MBIA Inc. in securities filings yesterday revealed that deposed chief executive officer Gary Dunton received a severance package of $5.2 million, while incoming CEO Jay Brown, who rejoined the firm last month, will receive a package of more than $27 million, mostly restricted stock options.
The Securities and Exchange Commission filings show that Dunton, replaced by Brown in the middle of February, will receive a total severance of $5.2 million. The total includes a $960,000 bonus for Dunton's efforts in selling $1 billion in surplus notes in January, which contributed to MBIA's capital raising plan and the upgrade of the rating for financial guarantor MBIA Insurance Corp. to triple-A.
The company will pay a cash severance of $2.8 billion and accelerate the vesting of Dunton's restricted stock, worth $1.1 billion. He will also be paid $200,000 for his work as a consultant with the company through April 30, and $123,000 for his medical benefits, outplacement services, and legal fees.
Brown, who took the job on Feb. 16, will be paid under an incentive program aimed at rewarding him if the company's stock price improves. He will be paid a base salary of $500,000 a year with an annual bonus not to exceed $2 million.
Under the five-year employment contract, Brown will get $25 million in restricted stock options to be paid in two parts.
Under the first part of the agreement, worth $20 million, Brown will get 1,634,000 restricted shares each worth $12.24, the price of MBIA's stock on the day before he assumed the CEO's job. The second part of the agreement will give him $5 million, with the calculation of the share totals to be dependant on the average share price before the award date.
This compensation is subject to shareholder approval, and will only vest if the company's share price is at or above $40, with some contingencies.
MBIA stock closed up 14%, or $1.51, to $12.31 in trading on the New York Stock Exchange yesterday.
