Slide 1: Compensation Analysis
Compensation Analysis Based on the work of compensation expert Brian T. Foley May 2, 2016 © Canyon Capital Advisors LLC
Slide 2: Source
Source The analysis herein is based on the work of Brian T. Foley, a leading nationally known compensation expert with more than 35 years of experience in addressing executive and director compensation matters. © Canyon Capital Advisors LLC Page 2
Slide 3: Mr. Tavakoli Is Overcompensated
Mr. Tavakoli Is Overcompensated Nader Tavakoli's compensation is excessive — both as compared to his predecessor's compensation opportunities and to that of the highest paid executives at Ambac's peers. Ambac’s 2016 Proxy Statement claims Ambac has a “pay for performance philosophy” and that muc
Slide 4: Mr. Tavakoli Is Overcompensated: Compared to Predecessor
Mr. Tavakoli Is Overcompensated Mr. Tavakoli's 2015 and 2016 compensation levels far exceed those of his predecessor, Diana Adams, which Ambac described in its proxy statement as “market competitive.” Mr. Tavakoli's 2015 total direct compensation was $5.77M: $3.1M in base salary and bonus; $2.67
Slide 5: Mr. Tavakoli Is Overcompensated: 2015 Compensation vs. Chosen Peers
Mr. Tavakoli Is Overcompensated Mr. Tavakoli’s 2015 compensation was extraordinarily high:(2) Ambac lists 16 companies that it claims are peers for compensation comparison (3) purposes (“Ambac's Chosen Peers”) in its proxy statement. At least as of 2015, all of Ambac's Chosen Peers were larger
Slide 6: Mr. Tavakoli Is Overcompensated: Expanded Ambac Peers
Mr. Tavakoli is Overcompensated Mr. Tavakoli's $3.1M 2015 total cash compensation was approximately $830K above (about 37% higher) the 75th percentile in terms of target annual cash compensation when compared to Ambac's Chosen Peers that report bonus target levels for 2015. For a more comprehens
Slide 7: Mr. Tavakoli Is Overcompensated: 2016 Compensation Package
Mr. Tavakoli is Overcompensated Mr. Tavakoli's 2016 total direct compensation package is also clearly excessive compared to the most proximate available year for both Ambac's Chosen Peers and the Expanded Ambac Peers: For the 11 of Ambac's Chosen Peers reporting bonus target levels, Mr. Tavakoli
Slide 8: Mr. Tavakoli Is Overcompensated: Long-Term Awards vs. Largest Comparators
Mr. Tavakoli is Overcompensated Other key observations about Mr. Tavakoli's 2016 compensation: His $5.7M in 2016 long‐term awards at target, valued at grant, is significantly higher than the numbers for 2015 long‐term awards for CEOs at the largest comparators – It is about $990K more (about 2
Slide 9: Mr. Tavakoli Is Overcompensated: Time-Based Restricted Stock Units
Mr. Tavakoli is Overcompensated In addition, the bulk ($4.275M) of Mr. Tavakoli's $5.7M target restricted stock unit grants for 2016, valued at grant, involve awards that will vest based only on time unless accelerated. They are not based on performance, and most likely will not be deductible by
Slide 10: Ambac's Board is Overcompensated
Ambac's Board is Overcompensated Ambac's board members are also significantly overpaid. Each of Ambac's full‐year board members received $475,000 in 2015. That consisted of a $200K cash Board retainer rate, plus an annual $250K stock‐based (RSU) Board retainer award and a $25K additional cash
Slide 11: Ambac's Board is Overcompensated: Primary Competitors
Ambac's Board is Overcompensated The comparison is just as stark looking at Ambac's three primary business competitors among its chosen peers: The 90th percentile of 2015 total non‐employee director compensation at Assured Guaranty was less than $335K. The 90th percentile of 2015 total non‐emp
Slide 12: Background of Brian T. Foley
Background of Brian T. Foley Brian Foley, founder of Brian Foley & Company, has more than 35 years of experience in providing independent advice on executive compensation and related corporate governance matters to boards of directors, compensation and other board committees and senior managements o
Slide 13: Reference Notes
Reference Notes (1) All non‐perfomance‐based compensation over $1 million generally is non‐deductible under IRC Section 162(m) if it is not based on performance goals set by the Compensation Committee at the start of the relevant year or applicable award cycle or fails to meet other tax requiremen
Slide 14: Reference Notes
Reference Notes (5) The term “CEO” in this presentation refers to the highest paid named executive officer at each company that is used for comparison purposes, whether that person was the CEO (which it was in most cases) or another executive. (6) The 10 additional companies are insurance compan
Slide 15: Important Information
Important Information CANYON CAPITAL ADVISORS LLC, THE CANYON VALUE REALIZATION MASTER FUND, L.P., MITCHELL R. JULIS AND JOSHUA S. FRIEDMAN (COLLECTIVELY, “CANYON”) AND FREDERICK ARNOLD (COLLECTIVELY WITH CANYON, THE “PARTICIPANTS”) HAVE FILED A DEFINITIVE PROXY STATEMENT WITH THE SECURITIES AND EXC