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Exhibit
10.3
RADIAN VOLUNTARY
DEFERRED
COMPENSATION PLAN FOR
DIRECTORS
Adopted by the Board of
Directors on May 6, 2008
Radian Group Inc.
(“Company”) currently maintains the Radian Voluntary
Deferred Compensation Plan for Directors (“Plan”). The
Plan was originally established by the Company’s Board of
Directors effective October 19, 1999. The Plan was amended and
restated to be effective December 12, 2005 (“2005
Plan”) in an effort 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. 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 Separation
from Service. If a Participant does not make an election to
commence payment upon his or her Separation from Service in the
initial deferral election, the Participant may not later make an
election to commence payment upon Separation from Service 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.
Section 1.06
“Committee” means the Compensation and Human Resources
Committee of the Board.
Section 1.07
“Compensation” means the annual fee, meeting fees, any
chairmanship fees and any other cash compensation payable to
Participants for services completed during the Plan Year for their
services as a member of the Board.
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 “Director”
means a director of the Company who is not an employee of the
Company or any of its Subsidiaries.
Section 1.11 “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 1.12
“Participant” means a Director who elects to
participate in the Plan, and further differentiated as
follows:
(a) “Active
Participant”: A Participant who is a Director at the time in
question.
(b) “Inactive
Participant”: A Participant who is not a Director 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 Directors, 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 “Separation from
Service” means a Director’s separation from service as
a member of the Board which constitutes a “separation from
service” for purposes of section 409A of the Code.
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.
ARTICLE II - Designation of
Participants and Payment of Account
Section 2.01 Each individual 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.
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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 individual first becomes a Director in the middle
of a Plan Year, the Director may elect to defer a percentage of his
or her Compensation for such Plan Year so long as the Director
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
individual first becomes a Director. The deferral election shall
apply only to Compensation earned with respect to services
performed after the date on which the Director 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 Separation from
Service.
(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 service with the
Board terminates before that specified date as a result of the
Participant’s death, Disability, or Separation from Service,
the Benefit Commencement Date shall 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,
(iii) in the event of the Participant’s Disability, the
date described in Section 5.02(a), or (iv) Separation
from Service, except as otherwise provided in
Section 2.05.
(c) Notwithstanding anything
in the Plan to the contrary, the payment dates for all
Grandfathered Deferrals shall be determined pursuant to Exhibit
A .
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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 Separation
from Service.
(b) If a Participant elected
Separation from Service 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 Separation from
Service. If the Participant has a Separation from Service 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 his or her 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 has a Separation from
Service, 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 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 payment elections made under the 409A transition
rules.
Section 2.07 All deferral elections
made with respect to Grandfathered Deferrals shall be governed by
Exhibit A hereto.
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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.
(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.
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Section 3.03
(a) For Participants who are
Inactive Participants as of January 1, 2008, as soon as
practicable after each year, each Inactive Participant’s
Account shall be credited with earnings based upon the average
yield on 5-year U.S. Treasuries on the last business day of each
month of such year plus 100 basis points.
(b) For Participants who
become Inactive Participants on or after January 1, 2008, each
Inactive Participant’s Account shall be credited with
earnings or losses each year based upon the return of a
hypothetical bond fund designated by the Committee.
(c) A Participant who ceases
being a Director shall have the rate of return that he
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