UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
DC 20549
FORM 8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of
The
Securities Exchange Act of 1934
Date
of report (Date of earliest event reported) July
9, 2015
Radian Group Inc.
(Exact
Name of Registrant as Specified in Its Charter)
Delaware
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1-11356
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23-2691170
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(State or Other Jurisdiction of Incorporation)
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(Commission File Number)
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(IRS Employer Identification No.)
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1601
Market Street, Philadelphia, Pennsylvania
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19103
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(Address
of Principal Executive Offices)
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(Zip
Code)
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(215) 231 - 1000
(Registrant’s
Telephone Number, Including Area Code)
Not Applicable
(Former
Name or Former Address, if Changed Since Last Report)
Check the
appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any
of the following provisions (see General Instruction
A.2. below):
⃞
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
⃞
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
⃞
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
⃞
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
Item 5.02.
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Departure of Directors or Certain Officers; Election of
Directors; Appointment of Certain Officers; Compensatory
Arrangements of Certain Officers.
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2015 Long-Term Incentive Awards
On July 9, 2015, the Compensation and Human Resources Committee (the
“Committee”) of the Board of Directors of Radian Group Inc. (the
“Company”) granted annual long-term incentive awards to the Company’s
executive officers, including its named executive officers (the “2015
LTI Awards”).
All of the 2015 LTI Awards granted by the Company, including those
awarded to the named executive officers as described in more detail
below, were granted under the Company’s 2014 Equity Compensation Plan
and will be settled in shares of the Company’s common stock.
The 2015 LTI Awards consist of: (1) stock-settled performance based
restricted stock units (“Performance Based RSUs”), and (2) performance
based non-qualified stock options (“Performance Based Options”). For
each of the named executive officers, the Performance Based RSUs and
Performance Based Options represent 75% and 25%, respectively, of the
total value of his/her 2015 LTI Award. For 2015, the Committee granted
long-term incentive awards to the named executive officers that on
average were approximately 10% less in grant date fair value than both
the awards granted to the same named executive officers in 2014 and such
named executive officers’ target long-term incentive compensation for
2015.
2015 Performance Based RSU Awards
The Committee granted a Performance Based RSU award to each of the
Company’s named executive officers in the following target amounts:
Mr. Ibrahim – 119,940 RSUs; Mr. Hall – 19,040 RSUs; Ms. Bazemore –
38,080 RSUs; Mr. Brummer – 21,900 RSUs; and Mr. Hoffman – 19,040 RSUs.
The Performance Based RSU awards generally vest on July 9, 2018, upon
the conclusion of a three year performance period. As further described
below, at the end of the performance period, each named executive
officer will be entitled to receive a number of RSUs (from 0 to 200% of
his/her target Performance Based RSU award) based on the Company’s
absolute and relative total stockholder return (“TSR”) over the three
year performance period, subject to a maximum cap (the “Maximum Cap”) of
6 times the value of his/her award on the grant date. Each vested
Performance Based RSU will be payable in one share of common stock,
subject to the Maximum Cap. In addition, for the 2015 Performance Based
RSUs, the Committee instituted a one-year, post-vesting holding period
for the Performance Based RSUs, such that the vested Performance Based
RSU will not be convertible into shares (other than such shares withheld
to pay taxes due at vesting) until the one-year anniversary following
the vesting date of the Performance Based RSUs. However, the
post-vesting holding period will not apply in certain circumstances,
such as the named executive officer's death or disability.
The Company’s absolute TSR will be determined based on the change in
market value of the Company’s common stock during the performance
period, as measured by comparing (x) the average closing price of the
Company’s common stock on the NYSE for the 20 consecutive trading days
preceding and including July 9, 2015 and (y) the average closing price
for the 20 consecutive trading days preceding and including the last day
of the performance period. The Company’s relative TSR will be measured
against the median TSR of a peer group consisting of the companies
listed on the NASDAQ Financial-100 Index and MGIC Investment
Corporation, NMI Holdings Inc. and Essent Group Ltd. (collectively, the
“Peer Group”).
The payout for the Performance Based RSU awards will be determined based
on an analysis of both the Company’s relative TSR and absolute TSR,
beginning with an assessment of Company’s relative TSR. The Company’s
TSR initially will be compared to the median TSR of the companies
included in the Peer Group (the “Median Peer Group TSR”). The starting
point for the payout determination (the “Relative Payout Percentage”)
will be 100% of target. For every 1% that the Company’s TSR exceeds the
Median Peer Group TSR, the Relative Payout Percentage will increase by 2
percentage points above 100% of target. For every 1% that the Company’s
TSR is below the Median Peer Group TSR, the Relative Payout Percentage
will decrease by 3 percentage points below 100% of target.
