Ambac Pays Four Executives $3 Million in Bonuses (Update2)

By Jody Shenn
Bloomberg News
February 2, 2009

Feb. 2 (Bloomberg) -- Ambac Financial Group Inc., the bond insurer whose shares fell 95 percent last year, awarded four executives almost $3 million in cash bonuses for 2008.

Chairman Michael Callen received $975,000 and Chief Executive Officer David Wallis got $500,000, according to a filing today with the U.S. Securities and Exchange Commission.

Overall bonuses for Ambac executive officers declined 60 percent in 2008 from the prior year, according to the filing. Ambac's board didn't award stock options or restricted shares to the executives last year, the filing said, as the New York-based company lost top insurance grades from ratings firms amid mortgage-debt losses, resulting in a decline in new business.

"Either the market prices on the company's securities are reflecting its prospects wrongly or the bonuses are out of sync," said Charles Lemonides, the chief investment officer at Valueworks LLC in New York, which owns Ambac shares and bonds. "We will see."

Chief Financial Officer Sean Leonard received a $950,000 bonus, while Executive Vice President Douglas Renfield-Miller got $550,000, according to the filing.

"The ultimate goal of the compensation framework was to create an incentive for key executive officers that have been, and will continue to be, instrumental to the implementation of the firm's corporate strategy." according to the filing.

The board held the salary levels of Callen and Wallis at their 2008 levels, the company said. Renfield-Miller and Leonard received salary increases, according to the filing. Vandana Sharma, an Ambac spokeswoman, declined to comment beyond the filing.

Ambac fell 10 cents, or 8.8 percent, to $1.04 in New York Stock Exchange composite trading today. The share are down 92 percent from a year ago.

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