April 1999. 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: 61.
C. Robert Quint............ Mr. Quint was named Executive Vice President, Chief
Financial Officer of the Company in April 1999. He
was Senior Vice President, Chief Financial Officer
of the Company and Radian in January 1996. He
joined Radian 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 Radian. From June 1987 until August 1990 he
served as an Assistant Controller for Reliance
Development Group, a commercial real estate
developer. Age: 39.
9
<PAGE> 13
Andrew R. Luczakowsky...... Mr. Luczakowsky was named Senior Vice President,
Information Systems of Radian in July 1998. He was
named Vice President of Radian in April 1984. He
has been employed by Radian in an information
technology related capacity since 1982. Age: 52.
Howard S. Yaruss........... Mr. Yaruss joined the Company and Radian in July
1997 as Senior Vice President, Secretary and
General Counsel. From July of 1991 until July of
1997 he served as Vice President and Assistant
General Counsel of Capital Reinsurance Company, a
reinsurance company. Age: 40.
Albert V. Will............. Mr. Will became Executive Vice President,
Operations of the Company upon the closing of the
merger between the Company and Amerin. He served as
Executive Vice President, Operations of Amerin from
August 1998 until June 1999. He has been a
Principal of Eotek, LLC and of Looking Glass
Partners. He served as Chief Operating Officer of
Banc One Mortgage from November 1995 through August
1997, and Senior Vice President of Residential
Services Corporation of America from September 1989
through November 1995. Age: 43.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
DIRECTOR COMPENSATION
Mr. Wender, Lead Director of the Company, receives $100,000 per year,
payable quarterly, for his services. All other directors of the Company who did
not serve as executive officers of the Company received an annual fee for their
services of $20,000, a $2,000 annual fee for serving as a Chairman of a
Committee, and a $1,500 fee for each Board of Directors meeting, a $1,500 fee
for each committee meeting attended not in conjunction with a Board of Directors
meeting and a $500 fee for each committee meeting attended in conjunction with a
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 non-employee director
automatically receives, at each December Board of Directors meeting, a grant of
400 units of phantom stock at full value exerciseable upon their departure from
the Board of Directors of the Company. Coinciding with the grant of the phantom
stock, each director receives a non-qualified stock option under the Company's
stock option plan to acquire 1,200 shares of Common Stock of the Company at the
fair market value of such Common Stock on the date of the grant. These options
become vested and fully exerciseable on the first anniversary of the date of the
grant, provided that the optionee is a director of the Company on such
anniversary date. 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. In 1997, the Directors of the Company undertook,
with the assistance of an outside consultant, a review of the Company's policies
with respect to director and board compensation.
10
<PAGE> 14
EXECUTIVE COMPENSATION
The following table sets forth certain information for the years ended
December 31, 1996, 1997 and 1998 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
-------------------- UNDERLYING COMPEN-
NAME AND PRINCIPAL POSITION YEAR SALARY(1) BONUS(2) OPTIONS(3)(6) SATION(4)
- --------------------------- ---- --------- -------- ------------- ---------
<S> <C> <C> <C> <C> <C>
Frank P. Filipps......................... 1998 $400,000 $600,000 42,500 $19,920
President & CEO 1997 $300,000 $450,000 50,000 $ 8,000
$250,000 0 $ 7,500
1996 $250,000
William W. Carroll(5).................... 1998 $190,000 $228,000 16,000 $14,475
Executive V.P. Sales 1997 $168,269 $218,750 19,500 $ 8,000
Paul F. Fischer.......................... 1998 $190,000 $209,000 14,500 $17,250
Sr. V.P. Risk Management 1997 $177,000 $177,000 28,500 $ 8,000
$165,000 0 $ 7,500
1996 $165,000
Douglas J. MacLeod....................... 1998 $187,000 $150,000 10,500 $17,235
Sr. V.P. Capital Markets -- Radian 1997 $187,000 $149,600 23,000 $ 8,000
$173,000 0 $ 7,500
1996 $185,000
C. Robert Quint.......................... 1998 $180,000 $225,000 16,000 $15,387
Executive V.P. Chief Financial Officer 1997 $167,000 $208,750 26,500 $ 8,000
1996 $160,000 $160,000 0 $ 7,500
</TABLE>
- ---------------
(1) Includes employee contributions to the Company's Savings Incentive Plan.
(2) Bonus amounts are for services rendered in the calendar year noted but paid
in the subsequent year.
(3) Options were granted on January 20, 1997 in consideration for 1996
performance and on December 2, 1997 in consideration for 1997 performance.
