Exhibit 10.7
RADIAN GROUP INC.
2008 EXECUTIVE LONG-TERM
INCENTIVE CASH PLAN
A S A MENDED AND R ESTATED ON M AY 13, 2009
1. Purpose.
The purpose of the Radian Group Inc.
2008 Executive Long-Term Incentive Cash Plan (the “
Plan ”) is to assist Radian Group Inc. and its
subsidiaries (collectively, the “ Company ”) in
attracting, retaining, and motivating certain executives and other
key officers of the Company by providing them with additional long
term cash incentives. The purpose of the Plan is to be achieved by
the grant of Performance Awards, as defined below.
2. Eligibility.
Eligibility under the Plan shall be
limited to executives and other key officers of the Company as
determined by the Compensation and Human Resources Committee (the
“ Committee ”) of the Board of Directors of the
Company (the “ Board ”) following the
recommendations of the Company’s Chief Executive Officer
(“ CEO ”).
3. Administration.
(a) Administrator . The Plan
shall be administered by the Committee, taking into account the
recommendations of the CEO and of such other senior officers as the
Committee may determine. The Committee may delegate its authority
to administer the Plan to a sub-committee of its members. The term
“ Administrator ” shall mean the Committee, or
any such sub-committee to which authority has been delegated. The
Administrator may rely on the services of the Company’s Human
Resources department as necessary or convenient for the
administration of the Plan.
(b) Powers and Authority .
The Administrator shall have full power and discretionary authority
to establish the rules and regulations relating to the Plan, to
interpret the Plan and those rules and regulations, to select
eligible persons who will receive Performance Awards (“
Award Recipients ”), to determine each Award
Recipient’s Target Award, Award Term, Performance Goals, and
Payout Amount, each as defined below, to make all factual and other
determinations in connection with the Plan, and to take all other
actions necessary or appropriate for the proper administration of
the Plan, including the delegation of such authority or power,
where appropriate. All powers of the Administrator shall be
executed in its sole discretion, in the best interest of the
Company, and in keeping with the objectives of the Plan and need
not be uniform as to similarly situated individuals. The
Administrator’s administration of the Plan, including all
such rules and regulations, interpretations, selections,
determinations, approvals, decisions, delegations, amendments,
terminations and other actions, shall be final and binding on the
Company and all Award Recipients and their respective
beneficiaries. Performance Awards shall be made conditional upon
the Award Recipient’s acknowledgment, by receipt of the
Performance Award, that all decisions and determinations of the
Administrator shall be final and binding on the Award Recipient,
his or her beneficiaries and any other person having or claiming an
interest under such Performance Award.
4. Performance
Awards.
(a) Performance Award
Defined. A “ Performance Award ” is a right
to receive a cash payment, contingent on (i) the achievement
of certain Performance Goals over the Award Term, each as defined
below, and (ii) the Administrator’s assessment of the
performance of the Company and/or the Award Recipient over the
Award Term, in each case as determined by the Administrator in its
sole discretion.
(b) Award Term. Performance
Awards will be measured over such period of time as shall be
established by the Administrator (the “ Award Term
”). Award Terms may be of varying and overlapping durations
and may be tied to vesting requirements as specified in the Award
Letter. Performance Awards shall be subject to forfeiture until the
conclusion of the Award Term or satisfaction of any vesting
requirements, except as may otherwise be provided in
Section 5 below.
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(c) Performance Goals . The
Administrator shall establish the performance goals for each Award
Term. The performance goals may include any one or more of several
criteria, such as, but not limited to, capital management, return
on capital employed, revenue growth, market share, margin growth,
return on equity, total stockholder return, increase in net
after-tax earnings per share, market price per share, growth in
market price per share, increase in operating pre-tax earnings,
operating profit or improvements in operating profit, improvements
in certain asset or financial measures (including working capital
and the ratio of revenues to working capital), credit quality,
expense management and expense ratios, pre-tax earnings or
variations of income criteria in varying time periods, economic
value added, or general comparisons with other peer companies or
industry groups or classifications with regard to one or more of
these criteria (the “ Performance Goals ”) and
are subject to adjustment as provided in Section 4(e) .
