Exhibit 10.1
EMPLOYMENT
AGREEMENT
THIS EMPLOYMENT AGREEMENT (the
“Agreement”) is entered into by and between Radian
Group Inc. (the “Company”) and S.A. Ibrahim (the
“Executive”) on April 20, 2005.
WHEREAS, the Company desires to
employ the Executive as its Chief Executive Officer and the
Executive desires to serve in such capacity on behalf of the
Company.
NOW, THEREFORE, in consideration of
the premises and of the mutual covenants and agreements hereinafter
set forth, the Company and the Executive hereby agree as
follows:
1. Employment .
(a) Term . The term of this
Agreement (the “Term”) shall begin as of May 4, 2005
(the “Effective Date”) and shall continue until May 3,
2008, unless sooner terminated by either party as hereinafter
provided. In no event shall the expiration of this Agreement be
deemed, in and of itself, a termination of the Executive’s
employment for purposes of this Agreement, including a termination
without Cause for purposes of Sections 11 and 12.
(b) Duties .
(1) The Executive shall serve as the
Chief Executive Officer of the Company with the duties,
responsibilities and authority commensurate therewith and shall
report to the Board of Directors of the Company (the
“Board”) and the non-executive Chairman of the Board
(the “Chairman”). The Executive shall perform all
duties and accept all responsibilities incident to such position as
may be reasonably assigned to him by the Board or the Chairman and
consistent with his position as the Chief Executive Officer. During
the Term, when applicable, the Company shall cause the Executive to
be nominated as a member of the Board.
(2) The Executive represents to the
Company that he is not subject to or a party to any employment
agreement, non-competition covenant, understanding or restriction
which would be breached by or prohibit the Executive from executing
this Agreement and performing fully his duties and responsibilities
hereunder.
(c) Best Efforts . During the
Term, the Executive shall devote his best efforts and full time and
attention to promote the business and affairs of the Company and
its affiliated companies, and shall be engaged in other business
activities only to the extent that such activities do not
materially interfere or conflict with his obligations to the
Company hereunder, including, without limitation, obligations
pursuant to Section 18 below. The foregoing also shall not be
construed as preventing the Executive from (1) serving on civic,
educational, philanthropic or charitable boards or committees, or,
with the consent of the Board, in its sole discretion, on corporate
boards (2) delivering lectures, fulfilling speaking engagements or
lecturing at educational institutions and (3) managing personal
investments, so long as such activities do not significantly
interfere with the performance of the Executive’s
responsibilities hereunder and are
permitted under the Company’s Code of
Conduct and employment policies; provided, however, that the
Executive shall be permitted to own passively not more than 5% of
the stock of those companies whose securities are listed on a
national securities exchange or on the NASDAQ system, except that
the Executive shall not invest in any business competitive with the
Company or that would otherwise violate the provisions of Section
18 below.
2. Base Salary and Bonus . As
compensation for the services to be rendered hereunder, the Company
shall pay to the Executive an annual base salary at the rate of
$725,000 (“Base Salary”). This amount may be subject to
an upward adjustment at the beginning of each Company fiscal year,
as determined by the Board, in its sole discretion. The
Executive’s Base Salary shall be paid in accordance with the
Company’s existing payroll policies, and shall be subject to
applicable withholding taxes. As soon as reasonably practicable
following the Effective Date, the Executive shall receive a signing
bonus of $1,100,000 to replace the bonus to which the Executive
would have otherwise been entitled had he remained employed with
his prior employer, in cash or in common stock of the Company
(“Company Stock”), or a combination of the two, at the
Executive’s election. In addition, the Executive shall be
eligible for annual bonus payments under the Company’s annual
incentive plan if certain individual and corporate performance
goals and targets, established by the Compensation and Human
Resources Committee of the Board (the “Compensation
Committee”), in its sole discretion, are met. The performance
goals and targets shall be determined by the Compensation
Committee, in its sole discretion, as of the beginning of each such
fiscal year. Promptly after the Compensation Committee’s
receipt of the financial information on which the performance goals
are based after the end of the fiscal year, the Compensation
Committee shall review actual performance against the applicable
performance goals and targets and shall notify the Executive of the
amount of his bonus, if any. The Executive’s bonus shall be
paid to him after the end of the fiscal year to which it relates,
at the same time and under the same terms and conditions as other
executives of the Company; provided that the Compensation Committee
shall have the right to claw back all or part of the
Executive’s bonus if required by applicable law. For the 2005
and 2006 fiscal years, the Executive’s target annual bonus
shall be no less than 1.75 times Base Salary, at the rate in effect
for the applicable fiscal year. For fiscal years after 2006 during
the Term, the Executive’s target annual bonus shall be
determined by the Compensation Committee, in its sole discretion;
provided that total direct compensation for which the Executive is
eligible during a fiscal year (taking into account Base Salary,
target annual bonus and target long term incentive compensation (as
described in Section 4)) shall not be materially less than the
total direct compensation for which the Executive is eligible
during either the 2005 fiscal year or the 2006 fiscal
year.
