<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]
April 3, 2000
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, May 9, 2000. 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 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 2000 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON
MAY 9, 2000
------------------------
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, May 9, 2000
at 10:00 a.m., local time, for the following purposes:
1. To elect five directors, for terms as described herein, 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, 2000; and
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 20, 2000
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 24, 2000 through May 9,
2000 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
April 3, 2000
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
2000 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON
MAY 9, 2000
------------------------
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 2000 annual meeting of stockholders to be held at 1601 Market Street,
11th Floor, Philadelphia, PA, on Tuesday, May 9, 2000 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 3, 2000.
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 five
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, 2000, 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 20, 2000 are entitled to vote at the
meeting. As of that date, 37,415,587 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, and (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 to be 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. With the prospect of two directors retiring from the
Board over the next two years because of the age limitation contained in the
Company's By-laws, the Nominating Committee recommended that the class of
several directors be rearranged in order to maintain the equality in size among
the classes.
Five directors are to be elected at the 2000 annual meeting. The terms of
four current directors, Frank P. Filipps, Stephen T. Hopkins, James C. Miller
and Anthony W. Schweiger, will expire at the 2000 annual meeting. The Board of
Directors has: (1) nominated Messrs. Filipps, Hopkins and Schweiger for election
as directors for terms of office that would expire in 2003, (2) nominated Mr.
Robert W. Richards from the class of directors with terms expiring in 2001 to
the class with terms expiring in 2003, and (3) nominated Mr. Miller to the class
with terms expiring in 2001. Thus, assuming the election of the directors as
nominated, the class of 2003 will have four members; the class of 2002 will have
five members; and the class of 2001 will have five members.
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 and the proposals of the Board. 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 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 the election of
2
<PAGE> 6
Messrs. Filipps, Hopkins, Schweiger and Richards as directors for terms of
office expiring in 2003, and Mr. Miller as a director for a term of office
expiring in 2001.
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 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 April 24, 2000. 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.
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, 2000.
NOMINEES FOR ELECTION AT THE
2000 ANNUAL MEETING FOR
TERMS EXPIRING IN 2003
FRANK P. FILIPPS........... Mr. Filipps is the Chief Executive Officer of the
Company and has been the Chairman of its Board of
Directors 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.
3
<PAGE> 7
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 ("Freddie
Mac"), 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.
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:
57.
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 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: 58.
NOMINEE FOR ELECTION AT THE
2000 ANNUAL MEETING FOR
TERM EXPIRING IN 2001
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.
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: 63.
ROY J. KASMAR.............. Mr. Kasmar has been President and Chief Operating
Officer of the Company since June 1999. He joined
Amerin Guaranty Corporation, an Illinois domiciled
insurer ("Amerin") as Executive Vice President and
Chief Operating Officer in May 1996 and became
President and Chief Operating Officer of Amerin in
November 1997. From 1988 to 1996 he
4
<PAGE> 8
was a member of the Operating Committee and
managing director of the 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 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: 44.
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: 48.
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.
DIRECTORS CONTINUING IN OFFICE
WITH 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 through 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.
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
5
<PAGE> 9
Affiliates. He has been a director of Smart Storage
Inc. since 1997. He has been a director of the
Company since June 1999. Age: 53.
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
Insurance Company where she retired from her
directorship in December 1996. She has been a
Director of the Company since July 1994. Age: 73.
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.
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.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
The Company believes that during the year ended December 31, 1999, 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 8, 2000, 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) OF CLASS(2) SOLE SHARED SOLE SHARED
------------------------- ------------ ----------- ---- ------ ---- ------
<S> <C> <C> <C> <C> <C> <C>
T. Rowe Price Associates................ 2,518,765 6.7% 413,153 -0- 2,518,765 -0-
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 entity as of February 8, 2000.
(2) The percentage has been determined based upon the number of shares
outstanding as of February 8, 2000.
6
<PAGE> 10
OWNERSHIP OF COMMON STOCK BY DIRECTORS AND OFFICERS
The following table sets forth, as of March 15, 2000, 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 most highly
compensated executive officers of the Company, and the directors and all
executive officers of the Company as a group.
