MBIA Insurance Regulator Criticizes Executive Retention Pay
The New York State regulator for MBIA Inc. (MBI)’s insurance unit criticized the company for paying executives $11.4 million to stay on board for three more years.
“These bonuses are unwarranted and ill-advised,” David Neustadt, a spokesman for the New York Department of Financial Service, said today in an e-mailed statement. “That MBIA in its current circumstances would pay big bonuses raises real questions as to the independence of MBIA’s board and the judgment of MBIA’s management.”
Kevin Brown, a spokesman for the Armonk, New York-based bond insurer, declined to comment.
MBIA said yesterday it’s paying the cash bonuses to keep four executives with the company through December 2015. Its board approved compensation for Chief Financial Officer Chuck Chaplin, Chief Operating Officer William Fallon, Chief Legal Officer Ram Wertheim and Chief Portfolio Officer Anthony McKiernan that include the retention awards and 2 million shares of stock.
Neustadt declined to elaborate on his e-mailed statement.
“The bonuses will be coming entirely from the holding company and will in no way disadvantage stakeholders in the insurance unit,” Mark Palmer, an equity analyst at New York- based trading firm BTIG LLC. “We believe it is in the best interest of MBIA’s stakeholders for the company to retain key executives, and we see the amounts in question as modest relative to typical executive compensation packages.”
The insurer has lost about 89 percent of its stock-market value since 2006 after it expanded from its original municipal- bond business to backing other kinds of securities including mortgage-related instruments that lost value during the financial crisis that began with the collapse of the U.S. property market the following year. MBIA shares were down 2.1 percent to $7.78 as of 4:15 p.m. in New York.
Chaplin and Fallon will receive $3.5 million each, Wertheim $2.4 million and McKiernan $2 million for staying on, according to a regulatory filing. If an executive leaves before December 2015 without the board’s consent, he must repay a portion of the bonus and forfeit additional stock awards.
In 2011, Chaplin received total compensation of $1.1 million, including $750,000 of salary and the rest retirement payments, according to a March 19 filing. Fallon was paid $750,000 and a total $960,938, according to the filing. Their base salaries were to remain at $750,000 this year.
McKiernan received total compensation of $2.7 million last year, including $450,000 of salary, $351,080 of stock awards, $1.75 of incentive compensation and $126,500 in retirement money. His salary was raised to $500,000 for 2012, according to the filing.
Wertheim, whose compensation wasn’t included in the March 19 filing, received a total consideration of $2.06 million in 2010, including $500,000 of salary, according to data compiled by Bloomberg. Wertheim’s salary last year remained at $500,000, according to a March 2011 filing.
MBIA said in March that its four top executives, Chaplin, Fallon, Wertheim and Chief Executive Officer Jay Brown, wouldn’t receive a cash bonus or long-term incentive pay for 2011 after talks with the New York State Department of Financial Services.
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