(4) Includes matching contributions by the Company under the Company's Savings
Incentive Plan and other fringe benefits.
(5) Mr. Carroll's employment with Radian commenced January 20, 1997.
(6) Options were granted on January 19, 1999 in consideration for 1998
performance.
The following table sets forth certain information concerning exercises of
stock options during the year ended December 31, 1998 and the value of
unexercised stock options at December 31, 1998 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.
11
<PAGE> 15
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, 1998 DECEMBER 31, 1998
ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ---------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Frank P. Filipps......... 0 $ 0 143,750 96,250 $4,237,031 $1,451,718
William W. Carroll....... 0 $ 0 0 19,500 $ 0 $ 0
Paul F. Fischer.......... 48,000 $2,429,622 40,000 58,500 $1,091,800 $ 969,293
Douglas J. MacLeod....... 7,000 $ 356,625 80,000 53,000 $2,281,200 $ 952,625
C. Robert Quint.......... 0 $ 0 52,000 44,500 $1,513,980 $ 620,565
</TABLE>
- ---------------
(1) At December 31, 1998, the closing price of a share of Common Stock on the
New York Stock Exchange was $43.375.
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 Company's 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 eligible 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 (up to a statutory maximum equal to
$160,000 in 1998) 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.
In January 1997, the Board of Directors of the Company established a
nonqualified Supplemental Executive Retirement Plan ("SERP"). This plan is
intended to provide certain officers with a supplemental retirement program to
the qualified pension plan. The difference between the SERP and the qualified
pension plan is that the SERP is not subject to the statutory cap on
compensation that may be taken into account for the calculation of benefits
($160,000 in 1998) and the statutory cap on actual benefits ($130,000 in 1998).
The benefit under the SERP is determined using the same formula as that under
the qualified pension plan but is based on total compensation (inclusive of
salary and bonus) up to 150% of average base pay for the three consecutive
calendar years for which such base pay is the highest. Under the terms of the
SERP, the Board of Directors must annually designate which officers are eligible
to participate in the SERP.
The following table sets forth the approximate annual pension that a
full-time employee, including an 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. Benefits shown in the following table in excess of $130,000
are payable by the Company only to persons designated by the Board of Directors
to participate in the SERP.
12
<PAGE> 16
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF CREDITED SERVICE
------------------------------------------------------------
REMUNERATION 5 10 15 20 25 30 35
- ------------ ------ ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
$100,000.... 7,250 14,500 21,750 29,000 36,250 43,500 50,750
$150,000.... 11,250 22,500 33,750 45,000 56,250 67,500 78,750
$160,000.... 12,050 24,100 36,150 48,200 60,250 72,300 84,350
$200,000.... 15,250 30,500 45,750 61,000 76,250 91,500 106,750
$250,000.... 19,250 38,500 57,750 77,000 96,250 115,500 134,750
$300,000.... 23,250 46,500 69,750 93,000 116,250 139,500 162,750
$500,000.... 39,250 78,500 117,750 157,000 196,250 235,500 274,750
$750,000.... 59,250 118,500 177,750 237,000 296,250 355,500 414,750
$1,000,000.. 79,250 158,500 237,750 317,000 396,250 475,500 554,750
</TABLE>
For the year ended December 31, 1998, the base salary for purposes of the
Pension Plan for the 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, 1998 for each such officer is as follows: Mr.
Filipps -- 6 years; Mr. Carroll -- 2 years; Mr. Fischer -- 22 years; Mr.
MacLeod -- 7 years; and Mr. Quint -- 9 years.
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,
1998:
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. The Stock Option and Compensation Committee
hired an outside consultant to review the Company's compensation programs in
light of those provided by similar organizations.
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.
13
<PAGE> 17
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 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.
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 Chief Executive Officer of the Company reviews the performance of all
executive officers and makes 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. After careful review, management has
concluded 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 or key employee and the Company. Pursuant to these
guidelines, the CEO 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 Committee reviews the individual performance of Messrs. Filipps and
Kasmar. The performances of the other executive officers of the Company are
reviewed by Mr. Filipps who 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 who 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
14
<PAGE> 18
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.
During 1998, no executive officers of the Company were granted options to
purchase shares.
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 was also drafted to comply with Section 162(m). To the extent
readily determinable and as one of the factors in its consideration of
compensation matters, the Stock Option and Compensation Committee considers the
anticipated tax treatment to the Company and to the executive officers of
various payments and benefits. The Stock Option and Compensation Committee
intends to retain the deductibility of compensation pursuant to Section 162(m),
but reserves the right to provide non-deductible compensation if it determines
that such action is in the best interests of the Company and its stockholders.