<TABLE>
<CAPTION>
NUMBER OF
SHARES PERCENTAGE
BENEFICIALLY OF
BENEFICIAL OWNER OWNED(1)(2) CLASS(3)
- ---------------- ------------ ----------
<S> <C> <C>
Herbert Wender.............................................. 269,375 *
Frank P. Filipps............................................ 212,234 *
Roy J. Kasmar............................................... 172,599 *
C. Robert Quint............................................. 82,392 *
James C. Miller............................................. 52,995(4) *
Albert Will................................................. 24,710 *
David C. Carney............................................. 22,600 *
James W. Jennings........................................... 21,600 *
Ronald W. Moore............................................. 21,000 *
Anthony W. Schweiger........................................ 21,000 *
Robert W. Richards.......................................... 20,500 *
Claire M. Fagin............................................. 17,000 *
Howard S. Yaruss............................................ 6,196 *
William W. Carroll(5)....................................... 5,231 *
Larry E. Swedroe............................................ 3,122 *
Howard B. Culang............................................ 400 *
Rosemarie B. Greco.......................................... 400 *
Stephen T. Hopkins.......................................... 400 *
-------
953,754
All directors and executive officers as a group (18
persons).................................................. 976,589 2.61%
</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: (1) shares allocable to employee contributions under the Company's
Savings Incentive Plan as of January 31, 2000, as to which the employee has
dispositive power, (2) shares that may be acquired within 60 days after the
ownership date reflected, upon exercise of employee and director stock
options, and (3) phantom stock units to which vesting could occur under
certain circumstances.
(3) "*" indicates less than one percent of class.
(4) Includes shares of Common Stock allocable to employee contributions under
the Company's Savings Incentive Plan, 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. Also included are 200 shares owned by Mr. Miller's daughter as to
which he disclaims beneficial ownership.
(5) Mr. Carroll resigned as an executive officer effective November 1, 1999.
7
<PAGE> 11
MEETINGS OF THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Board of Directors of the Company met on five occasions during the
period January 1, 1999 through December 31, 1999. 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 at least 75% of the meetings
of the Board of Directors and the committees thereof held during 1999.
EXECUTIVE COMMITTEE. As of December 31, 1999, the Executive Committee was
composed of Messrs. Wender (Chairman), Carney, Filipps, Kasmar 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, 1999 through December 31, 1999.
STOCK OPTION AND COMPENSATION COMMITTEE. As of December 31, 1999, the
Stock Option and Compensation Committee was composed of four non-employee
directors, Mr. Richards (Chairman), Mr. Culang, Dr. Fagin and Mr. Moore. This
Committee is responsible for administering the Company's 1992 Stock Option Plan,
1995 Equity Compensation Plan, and 1992 Long-Term Incentive 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, 1999 through
December 31, 1999.
AUDIT COMMITTEE. As of December 31, 1999, the Audit Committee was composed
of five non-employee directors, Mr. Carney (Chairman), Ms. Greco, Messrs.
Jennings, Miller and Schweiger. This Committee is responsible for recommending
to the Board of Directors the independent auditors to be retained by the
Company; reviewing and approving 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, 1999 and December 31, 1999.
NOMINATING COMMITTEE. As of December 31, 1999, the Nominating Committee
was composed of four non-employee directors, Messrs. Schweiger (Chairman),
Carney, Hopkins and Jennings. 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, 1999 and December 31, 1999. See "ELECTION OF
DIRECTORS -- Requirements for Advance Notification of Nominees."
INVESTMENT COMMITTEE. As of December 31, 1999, the Investment Committee
was composed of Mr. Moore (Chairman), Dr. Fagin, Messrs. Filipps, Miller,
Richards, and Swedroe. The Investment Committee is responsible for monitoring
the Company's investment guidelines and portfolio. The Investment Committee met
four times during the period January 1, 1999 through December 31, 1999.
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 March 15, 2000. 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 is the Chief Executive Officer of the
Company and has been the Chairman of its Board of
Directors since June 1999. He joined the Company
and Commonwealth Mortgage Assurance Company, the
Company's operating subsidiary now known as 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 1999. He joined
Amerin as Executive Vice President and Chief
Operating Officer in May 1996 and became President
and Chief Operating Officer of Amerin in November
1997. From 1988 to 1996 he was a member of the
Operating Committee and managing director of the
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
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: 44
C. Robert Quint............ Mr. Quint was named Executive Vice President, Chief
Financial Officer of the Company in April 1999. He
was named 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: 40.
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: 53.
9
<PAGE> 13
Howard S. Yaruss........... Mr. Yaruss joined the Company and Radian in July
1997 as Senior Vice President, Secretary and
General Counsel. From July 1991 until July 1997 he
served as Vice President and Assistant General
Counsel of Capital Reinsurance Company, a
reinsurance company. Age: 41.
Albert V. Will............. Mr. Will has been Executive Vice President,
Operations of the Company since June 1999. 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: 44.
