RADIAN GROUP INC. Item 5.02. Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
(e) Compensatory Arrangements of Certain Officers
2022 Long-Term Incentive Awards
On
All of the 2022 LTI Awards granted by the Company, including those awarded to
the Executives as described in more detail below, were granted under the
Each Executive's 2022 LTI Award is comprised of the following: (1) performance-based restricted stock units that will vest based on growth in the Company's "LTI Book Value per Share" (as defined below) over a three-year performance period (the "BV RSUs"); and (2) time-based restricted stock units that will vest over three years in pro rata installments ("Time-Based RSUs"). Consistent with the Company's pay-for-performance philosophy, the 2022 LTI Awards are primarily performance-based, with the BV RSUs and Time-Based RSUs comprising 60% and 40% of the Executives' target 2022 LTI Awards, respectively.
2022 Performance-Based Awards - BV RSUs
The Committee granted BV RSUs to the Executives in the following target amounts ("BV RSU Targets"):
BV RSU
Executive Officer Target (#)
Mr. Thornberry 155,850
Mr. Brummer 54,550
Mr. Hall 46,760
Mr. Hoffman 34,290
Mr. McMahon 28,060
The BV RSUs will vest on
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On the vesting date, each Executive will become vested in a number of BV RSUs
(from 0 to 200% of the Executive's BV RSU Target, the "BV Performance Level")
based on how the Company's cumulative growth in LTI Book Value per Share (as
defined below) over a three-year performance period from
Cumulative Growth in LTI Book BV Performance Level(1)
Value per Share(1) (Percentage of BV RSU Target)
>55% 200%
40% 100%
<15%(2) 0%
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(1) If the Company's cumulative growth in LTI Book Value per Share falls between
two referenced percentages, the BV Performance Level will be interpolated.
(2) If the Company's cumulative growth in LTI Book Value per Share is less than
15%, the BV Performance Level will be zero, and no BV RSUs would vest.
The Company's "LTI Book Value per Share" is defined as: (A) book value adjusted to exclude: (1) accumulated other comprehensive income; and (2) the impact, if any, during the three-year performance period from declared dividends on common shares and dividend equivalents on outstanding equity awards; divided by (B) basic shares of common stock outstanding.
The BV RSUs include a one-year holding period after vesting, such that the vested BV RSUs will not be convertible into shares (other than shares withheld to pay taxes due at vesting) until the one-year anniversary of the vesting date of the BV RSUs. However, as set forth in the applicable grant instrument, the post-vesting holding period will not apply in certain circumstances, such as (i) the Executive's death or disability, (ii) an Involuntary Termination (as defined below) in connection with a change of control before the end of the performance period, or (iii) the occurrence of a change of control after the end of the performance period.
The treatment of the BV RSU awards upon the occurrence of certain employment termination events is described under "Termination of Employment Events" below. The BV RSU awards provide for "double trigger" vesting in the event of a change of control. In the event of a change of control of the Company before the end of the three-year performance period, absent an Involuntary Termination (as defined below), the BV RSUs will become vested on the vesting date of the BV RSUs following the end of the three-year performance period in an amount equal to the projected BV Performance Level for the full performance period, estimated as of the end of the fiscal quarter immediately prior to the change of control (the "CoC Performance Level").
Executives are entitled to receive dividend equivalents on their BV RSU awards, as described below under "Dividend Equivalents."
2022 Time-Based RSUs
The Committee granted Time-Based RSUs to the Executives in the following
amounts:
The Time-Based RSUs are scheduled to vest in three pro rata installments on
The treatment of the Time-Based RSUs upon the occurrence of certain employment termination events is described under "Termination of Employment Events" below.
Executives are entitled to receive dividend equivalents on their Time-Based RSU awards as described below under "Dividend Equivalents."
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Termination of Employment Events
Generally, the 2022 LTI Awards would be treated as follows if the Executive's employment is terminated for the following reasons:
Termination Event BV-RSUs Time-Based RSUs
Voluntary Termination All unvested BV RSUs are All unvested Time-Based RSUs
forfeited are forfeited
Involuntary • Except as set forth • If terminated on or before
Termination* below, the target number of the first vesting date of the
BV RSUs will be prorated for Time-Based RSUs, 33% of the(No Change of Control) the number of months served Time-Based RSUs will
between the grant date and automatically vest, and the
date of termination, with remaining Time-Based RSUs
vesting occurring on the will be forfeited
original vesting date at the
BV Performance Level • If terminated after the
first vesting date of the
• If terminated within six Time-Based RSUs, any unvested
months of the grant date, Time-Based RSUs will
the BV RSUs will be automatically vest on the
forfeited date of termination
• If terminated during the
six-months prior to the
original vesting date, the
BV RSUs will not be prorated
(Executive is eligible for
full value of award)
Involuntary Accelerate vesting of BV Accelerate vesting of
Termination* RSUs as of the termination Time-Based RSUs in full on
date (or, if later, on the the termination date (or, if
(Occurring 90 Days date of the Change of later, on the date of the
Before or One Year Control) at the CoC Change of Control)
After Change of Performance Level
Control)
Death / Disability Accelerate vesting of BV Accelerate vesting of
RSUs as of the date of death Time-Based RSUs in full on
or disability at the BV RSU date of death or disability
Target or, if a change of
control has occurred, at the
CoC Performance Level.
Retirement BV RSUS are not forfeited Accelerate vesting of
and vest on the original Time-Based RSUs in full on
vesting date at the BV retirement date
Performance Level or, if a
change of control has
occurred, at the CoC
Performance Level.
* An "Involuntary Termination" is generally defined as a termination of the Executive's employment by the Company other than for "cause" or an Executive's termination of employment for "good reason."
The 2022 LTI Awards include a provision that prohibits the Executive from
competing with the Company and from soliciting the Company's employees or
customers for a period of 18 months with respect to
Dividend Equivalents
Executives are entitled to receive dividend equivalents on their 2022 LTI
Awards. In general, the 2022 LTI Awards provide that upon the declaration and
payment by the Company of a cash dividend on its common stock, each Executive
will be entitled to receive a cash amount equal to the per-share cash dividend
paid by the
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Dividend Equivalents will accrue on unvested 2022 LTI Awards in a non-interest bearing book account and will not be paid to the Executives prior to vesting of the 2022 LTI Awards. Unless the 2022 LTI Award is otherwise deferred under the Company's deferred compensation plan for executives, such Dividend Equivalents, as adjusted to take into account achievement of the applicable performance goals with respect to the BV RSUs, will be paid when the 2022 LTI Awards vest. If and to the extent that the underlying 2022 LTI Awards are forfeited, all related Dividend Equivalents will be forfeited. With respect to the BV RSUs, which are subject to a one-year holding period after vesting, Dividend Equivalents will be paid following the vesting of the BV RSUs when dividends are paid on the underlying common stock of the Company.
The foregoing summary of the 2022 LTI Awards is not a complete description of
all of the terms and conditions of the BV RSUs and the Time-Based RSUs, and is
qualified in its entirety by reference to the full text of the form of grant
instruments, which the Company plans to file as exhibits to its Quarterly Report
on Form 10-Q for the quarter ended
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