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Exhibit
10.2
RADIAN VOLUNTARY
DEFERRED
COMPENSATION PLAN FOR
OFFICERS
As amended by the Board
of Directors on May 6, 2008
Radian Group Inc.
(“Company”) currently maintains the Radian Voluntary
Deferred Compensation Plan for Officers (“Plan”). The
Plan was originally established by the Company’s Board of
Directors effective October 19, 1999. The Plan was amended and
restated effective December 12, 2005 (“2005 Plan”)
to incorporate the requirements of section 409A of the Internal
Revenue Code of 1986, as amended (“Code”) and was
further amended and restated effective January 1, 2008. The
Company now desires to amend and restate the Plan in order to
provide for transition elections under section 409A of the Code and
make other appropriate changes.
Amounts that were earned and vested as
of December 31, 2004 are intended to be
“grandfathered” for purposes of section 409A of the
Code (“Grandfathered Deferrals”). Distribution of the
Grandfathered Deferrals shall be governed by the Plan as in effect
on October 3, 2004, consistent with the
“grandfather” provisions of section 409A of the Code,
as set forth in Exhibit A hereto.
ARTICLE I -
Definitions
Section 1.01 “Account”
shall mean a bookkeeping record of the accumulated contributions
determined for each Participant, including any earnings credited to
or debited from such contributions. Except as provided in
Section 3.08, a Participant’s Account shall be fully
vested and nonforfeitable at all times.
Section 1.02 “Benefit
Commencement Date” means the date irrevocably elected by the
Participant pursuant to Section 2.04, or such later date as
elected by the Participant pursuant to Section 2.05. As part
of Participant’s initial deferral election made with respect
to Compensation earned in a given Plan Year, the Participant may
elect a specific distribution date or may elect to commence
distribution of his or her benefits under the Plan upon his or her
termination of employment. If a Participant does not make an
election to commence payment upon termination of employment in the
initial deferral election, the Participant may not later make an
election to commence payment upon termination of employment
pursuant to a re-deferral election under
Section 2.05.
Section 1.03 “Board”
means the Board of Directors of Radian Group Inc.
Section 1.04 “Code”
means the Internal Revenue Code of 1986, as amended.
Section 1.05 “Company”
means Radian Group Inc., a Delaware corporation, and its corporate
successors and assigns, and any Subsidiary which is authorized by
the Board to adopt this Plan by action of its board of directors or
other governing body.
Section 1.06
“Committee” means the Compensation and Human Resources
Committee of the Board.
Section 1.07
“Compensation” means annual bonuses paid to
Participants after the close of each calendar year for which the
bonuses are earned.
Section 1.08 “Contingent
Deferred Obligation” means the total amount of the
Company’s contingent liability for payment of deferred
benefits under the Plan.
Section 1.09 “Deferred
Compensation” means the amount of Compensation that a
Participant has irrevocably elected to defer under the terms of
this Plan.
Section 1.10 “Disabled”
or “Disability” means a physical or mental condition of
a Participant resulting from bodily injury, disease, or mental
disorder which renders the Participant incapable of continuing any
gainful occupation and which condition constitutes total disability
under the federal Social Security Act then in effect. A
determination of Disability shall be made in accordance with the
requirements of section 409A of the Code.
Section 1.11 “Eligible
Executive” means an executive of the Company or of a
Subsidiary who has the rank of Senior Vice President or higher and
such other officers of the Company as the Committee may
designate.
Section 1.12
“Participant” means an Eligible Executive who elects to
participate in the Plan, and further differentiated as
follows:
(a) “Active
Participant”: A Participant who is an employee of the Company
at the time in question.
(b) “Inactive
Participant”: A Participant who is not an employee of the
Company at the time in question (including as a result of the
Participant’s death or Disability).
Section 1.13 “Plan”
means this Voluntary Deferred Compensation Plan for Officers, as it
may be amended from time to time.
Section 1.14 “Plan
Year” means the calendar year during which a
Participant’s Compensation is earned.
Section 1.15
“Retirement” means a Participant’s termination of
employment with the Company and its Subsidiaries after attaining
eligibility for retirement under Radian’s Pension
Plan.
Section 1.16
“Subsidiary” means a company of which the Company owns,
directly or indirectly, at least a majority of the shares having
voting power in the election of directors or other governing
body.
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ARTICLE II - Designation of
Participants and Payment of Account
Section 2.01 Each employee who is
eligible to participate in the Plan shall complete such forms and
provide such data as are reasonably required by the Committee as a
precondition to Plan participation.