Once the Relative Payout Percentage has been determined, the actual
payout percentage under the Performance Based RSU award (the “Final
Payout Percentage”) will be subject to three absolute TSR hurdles (the
“Absolute TSR Hurdles”) that are intended to ensure that regardless of
the Company’s performance against the Peer Group, the Final Payout
Percentage remains correlated to the Company’s stock price performance
over the performance period. The Absolute TSR Hurdles will impact the
Final Payout Percentage as follows:
-
The Final Payout Percentage will be capped at 125% if the Company
fails to achieve an absolute TSR of at least 25%;
-
The Final Payout Percentage will be capped at 50% if the Company’s
absolute TSR is negative; and
-
The Final Payout Percentage will be 0% if (1) the Company’s absolute
TSR is negative 25% or lower, and (2) the Company’s TSR does not equal
or exceed the Median Peer Group TSR.
The Performance Based 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, the Performance Based RSUs will become payable at target
upon the vesting of the awards on July 9, 2018, provided that the
executive officer remains employed by the Company through such date.
However, if a named executive officer’s employment is terminated by the
Company without “cause,” or the named executive officer terminates
employment for “good reason,” in each case within 90 days before or one
year after a change of control, the Performance Based RSUs will become
fully vested and payable at target upon such termination (or the date of
the change of control, if later).
If the named executive officer retires before the end of the three year
performance period, the award will remain outstanding and will vest at
the end of the performance period to the extent that the performance
criteria discussed above have been satisfied (or will vest at the target
level in the event of a change of control) and generally will become
payable subject to the one year holding period discussed
above. Additionally, the Performance Based RSUs will become fully
vested and payable at target in the event of a named executive officer’s
death or disability.
The Performance Based RSUs also include a provision that prohibits the
executive officer from competing with the Company and from soliciting
the Company’s employees or customers for a period of twelve (12) months
(the “Restricted Period”) following termination of the executive
officer’s employment for any reason.
2015 Performance Based Stock Option Awards
The Committee granted Performance Based Options to each of the named
executive officers in the following amounts: Mr. Ibrahim – 48,090
Performance Based Options; Mr. Hall – 7,640 Performance Based Options;
Ms. Bazemore – 15,270 Performance Based Options; Mr. Brummer – 8,780
Performance Based Options; and Mr. Hoffman – 7,640 Performance Based
Options.
Each Performance Based Option has a per share exercise price of $18.42
(the closing price of the Company’s common stock on the NYSE on the date
of grant), and a ten-year term, with 50% of the award vesting on or
after the third anniversary of the grant date (i.e., July 9, 2018) and
the remaining 50% of the award vesting on or after the fourth
anniversary of the grant date (i.e., July 9, 2019); provided, however,
that the Performance Based Options will vest only if the closing price
of the Company’s common stock on the NYSE exceeds $23.03 (125% of the
Performance Based Option exercise price) for ten consecutive trading
days ending on or after third anniversary of the grant date (the “Stock
Price Vesting Hurdle”).
The Performance Based Options provide for “double trigger” vesting in
the event of a change of control. Except as provided below, upon a
change of control, the Performance Based Options will continue to vest
50% on the third and fourth anniversaries of the grant date, regardless
of whether the Stock Price Vesting Hurdle has been satisfied, as long as
the named executive remains employed by the Company through such date.
However, if a named executive officer’s employment is terminated by the
Company without “cause,” or the named executive officer terminates
employment for “good reason,” in each case within 90 days before or one
year after a change of control, the Performance Based Options will
become fully vested and exercisable upon such termination (or the date
of the change of control, if later).
The Performance Based Options also include a provision that prohibits
the executive officer from competing with the Company and from
soliciting the Company’s employees or customers during the Restricted
Period following termination of the executive officer’s employment for
any reason.
Additionally, the Performance Based Options will become fully vested and
exercisable in the event of a named executive officer’s death,
disability or retirement. However, if Mr. Ibrahim retires before the
Performance Based Options are otherwise exercisable, his Performance
Based Options will remain outstanding and become exercisable in
accordance with the three and four year vesting schedule and the Stock
Price Vesting Hurdle for such Performance Based Options, or as provided
above in the event of a change of control.
The foregoing summary of the 2015 LTI Awards is not a complete
description of all of the terms and conditions of the Performance Based
RSU awards and the Performance Based Options 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 September 30, 2015.
SIGNATURES
Pursuant to
the requirements of the Securities Exchange Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
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RADIAN GROUP INC.
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(Registrant)
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Date:
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July 15, 2015
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By:
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/s/ Edward J. Hoffman
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Edward J. Hoffman
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General Counsel and Corporate Secretary
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