3. Equity Compensation .
(a) Contemporaneously with this
Agreement, pursuant to the Company’s Equity Compensation Plan
(the “Equity Plan”), the Company shall grant to the
Executive 40,000 shares of Company Stock, subject to the
restrictions and conditions set forth in the Equity Plan and the
Restricted Stock Grant Agreement attached as Exhibit A . The
restricted stock shall vest ratably on each of the first three
anniversaries of the date of grant.
(b) The Executive agrees to comply
with the Company’s share ownership guidelines for Company
executives, as in effect from time to time, and agrees to hold a
number of shares of Company Stock with a value that is not less
than $7,250,000 by December 31, 2010.
4. Long Term Incentive Compensation . The
Executive shall be eligible to participate in any long-term equity
incentive programs established by the Company for its senior level
executives generally, including the Equity Plan, at levels
determined by the Compensation Committee in its sole discretion,
commensurate with the Executive’s position as Chief Executive
Officer. For 2005 and 2006, the target level of long term incentive
compensation, in the aggregate, for which the Executive is eligible
shall be no less than 3.0 times Base Salary, at the rate in effect
for the applicable fiscal year. Subject to the terms of the last
sentence of Section 2, for fiscal years after 2006 during the Term,
the target level of long term incentive compensation, in the
aggregate, for which the Executive is eligible shall be determined
by the Compensation Committee, in its sole discretion. As soon as
reasonably practicable following the Effective Date, pursuant to
the Company’s Equity Plan, the Company shall grant to the
Executive a nonqualified stock option to purchase a number of
shares of Company Stock equivalent in value to one half of the
Executive’s long term incentive compensation target for 2005,
subject to the terms and conditions of the Equity Plan and the
Nonqualified Stock Option Agreement attached hereto as Exhibit
B . The Option shall vest ratably over the first four
anniversaries of the date of grant and shall have a term of seven
years. In addition, with respect to the remaining one half of the
Executive’s long term incentive compensation target for 2005,
pursuant to the Company’s Performance Share Plan (the
“PSP”), the Company shall grant to the Executive a
performance share award, subject to the terms and conditions of the
PSP and the Performance Share Award Agreement attached hereto as
Exhibit C , with a Target Payout (as defined in the
Performance Share Award Agreement) of a number of shares of Company
Stock equivalent to one half of the Executive’s long term
incentive compensation target for 2005; provided that for purposes
of the PSP and the Performance Share Award Agreement, the Award
Term (as defined in the Performance Share Award Agreement) shall
commence on the Effective Date.
5. Retirement and Welfare Benefits
.
(a) The Executive shall be entitled
to participate in the Company’s health, life insurance, long
and short-term disability, dental, retirement, and medical
programs, if any, pursuant to their respective terms and
conditions. Nothing in this Agreement shall preclude the Company or
any affiliate of the Company from terminating or amending any
employee benefit plan or program from time to time after the
Effective Date.
(b) The Executive shall be entitled
to participate in the Company’s supplemental executive
retirement plan (the “SERP”) pursuant to its terms and
conditions (or shall be provided with a benefit with an
economically equivalent value); provided, however, that for
purposes of benefit accrual under the SERP only (and not vesting),
the Executive shall earn two years of service for every one year of
service completed during his first five full years of service with
the Company (thereafter the Executive shall earn only one year of
service for each completed year of service) and provided, further,
that upon his completion of five full years of service with the
Company, the Executive shall be fully vested in the amount of his
accrued benefit under the SERP (or economically equivalent benefit)
(in either case, determined based on his years of service with the
Company as modified by this Section 5(b)).
6. Vacation . The Executive shall be
entitled to vacation, holiday and sick leave at levels commensurate
with those provided to other senior executive officers of the
Company, in accordance with the Company’s vacation, holiday
and other pay for time not worked policies.
7. Expenses . The Company shall reimburse
the Executive for all necessary and reasonable travel and other
business expenses incurred by the Executive in the performance of
his duties hereunder in accordance with such reasonable accounting
procedures as the Company may adopt generally from time to time for
executives.
