Exhibit 10.66
May 6, 2004
Joseph W. Brown
24 Penwood Road
Bedford Corners, NY 10549
Dear Jay:
On behalf of MBIA Inc. (the "Company") and the Board of Directors
(the
"Board"), we want to thank you for your
leadership and outstanding efforts on
behalf of the Company during the past five
years. We are pleased that you have
agreed to remain with the Company to effect
a smooth transition of your duties
and responsibilities over the next several
years. We recognize that this
deviates from your original intention as to
your period of service for the
Company, and the Company has designed a
compensation plan and program to provide
you recognition for the commitment that you
are making and as an incentive for
you to continue your excellent efforts on
behalf of the Company.
1. Term of Employment. In order to facilitate a smooth transition
in
connection with Gary Dunton's promotion to
Chief Executive Officer of the
Company, the Company wishes to continue
your employment with the Company until
the earlier of May 31, 2007 and the date of
the Company's May 2007 annual
shareholders meeting (the "Termination
Date"). The period from the date hereof
through the Termination Date, or if earlier
the date of the termination of your
employment with the Company as contemplated
hereby, shall be referred to as the
"Employment Period". This letter agreement
shall supercede the terms of your
January 7, 1999 letter agreement with the
Company.
2. Title,
Reporting Relationship and Duties. Commencing on the date
hereof, you will cease serving as Chief
Executive Officer of the Company, but
continue to serve as executive Chairman of
the Company, reporting solely and
directly to the Board. Your duties and
responsibilities will be commensurate
with your title as executive Chairman, and
will include assisting Gary Dunton in
assuming his new responsibilities and
duties as Chief Executive Officer of the
Company.
3. Compensation. Your compensation package with respect to the
Employment Period will include a base
salary, an annual performance bonus and
the special one-time restricted stock grant
described below.
(a) Base Salary. Commencing on the date hereof and for the
duration of your
Employment Period, your annualized base salary will be
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$720,000. This reduced annual base salary reflects your change in
title
and duties from this date forward and will be paid in accordance
with
the Company's customary payroll practices.
(b) Annual Performance Bonus. With respect to the Employment
Period, you will be entitled to receive a performance-based annual
cash
bonus in accordance with the terms and conditions of the
Company's
Annual and Long-Term Incentive Plan (or any successor plan
thereto)
(the "Incentive Plan"), to the extent that the applicable
performance
criteria are satisfied. Your maximum annual bonus opportunity will
be
300% of
your base salary. Your bonus will be determined by the Board in
accordance with the generally applicable provisions of the
Incentive
Plan, as in effect from time to time, including the manner in which
the
performance objectives will be obtained and the determination
and
certification of your annual cash bonus.
(c) Long-Term Incentive Compensation. In light of the fact that
your services for the Company are expected to terminate on the
Termination Date, the Company and you have agreed that it would not
be
appropriate for you to receive new awards under the Company's
stock
option plan or standard long-term incentive compensation plans
and
programs, pursuant to which the Company currently makes annual
awards.
Accordingly, the one-time award of performance-based restricted
stock
referenced in Section 3(d) below is intended to replace your right
or
opportunity to participate in any further long-term incentive
compensation awards or programs during the Employment Period.
(d) Restricted Stock. The Company recognizes that you have
recently been granted an award of restricted stock subject to the
terms
of the Restricted Stock Award Agreement, dated as of February 10,
2004,
between you and the Company (the "Award Agreement"), in recognition
of
your contributions to the Company's success for the period
through
December, 2003, and as an inducement for you to continue your
excellent
performance on behalf of the Company. To induce you to commit
yourself
to employment with the Company through the Termination Date, you
will
be granted an additional award of 200,000 Company shares of
restricted
stock which may not vest prior to the end of the Employment Period
and
the full vesting of which is contingent upon the achievement of
substantial increases in the Company's book value, as modified, in
a
manner consistent with past long-term compensation practices,
to
eliminate the positive or negative effect of certain items over
a
period that may extend well beyond the Termination Date. The terms
and
conditions of this additional award shall be set forth in our
award
agreement of even date herewith, which in all events shall govern
such
2
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restricted stock award notwithstanding anything to the contrary
herein
or elsewhere. You agree and acknowledge that, pursuant to such
award
agreement, your right to receive the benefit of the restricted
stock
award referenced herein shall be subject to your not
voluntarily
terminating your employment prior to the Termination Date, other
than
in connection with a Constructive Termination Without Cause or
following a Change of Control.
4. Modifications to Outstanding Awards.
(a) Stock Options. Reference is made to your stock option
agreements
with the Company dated as of January 7,
1999, December 9, 1999, January 11,
2001, February 7, 2002 and March 12, 2003
(with respect to the grant effective
as of February 12, 2003) (the "Option
Agreements"). Each of the Option
Agreements is hereby amended to reflect the
following terms with respect to your
outstanding stock options:
(i) Subject to your continued employment with the Company
through
the Termination Date, all of your then outstanding stock options
under
the Option Agreements shall become fully vested and exercisable (to
the
extent not vested and exercisable prior to the Termination Date) on
the
Termination Date.
(ii) Subject to your continued employment with the Company
through
the Termination Date, each of your then outstanding stock options
shall
remain exercisable until the earliest of (a) May 31, 2012, (b)
the
second anniversary of the first date following the Termination Date
on
which the Company's common stock closes at a trading price that is
(1)
greater than or equal to $90 per share and (2) greater than or
equal to
150% of the closing price on the Termination Date, and (c) the
expiration of the original term with respect to each such stock
option
as provided under the applicable Option Agreement. For purposes of
this
clause (ii), the provisions of the Section of each Option
Agreement
titled "Adjustments for Changes in Structure and Special
Transactions"
shall be applicable and such Section of each Option Agreement
shall
remain in full force and effect for all other purposes.
(iii) In the event that, prior to the Termination Date, your
employment is terminated by the Company other than for Cause, by
you in
a Constructive Termination Without Cause or as a result of your
Di