Section 2.02
(a) Each Participant must
fully complete the deferral election form provided by the Company
irrevocably electing to reduce his or her Compensation by an amount
equal to between 10% and 100% in increments of 5% only. By making
such election, the Participant shall for all purposes be deemed
conclusively to have consented to the provisions of the Plan and to
all subsequent amendments thereto. Such forms must be filed prior
to January 1 of the Plan Year for which the election is to be
effective, or at such earlier time as may be set by the Committee
in its sole discretion.
(b) Notwithstanding the
foregoing, if an employee first becomes an Eligible Executive in
the middle of a Plan Year, the Eligible Executive may elect to
defer a percentage of his or her Compensation for such Plan Year so
long as the Eligible Executive files the deferral election form
provided by the Company, irrevocably electing to reduce his or her
Compensation by an amount equal to between 10% and 100% in
increments of 5% only, on or before the date that is 30 days after
the date on which the employee first becomes an Eligible Executive.
The deferral election shall apply only to Compensation earned with
respect to services performed after the date on which the Eligible
Employee files his or her deferral election form.
(c) A separate deferral
election must be filed for each Plan Year.
Section 2.03 A Participant may
elect to receive his or her Account balance in a single sum payment
or annual installment payments over a term of ten years. Subject to
Section 2.05, the form in which the Participant elects to
receive payment of his or her Account balance shall be irrevocably
elected on the Participant’s deferral election form as
described in Section 2.02 above.
Section 2.04
(a) On the Plan deferral
election form described in Section 2.02, a Participant may
elect to receive or commence payment of his or her Account balance,
in the form elected in Section 2.03, either (i) in
January of any year which is at least two years following the Plan
Year for which such election is made, or (ii) in January of
the year immediately following his or her termination of
employment.
(b) Subject to
Section 2.05, the date on which the Participant irrevocably
elects to receive, or commence receiving, payment of his or her
Account balance shall be elected on the Participant’s
deferral election form as the Benefit Commencement Date. However,
if the Participant designates a specified date as the Benefit
Commencement Date and the Participant’s employment with the
Company and its Subsidiaries terminates before that specified date
as a result of the Participant’s death, Disability or
Retirement, the Benefit Commencement Date shall
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be the first to occur of (i) the
specified date, (ii) in the event of the Participant’s
death, the date described in Section 4.01, or (iii) in
the event of the Participant’s Retirement or Disability, the
date described in Section 5.03.
(c) Notwithstanding anything
in the Plan to the contrary, the payment dates for all
Grandfathered Deferrals shall be determined pursuant to Exhibit
A.
Section 2.05
(a) For amounts other than
Grandfathered Deferrals, a Participant shall have the option of
postponing an elected Benefit Commencement Date by making an
irrevocable election to defer payment at least 12 full months
before distributions under the Plan related to that Benefit
Commencement Date are scheduled to commence. Such re-deferral shall
be for at least five years from the year of the Benefit
Commencement Date, and shall not take effect until at least 12
months after the date on which the re-deferral election is made. A
Participant may not, in connection with a re-deferral made under
this Section 2.05, elect to receive a distribution of amounts
related to a Benefit Commencement Date upon his or her termination
of employment.
(b) If a Participant elected
termination of employment as the Benefit Commencement Date on his
or her original deferral election form, the Participant may
re-defer the Benefit Commencement Date only if such re-deferral is
for at least five years from the Participant’s date of
termination. If the Participant terminates employment within 12
months after the date on which the re-deferral election is made,
the re-deferral election shall be disregarded for purposes of
determining the Participant’s Benefit Commencement
Date.
(c) In connection with a
re-deferral election under this Section 2.05, a Participant
may also change the form in which the Participant elected to
receive his or her Account balance under Section 2.03 at the
applicable Benefit Commencement Date.
(d) A Participant may
postpone the elected Benefit Commencement Date and change the form
of payment relating to that Benefit Commencement Date on one or
more occasions in accordance with this Section 2.05. A
Participant shall make the elections on a form designated by the
Committee.
(e) For re-deferral elections
made after December 31, 2008 with respect to amounts other
than Grandfathered Deferrals, the Participant’s new Benefit
Commencement Date (as designated in the re-deferral election) shall
not be accelerated if the Participant terminates employment, other
than on account of Disability or death or as otherwise permitted by
section 409A.
(f) Notwithstanding the
foregoing, elections may be made on or before December 31,
2008 under the transitional rules set forth in section 409A,
pursuant to Section 2.06 below.