8. Relocation .
(a) The Executive agrees that he
will relocate to the Philadelphia, Pennsylvania metropolitan area
to perform the duties assigned hereunder by March 31, 2006. The
Company shall reimburse the Executive for his relocation expenses,
which shall include the fees and expenses incurred by the Executive
in selling the Executive’s existing principal residence in
the San Francisco, California metropolitan area, purchasing a new
principal residence in the Philadelphia metropolitan area and
moving the Executive and his family to the Philadelphia
metropolitan area; provided that if the Executive decides not to
sell his existing principal residence in San Francisco, California,
the Company shall pay to the Executive a lump sum cash payment of
$600,000, in lieu of the Company reimbursing the Executive for the
cost incurred by the Executive in selling his existing principal
residence in San Francisco, California. All relocation expenses
must be approved by the Board and will be reimbursed promptly,
subject to applicable withholding taxes, so that the Executive
bears no unreasonable out of pocket expenses.
(b) The Company will provide
temporary housing, at its cost, in a suitable residence in the
Philadelphia metropolitan area for the Executive until such time as
the Executive’s family relocates to the Philadelphia
metropolitan area.
9. Perquisites . The Executive shall be
provided with such other executive perquisites as may be provided
to other senior executive officers of the Company.
10. Indemnification . The Company agrees
to indemnify the Executive against all claims arising out of
actions or omissions during the Executive’s employment by the
Company, to the same extent and on the same terms and conditions
provided for in the Company’s bylaws or under the Delaware
General Corporation Law, each as in effect on the Effective Date.
The Company agrees it will continue to maintain officers’ and
directors’ liability insurance to fund the indemnity
described above in the same amount and to the same extent it
maintains such coverage for the benefit of its other officers and
directors.
11. Termination Without Cause; Resignation
for Good Reason – Prior to a Change of Control . If the
Executive’s employment is terminated by the Company without
Cause (as defined in Section 16) or the Executive resigns for Good
Reason (as defined below), in either case, at any time prior to a
Change of Control (as defined in Section 11 of the Equity Plan)
this Section 11 shall apply.
(a) The Company may terminate the
Executive’s employment with the Company at any time without
Cause upon not less than 15 days’ prior written notice to
the
Executive; provided that in the event that such
notice is given, the Executive shall be under no obligation to
render any additional services to the Company and shall be allowed
to seek other employment. In addition, the Executive may initiate a
termination of employment by resigning under this Section 11 for
Good Reason. The Executive shall give the Company not less than 15
days’ prior written notice of such resignation. On the date
of termination or resignation, as applicable, specified in such
notice, the Executive agrees to resign all positions, including as
an officer, and Board memberships related to the Company and its
subsidiaries and affiliates.
(b) Unless the Executive complies
with the provisions of Section 11(c) below, upon termination or
resignation, as applicable, under Section 11(a) above, the
Executive shall be entitled to receive only the amount due to the
Executive under the Company’s then current severance pay plan
for employees, if any, but only to the extent not conditioned on
the execution of a release by the Executive. No other payments or
benefits shall be due under this Agreement to the Executive, but
the Executive shall be entitled to any benefits accrued and due in
accordance with the terms of any applicable benefit plans and
programs of the Company.
(c) Notwithstanding the provisions
of Section 11(b), upon termination or resignation, as applicable,
under Section 11(a) above, if the Executive executes and does not
revoke a written release, in a form acceptable to the Company, but
substantially in the form attached hereto as Exhibit D
(subject to any necessary adjustment reasonably determined by the
Company to be necessary to comply with applicable law at the time
of the Executive’s termination) of any and all claims against
the Company and all related parties with respect to all matters
arising out of the Executive’s employment by the Company, or
the termination thereof (other than claims for any entitlements
under the terms of this Agreement or under any plans or programs of
the Company under which the Executive has accrued and is due a
benefit) (the “Release”), the Executive shall be
entitled to receive, in lieu of the payment described in Section
11(b) and any other payments due under any severance plan or
program for employees or executives, the following:
(1) An amount equal to 2.0 times
Executive’s Base Salary (at the rate in effect immediately
before the Executive’s termination or resignation, as
applicable), one half of which will be payable in accordance with
the Company’s normal payroll practices in twelve equal
monthly installments over the twelve-month period following the
date of the Executive’s termination of employment (the
“Severance Period”) and the remaining one half of which
will be paid in a lump sum on the last day of the Severance
Period.
(2) An amount equal to 2.0 times the
Executive’s target annual bonus for the year in which the
Executive’s termination or resignation (as applicable)
occurs, one half of which will be payable in accordance with the
Company’s normal payroll practices in equal monthly
installments over the Severance Period and the remaining one half
of which will be paid in a lump sum on the last day of the
Severance Period.
(3) A pro rata bonus for the year in
which the Executive’s termination of employment occurs. The
pro rata bonus shall be based on the Executive’s target
annual bonus for the year in which the Executive’s
termination occurs, multiplied by a fraction, the numerator of
which is the number of days during which the Executive was employed
by the Company in the year of his termination and the denominator
of which is 365. Payment shall be made at the same time and under
the same terms and conditions as bo
