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Board Committees
The Board carries out certain of its responsibilities through its committees. Committees have access to necessary resources, including Radian employees, outside consultants and advisors, as they deem necessary. The Board continues its committee oversight throughout the year by hearing reports of the committee chairs at each regularly scheduled Board meeting and having access to the written minutes of the various committee meetings.
1. Number, Structure and Purpose of the Committees
The Board has five standing committees: Audit and Risk, Compensation and Human Resources, Credit, Finance and Investment and Governance. All five committees consist entirely of independent directors. The Board may constitute additional committees as it deems appropriate.
2. Committee Roles and Responsibilities
Each committee is charged with developing a charter for approval by the Governance Committee and the Board, which defines its purpose, responsibilities and procedures. Each Committee is required to perform an annual review of its charter. The following is an outline of each committee’s basic role.
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Audit and Risk
The Audit and Risk Committee assists the Board in its responsibilities related to the integrity and reporting of the Company’s quarterly and annual financial statements, the independence and performance of the Company’s internal and external auditors, the Company’s system of internal controls and mechanisms for receiving complaints or orders regarding the Company’s accounting procedures.
The Committee is directly responsible for the appointment, compensation and oversight of the
external auditors who audit the Company’s financial statements.
The Committee reviews, prior to release, the annual audited financial statement information and the unaudited quarterly financial information, including management’s discussion and analysis for each period.
The Company maintains, and the Audit and Risk Committee reviews activity under, a Code of Conduct and Ethics.
The Committee oversees the Company’s overall enterprise risk management. The function of the Committee is oversight. Management remains in the first instance responsible for the preparation, presentation and integrity of the Company’s financial statements and public disclosures. Management is also responsible for maintaining appropriate accounting and financial policies and internal controls along with procedures designed to assure compliance with accounting standards and applicable laws and regulations. Internal audit examines and evaluates business processes including the Company’s system of internal controls. The external auditor is responsible for planning and carrying out an audit in accordance with generally accepted auditing standards. Both the Chief Audit Executive and the external auditor report directly to the Committee. The Company requires rotation of the lead partner and the concurring partner of the Company’s external auditor every five years and rotation of other partners every seven years.
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Compensation and Human Resources
The Compensation and Human Resources Committee oversees corporate compensation and benefit policies and programs for Radian and its subsidiaries. The Committee establishes the compensation and benefit structure of all senior corporate and principal subsidiary officers (except the CEO, which is approved by the independent directors).
Annually, the Committee reviews with the CEO and Chief Administrative Officer the quality and depth of the pool of competent, qualified managers throughout the organization as well as the Company’s management development practices and programs. The Committee reviews the performance and potential of key executives and management’s efforts to identify and develop high potential individuals to ensure the continuity of senior leadership. To assist the Committee, the CEO provides an assessment annually of persons considered potential successors to certain senior management positions. The Committee reviews and discusses with management, prior to filing, the Compensation Discussion and Analysis included in the Company’s annual proxy statement.
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Credit
The Credit Committee oversees our credit and risk management policies and procedures, including oversight of our systems for identifying and quantifying emerging matters that could pose significant risk implications for the Company. The Committtee regularly reviews our credit-based risks, credit policies and overall credit management. Specifically, the Committee reviews the quality of our mortgage insurance and financial guaranty portfolios, and assesses general compliance with underwriting and diversification guidelines.
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Finance and Investment
The Finance and Investment Committee establishes investment policy guidelines and monitors progress toward achieving investment objectives as well as changes required to meet the current needs of the business. The Committee regularly reviews and evaluates the performance of the investment portfolio and the investment managers and other investment professionals to ensure adherence to policy guidelines. In addition, the Committee oversees the Company’s capital structure with a focus on appropriate liquidity levels and the efficient use of capital.
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Governance
The Governance Committee oversees the process of Board governance, recommends qualified directors for nomination by the Board and election by stockholders and recommends committee membership and chairs to the Board.
In conjunction with the governance process, the Committee recommends appropriate performance criteria for the Board to evaluate itself and its members. Criteria for individual evaluation include the director’s attendance record, independence, preparedness, participation, contribution, continuing education and candor. The Committee sponsors an annual process by which the Board can assess its effectiveness. The Committee also regularly examines the governance process in light of both external and internal issues and makes appropriate recommendations to the Board for any change.
3. Assignment of Committee Members
Annually, the Board appoints committee members and chairs. The Board believes that consistency and experience within committees is an important governance element and rotates committee participation as needs and skills may require.
4. Frequency, Length and Agenda of Committee Meetings
The chair of each committee assures compliance with applicable regulatory requirements with respect to its oversight responsibilities. The chair determines the frequency, length and agenda of committee meetings. Every Board member may suggest agenda items for any committee meetings.
5. Committee Minutes and Records
Committees maintain appropriate minutes of each meeting and make timely reports to the Board with recommendations for approval as the committee’s actions may warrant.
6. Continuing Education
Each independent director is encouraged to participate in continuing education programs regarding the Company and its businesses as well as to participate in appropriate external education programs involving their committee roles and responsibilities. Subject to the approval of the Chairman, the Company reimburses the director for the cost of related external education.
7. Spokesperson
The Company’s CEO has the authority and responsibility to designate the public spokesperson(s) for the Company. Individual members of the Board may, from time to time at the request of the CEO or the Board, meet or otherwise communicate with various constituencies on matters related to the Company.
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