Section 2.06 To the extent
permitted under section 409A and the regulations issued thereunder,
Participants may make new payment elections on or before
December 31, 2008 with respect to the time and form of payment
of amounts other than Grandfathered Deferrals, provided that a
Participant shall not be permitted in calendar year 2008
(i) to change payment elections with
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respect to amounts that the Participant
would otherwise receive in 2008 or (ii) to cause payments to
be accelerated into 2008. The Committee shall determine the
available payment forms, times, and other terms relating to new
payments elections made under the 409A transition rules.
Section 2.07 All re-deferral
elections made with respect to Grandfathered Deferrals shall be
governed by Exhibit A .
ARTICLE III - Contingent Future
Payments, Earnings, Investments and Forfeitures
Section 3.01 The Committee shall
cause an Account to be kept in the name of each Participant, which
shall reflect the value of the Contingent Deferred Obligation
payable to such Participant or beneficiary under the Plan. Each
Account shall be maintained for bookkeeping purposes only. Neither
the Plan nor any of the Accounts established under the Plan shall
hold any actual funds or assets.
Section 3.02
(a) As soon as practicable
after each year, each Active Participant’s Account shall be
credited with earnings and debited with losses in accordance with
the rate of return option elected by the Participant. The rate of
return options available under the Plan are:
(i) For investment elections
in effect prior to January 1, 2008, an annual rate of return
equal to 200 basis points in excess of the average yield on 30-year
U.S. Treasuries in effect on the last business day of each month of
the year.
(ii) For investment elections
in effect prior to January 1, 2008, an annual rate of return
equal to the change in the market value of the Company’s
Common Stock (positive or negative) for the year.
(iii) The return on a
hypothetical investment in one or more investment funds designated
by the Committee, which constitute a “predetermined actual
investment” as described in the regulations issued under
section 409A of the Code.
(b) Under alternative
3.02(a)(iii), beginning January 1, 2008, each Active
Participant may select one investment fund from those designated by
the Committee for purposes of measuring investment return for the
investment of the Participant’s Deferred Compensation for
each Plan Year. The Participant may select different investment
funds for different Plan Years’ Deferred Compensation, but
only one investment fund for each Plan Year’s Deferred
Compensation. The investment funds shall be used only for purposes
of measuring the return on the Participant’s Account, and no
Participant shall have any interest in any actual investment fund.
The Company shall calculate the return on the hypothetical
investments in investment funds on a quarterly or more frequent
basis.
(c) The Committee shall
establish procedures by which Active Participants can change their
investment elections among the available investment alternatives,
with such changes to be effective as of the first day of the
calendar quarter following the date of the election, except as
otherwise determined by the Committee. Any changes with respect to
the Common Stock investment return shall be subject to applicable
securities laws and Company policies.
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(d) Effective January 1,
2008, for elections made in December 2007 and thereafter, no
Participant may make a new election (including a re-deferral
election) to designate an investment return based on alternative
3.02(a)(i) or 3.02(a)(ii). Elections in effect prior to
January 1, 2008 with respect to alternative 3.02(a)(i) or
3.02(a)(ii) shall remain in effect according to their terms, unless
the Active Participant elects to designate an investment fund for
measuring investment return as described in alternative
3.02(a)(iii) above.
(e) Prior to January 1,
2008, if a Participant elected alternative 3.02(a)(ii) above with
regard to any deferred amount, such deferred amount was increased
by 20%. If in the two years following the year of such deferral,
the Participant (i) leaves the Company’s employ for any
reason other than on account of his or her death, Disability or
Retirement, or (ii) makes an election under Section 5.04
of this Plan or under Section 3.09 of Exhibit A to
withdraw all or any part of such deferred amount, then such 20%
increase and the return associated with such increase shall be
deducted from his or her Account. (For example, if in a given year,
the Participant deferred $100,000 and elected return option
3.02(a)(ii) above with regard to such amount, the
Participant’s Account was credited with $120,000 and the
Common Stock return was applied to the full $120,000. If at any
point in the two years following the year of such deferral, the
Participant elects an early payment of all or any part of such
amount or leaves the Company’s employ for any reason other
than his or her death, Disability or Retirement, $20,000 and any
return associated with such $20,000 shall be deducted from his or
her Account.)
Section 3.03
(a) For Participants who are
Inactive Participants as of January 1, 2008, as soon as
practicable after each year, each Inactive ParticipantR
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