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Board of Directors
Role and Composition
The Board is elected by the stockholders. The directors' fundamental responsibility is to exercise their business judgment in a manner they reasonably believe to be in the best interests of the Company and its stockholders.
Board Composition and Qualifications
The Board determines the number of directors and ensures that a substantial majority of directors are independent, as independence is determined by the Board based on the New York Stock Exchange listing standards and applicable SEC rules. With respect to a director’s relationship with the Company that does not compromise the director’s independence per se under the NYSE listing standards and applicable SEC rules, the other directors who are independent will determine whether such relationship is “material.”
The Board selects members who are able and prepared to devote sufficient time and effort to the Company. The Board formally assesses the directors' relevant skills and characteristics, financial expertise, and diversity of experiences and backgrounds, and in its nomination and selection process strives to supplement and/or complement the breadth and depth of Board expertise. Directors are expected to attend all scheduled meetings of the full Board and the committees on which they serve, as well as the Company's annual stockholders' meeting.
Stockholders may recommend qualified individuals to be considered for director, as provided in the Company's By-Laws.
On matters of corporate governance, the Board decisions will be made by the independent directors.
Board Leadership - Non Executive Chairman of the Board
The non-executive Chairman of the Board (Chairman) is responsible for the management, development and effective performance of the Board, and provides leadership to the Board for all aspects of the Board's work.
The Chairman acts in an advisory capacity to the Chief Executive Officer (CEO) and to other members of management in all matters concerning the interests of the Board and relationships between management and the Board.
The Chairman:
- Chairs the Board meetings;
- Chairs meetings of the independent directors;
- Plans and organizes the activities of the Board in consultation with the CEO, including:
- preparation for, and conduct of, Board meetings;
- the quality, quantity and timeliness of information that goes to the Board;
- ongoing formal and informal communications with and among directors; and
- acting as principal liaison between the independent directors and the CEO;
- Participates with the Human Resources and Compensation Committee (HR Committee) in evaluating and recommending director compensation and reviewing management succession;
- Chairs the annual and any special meetings of stockholders;
- In conjunction with the Governance Committee:
- evaluates the Board's effectiveness and assists with the implementation of any governance improvements;
- supports Board succession planning; and
- participates in the directors' peer review process;
- Participates with the HR Committee in establishing the performance goals and assessment of the CEO in meeting agreed upon targets;
- Consults with the CEO and management in the planning of strategy meetings;
- Participates with the respective committee chairpersons in retaining consultants who report directly to the Board;
- On an as-needed basis, represents the Board at management meetings and at meetings with investors and others;
- Attends, as a non-voting participant, all meetings of all Board committees; and
- Carries out special assignments at the request of the CEO or the Board.
Selection of the CEO
The Board elects the CEO. The CEO is the senior executive of the Company and is responsible for:
- Providing strong, ethical and principled leadership of the Company's businesses;
- Establishing the Company's mission and core values;
- Determining corporate strategies and policies;
- Insuring complete and accurate disclosures of financial, operational and management matters to the Board for its consideration in the approval process;
- Ensuring the regulatory compliance and integrity of all financial filings and other corporate communications;
- Providing data and information to the Board so that the directors may be current with respect to Company, industry and corporate governance matters; and
- Acting as the primary spokesperson for the Company in all public matters.
Board Member Orientation
New directors undergo appropriate orientation to understand Radian's businesses, management and systems of internal controls.
Service on Other Boards
Directors may not serve on more than two other public company boards.
Change of Responsibility of Director
Any significant change in the business activities of a Board member, including directorships or chair positions in other companies, together with the director's offer to resign from the Board, are required to be promptly communicated to the Chairman and chair of the Governance Committee for review of possible conflicts of interest. The Board will then determine if the change warrants acceptance of the director's offer of resignation.
Director Compensation and Stock Ownership
The form and amount of director compensation are determined by the Compensation and Human Resources Committee of the Board. The guiding principles of the Company's director compensation program are (i) compensation made in proportion to the amount of work required of directors in companies of a comparable size to that of the Company, (ii) alignment of directors' interests with the long-term interests of the Company's stockholders, (iii) transparency of the structure of the compensation so that stockholders can easily understand it and (iv) consistency with directors' independence. The Board views equity ownership in the Company as the primary means of accomplishing the alignment of directors' and stockholders' interests. Each director is required to maintain a minimum direct investment in common shares of Radian equal to $350,000 or approximately two years' total compensation as a Board member. Directors have a four year phase in period to achieve their minimum holdings*.
*Given the significant decrease in the market value of our common stock during 2007, the Board is in the process of reevaluating these ownership requirements. The ownership requirements have been temporarily suspended until completion of the Board’s review.
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