MBIA Inc., the parent company of National Public Finance Guarantee, said Chuck Chaplin will step down March 11 as co-president, chief financial officer and chief administrative officer and will retire from the company effective Jan. 1, 2017.
Chaplin will remain an executive vice president until his retirement. Anthony McKiernan, who has been executive vice president and the chief portfolio officer since May 2012, will take over as CFO on March 11, the company said Jan. 22.
"We viewed the announcement as surprising insofar as we view Chaplin as an effective executive, had seen him as a potential candidate to replace MBI CEO Jay Brown when he ultimately retires, and can see no obvious reason for his departure," BTIG LLC analysts Mark Palmer and Giuliano Bologna said in a report.
The change should have little impact on the prospects of the company and the stock and the trajectory of its shares for the foreseeable future will depend on how the restructuring of Puerto Rico's debt evolves and the amount of losses the company is likely to absorb, the BTIG analysts said.
The BTIG report also said that some investors may believe Chaplin's resignation was related to the announcement by the Puerto Rico Electric Power Authority and its creditors early Saturday morning that their restructuring talks had collapsed.
"The thinking would be that because the discussions had fallen apart Chaplin had viewed MBI's situation as dire and opted to resign as a result. While we cannot say definitively that there was no relationship between Chaplin's announcement and the state of the PREPA negotiations, we question whether it was even clear that the talks would collapse when MBI announced the resignation late Friday afternoon."
PREPA said Wednesday that the talks were back on track. National wrapped about $1.3 billion of PREPA bonds as of August, according to Interactive Data Corp.
MBIA said Chaplin will receive a one-time severance payment of $1.5 million under a separation agreement in connection with his retirement, in exchange for his agreement to forfeit the outstanding performance based restricted stock awarded to him as part of the cash retention and restricted stock award made to him on Dec. 21, 2012 and to comply with a non-compete covenant that is part of the separation agreement.
Mr. McKiernan has been Executive Vice President and Chief Portfolio Officer since May 1, 2012 and before that he was vice president and chief portfolio officer since Aug. 3, 2011.
McKiernan joined MBIA Insurance Corp. in 2000 as a vice president in the credit analytics group and managed the corporate insured portfolio management group prior to becoming the head of structured finance insured portfolio management group in 2007.
For the 2016 performance year, Mr. Chaplin will be entitled to receive a cash performance bonus at his target bonus amount for the year, and in, lieu of the long term incentive restricted stock award for the year, a cash payment at the target LTI amount.
In addition, on April 2, 2018, Chaplin will receive a payment of $75,000 in lieu of the contribution the company would have made to Chaplin's non-qualified deferred compensation retirement account in respect of the 2016 bonus that will be paid to him in 2017.
MBIA declined to comment further, as it is the company's general policy to file the necessary 8-K and not provided any additional comments besides what is included in the 8-K.