MEMBERS OF THE STOCK OPTION AND COMPENSATION COMMITTEE
Robert W. Richards (Chairman)
Howard B. Culang
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 index, and (iii) a peer
group constructed by the Company for the period December 31, 1993 through
December 31, 1998. 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.
15
<PAGE> 19
PERFORMANCE GRAPH
<TABLE>
<CAPTION>
CMAC INVESTMENT CORP S&P 500 INDEX PEER GROUP
-------------------- ------------- ----------
<S> <C> <C> <C>
'1993' 100.00 100.00 100.00
'1994' 104.82 101.32 98.68
'1995' 160.49 139.40 170.24
'1996' 269.01 171.40 218.08
'1997' 443.18 228.59 339.79
'1998' 338.01 293.91 451.82
</TABLE>
FOOTNOTES:
(1) Returns were prepared by Standard & Poor's Compustat, a division of
McGraw-Hill, Inc.
(2) The return for the peer group for the periods shown assumes the base period
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.
(3) 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 Radian were indirect subsidiaries of Reliance Group
Holdings, Inc. ("Reliance"). Mr. Wender, Lead Director of the Company, was
Chairman of the Board and Chief Executive Officer of Commonwealth, an indirect
subsidiary of Reliance at that time.
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. On February 27, 1998, Commonwealth was acquired
by LandAmerica Financial Group, Inc. and as successor to Commonwealth Land Title
Insurance Company ("Commonwealth"), now owns the Preferred Stock. Dividends on
the Preferred Stock are payable quarterly and for the year ended December 31,
1998 totaled $3.3 million. The Preferred Stock is redeemable, in whole or from
time to time in part, at the option of the Company at $54.125 per share
beginning on August 15, 2002 and declining to $50.00 per share on August 15,
2005. On August 15 of each year beginning in 2002, the Company is obligated, to
the extent it has funds legally available therefor, to redeem 72,000 shares
(80,000 in 2012) at a redemption price of $50.00 per share. 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. 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 Company granted to Commonwealth certain rights to register the Preferred
Stock under the Securities Act of 1933, as amended.
16
<PAGE> 20
The Company has entered into change of control agreements with each of
Messrs. Filipps, Kasmar, Fischer, MacLeod, Luczakowsky, Quint, Carroll and
Yaruss and Scott Stevens, Senior Vice President -- Human Resources and
Administration. 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" of the Company or Radian, 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 then current
annual base compensation plus (2) the target bonus 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.
II. STOCKHOLDER APPROVAL OF SELECTION OF
OF INDEPENDENT AUDITORS
On January 19, 1999 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, 1998.
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 1999 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.
III. 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
2000 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 2000 annual meeting, such proposals
must be received by the Company not later than December 3, 1999. Proposals
should be directed to the attention of the Secretary of the Company.
17
<PAGE> 21
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, 1998,
including financial statements and schedules thereto, but excluding exhibits.
Requests for copies of such report should be directed to C. Robert Quint,
Executive Vice President, Chief Financial Officer, Radian Group Inc., 1601
Market Street, Philadelphia, PA 19103.
By Order of the Board of Directors
HOWARD S. YARUSS
Secretary
18
<PAGE> 22
RADIAN GROUP INC.
PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD AUGUST 31, 1999
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby authorizes Frank P. Fllipps, Howard S. Yaruss, 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 Radian
Group Inc., (the "Company"), held of record by the undersigned, at the Annual
Meeting of Stockholders of the Company to be held at 1601 Market St., 11th
floor, Philadelphia, PA 19103, on August 31, 1999 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 July 30, 1999. 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 PROPOSALS REFERRED TO IN ITEMS 1 and 2.
RADIAN GROUP INC.
P.O. BOX 11024
NEW YORK, N.Y. 10203-0024
<PAGE> 23
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1. Election of Directors FOR all nominees WITHHOLD AUTHORITY to vote EXCEPTIONS
listed below / / for all nominees listed below / / / /
</TABLE>
Nominees: D. Carney, C. Fagis, R. Moore
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, MARK
THE "EXCEPTION" 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 / / AGAINST / / ABSTAIN / /
3. To transact such other business as may properly come before the meeting.
Change of Address and
or Comments Mark Here / /
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_____________________________________________1999
SIGNED________________________________________________
______________________________________________________
VOTES MUST BE INDICATED
(X) IN BLACK OR BLUE INK. /X/
SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
