NU Online News Service, March 21, 2:48 p.m.EDT

The senior chief executives of MBIA will not be getting a bonusthis year, though the compensation committee agreed that they areentitled to one.

The Armonk, N.Y.-based bond insurer says that after discussionswith the New York Department of Financial Services, it determinedthat “it was in the best interest of the company not to take cashbonuses or long-term-incentive awards for 2011.”

The decision affects Chief Executive Officer Jay Brown;Co-President, Chief Financial Officer and Chief AdministrativeOfficer C. Edward Chaplin; Co-President and Chief Operating OfficerWilliam Fallon; and Ram Wertheim, executive vice president, chieflegal officer and secretary of the company.

The company did not elaborate on the reasons for the decisionand the NYDFS declined to comment.

MBIA is involved in litigation over the splitting of the companyin two parts, separating troubled structured-finance instrumentsfrom its healthy book of municipal bonds. At the same time it issuing banks over residential-mortgage-backed securities that itclaims it would have never insured had it known the mortgages weresub-prime.

The company was in serious financial shape at one point, and wasstabilized once the companies were split. However, for the 2011fourth quarter, MBIA reported a $626 million loss.

Had the bonuses been paid, Brown would have been entitled up to$2 million on top of his annual salary of $500,000.

In its filing, the company says that the purpose of itscompensation program is to “attract, retain and motivate a highlyskilled team of employees” and that without it there is “the riskthat our compensation program will no longer be effective inmeeting our objectives.”

Brown's employment agreement with MBIA ends on Dec. 31,2012.

In other news, Bloomberg reports that a jury will not hear the banks'case against MBIA, which contends that then-InsuranceSuperintendent Eric Dinallo did not have the authority to split theinsurance carrier in two.

The case will be heard by state Supreme Court Judge Barbara R.Kapnick.

The report also says another bank, UBS AG, has withdrawn fromthe suit, leaving three from the original 18 banks left in thelitigation.

Correction: Clifford Corso, MBIA's chief investment officerand Anthony McKiernan, chief portfolio officer were not on the listof senior executives not receiving bonuses.