Ambac Financial Group Inc., which reported a net loss of $5.6 billion in 2008, gave a number of its named executive officers more than $1 million each in compensation last year, according to a proxy statement the company filed with the Securities and Exchange Commission yesterday.
Eight Ambac executives combined to take home $15.7 million in compensation in 2008, according to the document. Salaries and bonuses accounted for $9.1 million of that total, with six of those executives breaking the $1 million barrier, the document said.
Ambac said it needed to pay cash bonuses to its named executive officers - its most highly compensated senior officials - because they would have not have received any bonus under one of the incentive bonus plans already in place. It claims that, on average, incentive compensation for each executive fell 60% from 2007.
The statement says Ambac views each named executive officer, or NEO, "as critical to our efforts to improve stockholder value over the long term." Ambac stock, which closed at $0.91 yesterday, has fallen more than 99% since hitting a high of $96.10 in May 2007.
"The committee determined that paying discretionary cash bonuses to these NEOs was advisable in order to provide them with a total compensation level that would acknowledge their efforts and loyalty during 2008 and successfully retain and motivate them for the future," the proxy statement said.
"Total compensation levels for the NEOs would have otherwise been insufficient, in the committee's judgment, because the NEOs did not receive any bonus payout under the Executive Incentive Plan as a result of Ambac not having reached the pre-established performance thresholds," it said.
Michael A. Callen, who served as interim chief executive officer from January to October, received $607,500 in salary and a $975,000 bonus; former chief risk officer and current CEO David W. Wallis received $718,592 in salary and a $500,000 bonus; chief financial officer Sean T. Leonard received $380,000 in salary and a $950,000 bonus; executive vice president Douglas C. Renfield-Miller received $300,000 in salary and a $550,000 bonus; senior vice president and general counsel Kevin Doyle received $260,000 in salary and a $950,000 bonus; senior managing director Robert Shoback received $250,000 in salary and a $350,000 bonus; former executive vice president John W. Ulhein 3d received $350,000 in salary and a $750,000 bonus; and former chief risk officer William T. McKinnon received $400,000 in salary and an $850,000 bonus.
In addition, Wallis received $666,879 related to his move to New York, which included the cost of flights to New York from London for his family, $76,000 in rental costs for his living arrangements in New York, and a $574,070 tax equalization payment, among other expenses.
Ambac paid Uhlein an additional $350,000 as part of a severance package, and paid McKinnon - who retired in February 2008 - $750,000 related to long-term incentive compensation for the 2008 performance year.
Ambac also promised last February that all its other employees would receive a 2008 bonus that was at least 90% of the bonus they received in 2007. That guarantee did not apply to the NEOs.
Ambac has given raises to Renfield-Miller, Leonard, Doyle, and Shoback for 2009. Wallis received a raise when he was promoted to CEO from chief risk officer.
The company says its compensation in 2009 will try to reflect a move away from short-term incentive compensation.
"Going forward, our compensation programs will have less emphasis on variable-rate compensation and more emphasis on payments based on individual performance, accountability and contributions, retention, and motivation," Ambac said.