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The report also says another bank, UBS AG, has withdrawn from the suit, leaving three from the original 18 banks left in the litigation.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