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 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, 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
an annual grant of 400 units of phantom stock at full value exerciseable upon
their departure from the Board of Directors of the Company. Each director also
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, 1999, 1998 and 1997 as to the compensation of (i) the Chief
Executive Officer of the Company, (ii) the four most highly compensated
executive officers of the Company other than the Chief Executive Officer, and
(iii) Mr. William W. Carroll, who would have been included in the former group
had he not resigned as an executive officer in November, 1999.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
------------
AWARDS
------------
SECURITIES
ANNUAL COMPENSATION UNDERLYING ALL OTHER
----------------------- OPTIONS/ COMPEN-
NAME AND PRINCIPAL POSITION YEAR SALARY(1) BONUS(2)(8) SARS(3) SATION(4)
- --------------------------- ---- --------- ----------- ------------ ---------
<S> <C> <C> <C> <C> <C>
Frank P. Filipps....................... 1999 $500,000 $750,000 67,500(6) $ 21,979
Chairman of the Board and 1998 $400,000 $600,000 42,500 $ 19,920
Chief Executive Officer 1997 $300,000 $450,000 50,000 $ 8,000
Roy J. Kasmar.......................... 1999 $336,828 $475,000 30,000 $137,836
President and Chief Operating Officer 1998 $275,000 $325,000 18,345(7) $ --
1997 $245,000 $ 86,875 53,330(7) $102,188
C. Robert Quint........................ 1999 $225,000 $247,500 18,500(6) $ 15,862
Executive V.P., Chief Financial Officer 1998 $180,000 $225,000 16,000 $ 15,387
1997 $167,000 $208,750 26,500 $ 8,000
William W. Carroll..................... 1999 $220,000 $220,000 0 $ 13,945
Sr. V.P. Sales -- Radian(5)(9) 1998 $190,000 $228,000 16,000 $ 14,475
1997 $168,269 $218,750 19,500 $ 8,000
Albert V. Will......................... 1999 $220,000 $200,000 17,000 $ 8,000
Executive V.P., Sales and Operations(5) 1998 $ 78,557 $145,754 24,710(7) $ 17,250
Howard S. Yaruss....................... 1999 $175,000 $131,250 9,750(6) $ 18,400
Sr. V.P., Secretary & General
Counsel(5) 1998 $150,000 $112,500 8,000 $ 18,400
1997 $150,000 $ 50,000 16,000 $ 10,000
</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 18, 2000 in consideration for 1999
performance.
(4) Includes matching contributions by the Company under the Company's Savings
Incentive Plan, relocation expenses and other fringe benefits.
(5) Indicates employment commenced during the first year for which a salary is
provided.
(6) Includes phantom stock units granted in December 1999.
(7) Number of shares underlying options have been adjusted to reflect the
merger.
(8) Bonus may have been deferred pursuant to the terms of the Deferred
Compensation Plan.
(9) Mr. Carroll resigned as an executive officer effective November 1, 1999.
The following table sets forth certain information concerning grants of
stock options made during the year ended December 31, 1999 to (i) the chief
executive officer of the Company, (ii) the four most highly compensated
executive officers of the Company other than the chief executive officer, and
(iii) Mr. William W. Carroll who would have been included in the former group
had he not resigned as an executive officer in November, 1999.
11
<PAGE> 15
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS(1)
-------------------------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS POTENTIAL REALIZABLE VALUE AT ASSUMED
UNDERLYING GRANTED TO ANNUAL RATES OF STOCK PRICE APPRECIATION
OPTIONS EMPLOYEES EXERCISE FOR OPTION TERM (10 YEARS)(2)
GRANTED/ IN FISCAL OR BASE EXPIRATION ----------------------------------------
NAME SARS YEAR PRICE DATE 0% 5% 10%
- ---- ---------- ------------ -------- ---------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Frank P. Filipps..... 42,500 19.95% $40.625 01/19/09 $ -- $1,085,826 $2,751,696
7,500(4) 58.60% $ -- 12/17/02 $339,375 -- --
Roy J. Kasmar(3)..... -- -- -- -- -- -- --
Albert V. Will(3).... -- -- -- -- -- -- --
C. Robert Quint...... 16,000 7.51% $40.625 01/19/09 $ -- $ 408,781 $1,035,933
1,500(4) 11.72% $ -- 12/17/01 $ 67,875 -- --
Howard S. Yaruss..... 8,000 3.75% $40.625 01/19/09 $ -- $ 204,390 $ 517,966
1,000(4) 7.81% $ -- 12/17/01 $ 45,250 -- --
William W.