The Performance Goals may be measured with respect to the Company
alone on an absolute basis, on a relative or comparative basis with
such peer companies or index as the Administrator may select, in
its sole discretion, or in such combination thereof as may be
determined by the Administrator, in its sole discretion.
Performance Goals may be based on the performance of the Company as
a whole, or on the performance of a specified business unit or
subsidiary, or on the performance of a group of subsidiaries,
divisions or business units. Performance Goals may be measured on a
cumulative basis, or in the alternative on an annual, quarterly or
other periodic basis, or in the form of a matrix combining various
Performance Goals and weighting them in any manner that the
Administrator may determine, in its sole discretion. In
establishing the Performance Goals, the Administrator may establish
different Performance Goals for individual Award Recipients or
groups of Award Recipients.
(d) Target Award. The
Administrator shall establish for each Award Recipient a target
award (the “ Target Award ”). The Target Award
may be a fixed cash amount or expressed as a percentage of annual
base salary. The maximum payout under any Performance Award may not
exceed four times the Target Award, subject to adjustment as
provided in Section 4(e).
(e) Adjustments to Performance
Awards due to Certain Circumstances.
(i) In order to avoid any undue
windfall or hardship due to external causes, the Administrator may
make a determination as to whether a specific Performance Goal has
been achieved without regard to the effect of any change in
accounting standards, any change in the outstanding capital stock,
any acquisition or disposition by the Company not planned for at
the time the Performance Goals were established or any other
extraordinary, unusual or nonrecurring event or item that would
otherwise impact the Company’s or a peer company’s
reported financial performance.
(ii) Notwithstanding the foregoing,
for Performance Awards granted on or after May 13, 2009, in
the event of a Change of Control, the Administrator may make such
adjustments to the Performance Goals as it deems appropriate, in
its sole discretion, to take into account any changes to the
Company or its operations (including to reflect the performance of
any successor to the Company) with respect to Performance Awards
that continue in effect after the Change of Control.
(f) Establishment of Performance
Awards. Performance Awards shall be granted by the
Administrator in writing not later than 90 days after the
commencement of the period of service to which the Performance
Goals relate. Following the establishment of the Performance Goals,
the Administrator shall advise each Award Recipient of the terms
and conditions of his or her Performance Award, through the
issuance of an “ Award Letter ” under the Plan,
including the method or formula for determining the
payouts.
(g) Payments under Performance
Awards. Upon the conclusion of the Award Term, the
Administrator shall review the extent to which the Performance
Goals were achieved for the Award Term for each Award Recipient and
may also consider subjective factors related to the performance of
the Company and/or the Award Recipient during the Award Term. The
Administrator will make the final determination, in its sole
discretion, of the extent to which the Performance Goals were
achieved and, in its sole discretion, determine the payout amount
under the Performance Award (the “ Payout Amount
”) for each of the Award Recipients. The Administrator shall
promptly notify each Award Recipient as to the determination of the
Payout Amount. The Payout Amount payable to Award Recipients under
this Plan shall be paid solely in cash and shall be paid within 90
days of the end of the Award Term, but in no event later than the
15 th
day of the third month following the
year in which the award vests.
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5. Termination of Employment.
(a) Death or Disability . If
an Award Recipient’s employment with the Company terminates
as a result of such Award Recipient’s death or disability,
any outstanding Performance Awards shall remain in force, and such
Award Recipient (or his or her estate, representatives, heirs or
beneficiaries, as applicable, in the case of death) shall be
entitled to any payout that thereafter becomes due under such
outstanding Performance Awards, at the same time, and to the same
extent, as though such Award Recipient had remained employed by the
Company through the conclusion of the Award Term (notwithstanding
any continued service condition). For purposes of the Plan,
“disability” shall mean a physical or mental impairment
of sufficient severity that the Award Recipient is both eligible
for and in receipt of benefits under the applicable long-term
disability program maintained by the Company.
(b) Retirement . If an Award
Recipient’s employment with the Company terminates by reason
of such Award Recipient’s retirement prior to the end of an
Award Term, but after the conclusion of not less than 33% of such
Award Term, then such Performance Award shall remain in force, and
such Award Recipient shall be entitled to any payout that
thereafter becomes due under such Performance Award, at the same
time, an
