SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 30, 2006
MBIA INC.
(Exact name of registrant as specified in its charter)
Connecticut 1-9583 06-1185706
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
113 King Street,
Armonk, New York 10504
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
914-273-4545
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
|_| Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
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ITEM 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
The Company has entered into a letter agreement with C. Edward Chaplin
pursuant to which Mr. Chaplin will serve as Chief Financial Officer of the
Company and Vice Chair of its wholly owned subsidiary, MBIA Insurance
Corporation and a member of its Executive Policy Committee. Under the agreement,
Mr. Chaplin's initial annual base salary will be $500,000 and his annual bonus
will be made at the Company's discretion (the bonus will be based primarily upon
the Company's financial performance and upon individual performance factors).
Mr. Chaplin will also be eligible to receive a long-term incentive cash award in
2007 (targeted at $225,000) and performance-based restricted stock in 2008 and
2009 (targeted at 5,000 and 7,500 shares respectively). Mr. Chaplin may be
awarded performance shares in the future as approved by the Chief Executive
Officer and the Company's compensation committee. Mr. Chaplin will receive five
annual credits to the Company's Deferred Compensation and Excess Benefit Plan in
the amount of $140,000 per year. The Company will provide Mr. Chaplin with
relocation assistance.
In addition to the compensation described above, and as an inducement to
him to accept employment with the Company, Mr. Chaplin is entitled to receive
sign-on incentives under the letter agreement. These incentives, which are
designed to compensate Mr. Chaplin for the compensation that he will forfeit
upon termination of employment with his prior employer, include (i) a cash bonus
of $500,000, (ii) restricted stock with a value of $1,800,000 at the time of the
grant (the actual number of shares awarded will be determined by the share price
on the close of business on the effective date of the grant) that will vest 50%
on the second anniversary and the remaining 50% on the fourth anniversary of the
grant date, (iii) a grant of 37,500 stock options, with an exercise price that
is not less than the closing price of the Company's shares on the date of grant,
that will become 100% vested on the fifth anniversary of the grant date and will
expire ten years from the date of grant, and (iv) to the extent Mr. Chaplin is
prohibited from exercising any options from his prior employer or is otherwise
not compensated therefore, the Company will issue to him three-year
cliff-vesting restricted stock with a value, as of the grant date, equal to the
spread value of such options on the date of Mr. Chaplin's termination of
employment, not to exceed $1.5 million.
The letter agreement further provides that if, within the first 18 months
of his employment, the Company terminates Mr. Chaplin's employment for any
reason other than cause, Mr. Chaplin will be entitled to a severance payment
valued at $500,000 at the time of separation. In addition, the restricted stock
and stock options awarded to Mr. Chaplin in connection with the commencement of
his employment will immediately vest on the date of termination and the options
will remain exercisable for one year from the date of termination.
ITEM 5.02. DEPARTURE OF DIRECTORS OR PRINCIPAL OFFICERS; ELECTION OF
DIRECTORS; APPOINTMENT OF PRINCIPAL OFFICERS.
Nicholas Ferreri is expected to step down as Chief Financial Officer as of
June 26, 2006 and is expected to continue as an employee for up to two weeks to
assist in the transition to Mr. Chaplin.
Pursuant to the letter agreement with C. Edward Chaplin described above in
Item 1.01, Mr. Chaplin resigned as Director of the Company on May 24, 2006. Mr.
Chaplin is expected to begin serving as the Company's Chief Financial Officer as
of June 26, 2006. The terms of his employment agreement are described above in
Item 1.01.
Prior to his resignation, Mr. Chaplin had served as Director of the Company
since 2002. Mr. Chaplin, 49, is a Chartered Financial Analyst who has been with
Prudential Financial Inc. since 1983 and is currently responsible for capital
and liquidity management, corporate finance, and banking and cash management. He
is a member of Prudential's Financial Controls Committee, a management group
supervising capital commitments, balance sheet and legal entity structure, and a
member of the Investment Oversight Committee of Prudential's employee benefit
plans. Mr. Chaplin is a member of the Board of Overseers of Rutgers University
and of the Executive Leadership Council, a business group promoting workplace
diversity. He holds a B.A. degree from Rutgers College and an M.A. degree from
Harvard University.
On May 30, 2006, MBIA Inc. issued a press release announcing Mr. Chaplin's
resignation as a Director and his appointment as Chief Financial Officer as well
as Mr. Ferreri's resignation. A copy of the press release is attached as Exhibit
99.1 to this Form 8-K.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
99.1 Press Release issued by MBIA Inc. dated May 30, 2006.
This information is not deemed to be "filed" for the purposes of Section 18
of the Securities Exchange Act of 1934 and is not incorporated by reference into
any Securities Act registration statements.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
MBIA INC.
By: /s/ Ram D. Wertheim
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Ram D. Wertheim
General Counsel
Date: May 30, 2006
EXHIBIT INDEX TO CURRENT REPORT ON FORM 8-K
Dated May 30, 2006
Exhibit 99.1 Press Release issued by MBIA Inc. dated May 30, 2006.