Carroll(5)......... 16,000 7.51% $40.625 01/19/09 $ -- $ 408,781 $1,035,933
</TABLE>
- ---------------
(1) All options disclosed in this table vest in four equal installments on each
anniversary of the date of grant in 2001, 2002, 2003 and 2004 and have a
reload feature.
(2) The dollar amounts under these columns are the result of calculations at 0%,
5% and 10% rates set by the Securities Exchange Commission and therefore are
not intended to forecast possible future appreciation of the price of the
Common Stock. The Company did not use an alternative formula for a grant
date valuation, an approach which would state gains at present, and
therefore lower, value. The Company is not aware of any formula which will
determine with reasonable accuracy a present value based on future unknown
or volatile factors.
(3) No stock options were granted by Amerin Corporation in 1999 prior to its
merger with and into the Company and no stock options were granted by the
Company subsequent to the merger.
(4) Phantom stock units granted December 17, 1999 with a grant date market close
price of $45.25 per unit.
(5) Mr. Carroll resigned as an executive officer effective November 1, 1999.
The following table sets forth certain information concerning exercises of
stock options during the year ended December 31, 1999 and the value of
unexercised stock options at December 31, 1999 for (i) the Chief Executive
Officer of the Company, (ii) the four most highly compensated executive officers
of the Company other than the Chief Executive Officer, and (iii) William W.
Carroll, who would have been included in the former group had he not resigned as
an executive officer in November, 1999.
12
<PAGE> 16
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR END OPTION/SAR VALUES(1)
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF SECURITIES IN-THE-MONEY
UNDERLYING OPTIONS/SARS OPTIONS/SARS
SHARES AT DECEMBER 31, 1999(3) AT DECEMBER 31, 1999
ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Frank P. Filipps.............. -- -- 192,500 97,500 $6,086,875 $1,203,125
Roy J. Kasmar................. -- -- 166,691 -- $ 795,042 $ --
William W. Carroll(2)......... -- -- 4,875 30,625 $ -- $ 114,000
Albert V. Will................ -- -- 24,710 -- $ 539,913 $ --
Howard S. Yaruss.............. -- -- 4,000 21,000 $ -- $ 104,750
C. Robert Quint............... -- -- 72,625 41,375 $2,232,188 $ 459,688
</TABLE>
- ---------------
(1) At December 31, 1999, the closing price of a share of Common Stock on the
New York Stock Exchange was $47.75.
(2) Mr. Carroll resigned as an executive officer effective November 1, 1999.
(3) There is a reload feature attached to outstanding option grants.
CHANGE OF CONTROL AGREEMENTS
See "CERTAIN TRANSACTIONS" for a description of change of control
agreements between the Company and its executive officers.
DEFERRED COMPENSATION PLAN
In October 1999, the Board of Directors of the Company approved a Deferred
Compensation Plan for certain key officers of Radian. The Deferred Compensation
Plan affords the key officers the opportunity to elect to defer receipt of their
annual bonus monies. This program provides a way for key officers to defer
income and tax liability while earning a rate of return equal to either (i) 200
basis points above the U.S. 30-year Treasury rate or (ii) the Company's return
on equity.
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
$170,000 in 2000) 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") for selected senior
officers of the Company. 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 ($170,000 in 2000) and the
13
<PAGE> 17
statutory cap on actual benefits ($135,000 in 2000). 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.
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 $135,000
are payable by the Company only to persons designated by the Board of Directors
as eligible to participate in the SERP.
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 7,100 14,200 21,300 28,400 35,500 42,600 49,700
$ 150,000 11,100 22,200 33,300 44,400 55,500 66,600 77,700
$ 170,000 12,700 25,400 38,100 50,800 63,500 76,200 88,900
$ 200,000 15,100 30,200 45,300 60,400 75,500 90,600 105,700
$ 250,000 19,100 38,200 57,300 76,400 95,500 114,600 133,700
$ 300,000 23,100 46,200 69,300 92,400 115,500 138,600 161,700
$ 500,000 39,100 78,200 117,300 156,400 195,500 234,600 273,700
$ 750,000 59,100 118,200 177,300 236,400 295,500 354,600 413,700
$1,000,000 79,100 158,200 237,300 316,400 395,500 474,600 553,700
</TABLE>
For the year ended December 31, 1999, 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, 1999 for each such officer is as follows: Mr.
Filipps -- 7 years; Mr. Kasmar -- 4 years; Mr. Will -- 2 years; Mr. Yaruss -- 3
years and Mr. Quint -- 16 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,
1999:
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.
