No Bonuses for MBIA Chief Execs

Updated: 4:22 p.m. EDT

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

The senior chief executives of MBIA will not be getting a bonus this year, though the compensation committee agreed that they are entitled to one.

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

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

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

MBIA is involved in litigation over the splitting of the company in two parts, separating troubled structured-finance instruments from its healthy book of municipal bonds. At the same time it is suing banks over residential-mortgage-backed securities that it claims it would have never insured had it known the mortgages were sub-prime.

The company was in serious financial shape at one point, and was stabilized once the companies were split. However, for the 2011 fourth 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 its compensation program is to “attract, retain and motivate a highly skilled team of employees” and that without it there is “the risk that our compensation program will no longer be effective in meeting 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-Insurance Superintendent Eric Dinallo did not have the authority to split the insurance 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The report also says another bank, UBS AG, has withdrawn from the suit, leaving three from the original 18 banks left in the litigation.

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


Resource Center

View All »

Contractors General Liability Coverage 102

What is a prior work exclusion? Which option is right for my client? Why do...

Sign up today to get a 50% matching credit -...

Insurance marketing sometimes seems like it's a game of swings and misses, but we're here...

Guide: 5 Steps to Selling Cyber

Cyber risk and data security is on the agenda of every business owner and executive....

Citation Correlation

Do rigger and signalperson qualifications correlate with the cause of crane and rigging accidents? ...

Complete Guide to Electronic Signatures in Property & Casualty Insurance...

In property and casualty insurance, closing new business quickly is key. Learn how to leverage...

INSTANT ACCESS: Complimentary Sales Closer Questionnaires

Help property owners or managers compare your commercial residential property insurance coverage vs. the competition....

Determining Vacant Property Perils and Valuations

Are your clients fully covered for Vacant Properties? In this economic climate, your insureds may...

Risk Management for Law Firms

This package of 3 concise risk management articles offers straightforward content and practical suggestions law...

Guide: Top 15 E&O Risks-And How To Avoid Them

Accidents happen. But when it's an errors and omissions oversight, that accident can open your...

We'll Show You How to Reach Your Sales Goals

Whether you work alone or have a team of agents working for you, we can...

PropertyCasualty360 Daily eNews

Get P&C insurance news to stay ahead of the competition in one concise format - FREE. Sign Up Now!

Advertisement. Closing in 15 seconds.