Therefore, in practice, it 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 corporate
and individual objectives should lead to improved performance and greater value
to the stockholders. The Stock Option and Compensation Committee has worked with
an outside consultant which reviewed the Company's compensation programs
compared to those provided by similar organizations.
14
<PAGE> 18
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 results of the
Company's 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 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 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. Based upon the review and
management's recommendations, the Committee has 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.
15
<PAGE> 19
The Committee reviews the individual performance of Messrs. Filipps and
Kasmar. The performances of the other executive officers of the Company are
reviewed by either Mr. Filipps or Mr. Kasmar, who also make 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 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.
On January 19, 1999 the following executive officers of the Company named
in the "Summary Compensation Table" were granted options to purchase shares of
Common Stock: Mr. Filipps -- 42,500, Mr. Quint -- 16,000, Mr. Carroll -- 16,000
and Mr. Yaruss -- 8,000 shares each. On December 17, 1999 the following
executive officers received phantom stock unit grants: Mr. Filipps -- 7,500, Mr.
Quint -- 1,500 and Mr. Yaruss -- 1,000 units each. Mr. Filipps' phantom stock
units vest 3 years from the date of grant, while Mr. Quint's and Mr. Yaruss'
phantom stock units vest 2 years from the date of grant.
During 1999, the executive officers of the Company as a group were granted
options to purchase 89,000 shares in total. These options vest 25% per year
beginning January 18, 2001, and were granted at an option price of $40.625 per
share, the closing price of the Common Stock on the New York Stock Exchange on
January 18, 1999.
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 to 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 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, 1994 through December 31, 1999. The
16
<PAGE> 20
five companies in the peer group, MGIC Investment Corporation, PMI Group and
Triad Guaranty Inc., publicly-traded mortgage insurance companies, as well as
Fannie Mae and 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.
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
RADIAN GROUP INC S&P 500 INDEX PEER GROUP
---------------- ------------- ----------
<S> <C> <C> <C>
1994 100.00 100.00 100.00
1995 153.12 137.58 172.59
1996 256.65 169.17 220.95
1997 422.82 225.60 342.97
1998 322.48 290.08 449.98
1999 336.05 351.12 380.40
</TABLE>
PEER GROUP COMPANIES
Fannie Mae
Freddie Mac
MGIC Investment Corp/WI
PMI Group Inc
Triad Guaranty Inc
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.
(4) This Performance Graph includes the addition of two companies not previously
included in the peer group.
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 Land Title
Insurance Company ("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. who, as successor to Commonwealth, now owns
the Preferred Stock. Dividends on the Preferred Stock are payable quarterly and
for the year ended December 31, 1999 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,
17
<PAGE> 21
to the extent it has funds legally available therefor, to redeem 72,000 shares
(80,000 shares 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.
The Company has entered into change of control agreements with each of
Messrs. Frank P. Filipps, Roy J. Kasmar, Paul F. Fischer, Andrew R. Luczakowsky,
C. Robert Quint, Scott C. Stevens and Howard S. Yaruss. 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.
The Company has entered into an employment agreement with Mr. Roy J.
Kasmar. The employment agreement has a two-year term which commenced on April 9,
1999. It provides Mr. Kasmar with a base salary of $375,000 per year, a target
bonus of $475,000 per year, a minimum bonus of $237,500 in 1999 and 2000, the
right to be nominated as a director of the Company as long as he is employed by
the Company, reimbursement for relocation expenses in connection with his move
to the Company's headquarters in Philadelphia, severance in the event his
employment is terminated under certain circumstances during the term of the
agreement and certain fringe benefits commensurate to those provided to other
senior executives of the Company.
II. STOCKHOLDER APPROVAL OF SELECTION
OF INDEPENDENT AUDITORS
On January 18, 2000 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, 1999.
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 2000 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.
18
<PAGE> 22
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
2001 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 2001 annual meeting, such proposals
must be received by the Company not later than December 4, 2000. 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, 1999,
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
19
<PAGE> 23
RADIAN GROUP INC.
PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 9, 2000
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby authorizes Frank P. Filipps, 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 May 9, 2000 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 3, 2000. 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> 24
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<TABLE>
<S> <C> <C> <C>
1. Election of Directors FOR all nominees WITHHOLD AUTHORITY to vote EXCEPTIONS
listed below / / for all nominees listed below / / / /
</TABLE>
Nominees: F. Filipps, S. Hopkins, A. Schweiger, R. Richards, J. Miller
(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_____________________________________________2000
SIGNED________________________________________________
______________________________________________________
VOTES MUST BE INDICATED
(X) IN BLACK OR BLUE INK. /X/
SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
