March 20, 2019

Dear Owners:

You are cordially invited to attend the annual meeting of MBIA shareholders on Wednesday, May 1, 2019 at 10:00 a.m. at 2 Manhattanville Road, Conference Room 2, First Floor, Purchase, New York.

Our agenda for this year’s meeting is for shareholders to:

After the formal agenda is completed, we will be happy to answer any questions you may have.

Even if you do not plan to attend the annual meeting, we urge you to vote your shares. Instructions for using all of the available voting options are included in the enclosed proxy statement.

We appreciate your continued support on these matters and look forward to seeing you at the meeting.

Very truly yours,

Charles R. Rinehart Chairman		William C. Fallon Chief Executive Officer

MBIA Inc.

Notice of Annual Meeting of Shareholders

and Proxy Statement

Dear Shareholders:

We will hold the 2019 Annual Meeting of MBIA Inc. (“MBIA” or the “Company”) Shareholders at 2 Manhattanville Road, Conference Room 2, First Floor, Purchase, New York 10577, on Wednesday, May 1, 2019 at 10:00 a.m. EDT in order for shareholders to:

These items are more fully described in the following pages.

This year, we have again elected to adopt the SEC rules that allow companies to furnish proxy materials to their shareholders over the Internet. The Notice of Internet Availability of Proxy Materials (the “Notice”) provided to shareholders contains instructions on how to access our 2018 Annual Report to Shareholders and proxy materials for the 2019 Annual Meeting online, how to request a paper copy of these materials and how to vote your shares. We expect to furnish the Notice to shareholders and make proxy materials available beginning on or about March 20, 2019.

The Notice provides instructions regarding how to view our proxy materials for the 2019 Annual Meeting online. As explained in greater detail in the Notice, to view the proxy materials and vote, you will need to visit www.proxyvote.com and have available the 16-digit control number(s) contained on your Notice. If you received a Notice by mail, you will not receive a printed copy of the proxy materials in the mail unless you request them or you own shares of MBIA Inc. in the MBIA Inc. 401(k) Plan or MBIA Inc. Non-Qualified Retirement Plan. There is no charge for requesting a copy. To facilitate timely delivery, please make your request on or before April 17, 2019. To request paper copies, shareholders can go to www.proxyvote.com, call 1-800-579-1639 or send an email to sendmaterial@proxyvote.com. When requesting materials by email, please send a blank email with your 16-digit control number(s) (located on the Notice) in the subject line.

You have the option to receive all future proxy statements, proxy cards and annual reports electronically via email or the Internet. If you elect this option, the Company will only mail materials to you in the future if you request that we do so. To sign up for electronic delivery, please follow the instructions under “General information––Voting” to vote your shares using the Internet. After submitting your vote, follow the prompts to sign up for electronic delivery.

Sincerely,

Jonathan C. Harris

Secretary

1 Manhattanville Road

Suite 301

Purchase, New York 10577

March 20, 2019

Contents

General information

How it works. The Board of Directors of the Company is soliciting shareholders’ proxies in connection with the Annual Meeting of Shareholders to be held at 2 Manhattanville Road, Conference Room 2, First Floor, Purchase, New York 10577, on Wednesday, May 1, 2019 at 10:00 a.m. EDT. Only shareholders of record at the close of business on March 7, 2019 may vote at the Annual Meeting. As of March 7, 2019, there were 90,179,632 shares of our common stock (which is our only class of voting stock) outstanding and eligible to be voted. Treasury shares are not voted. Each shareholder has one vote for each share of MBIA common stock owned on the record date for all matters being voted on at the Annual Meeting.

A quorum is constituted by the presence, in person or by proxy, of holders of our common stock representing a majority of the number of shares of common stock entitled to vote. Abstentions and broker non-votes will be considered present to determine the presence of a quorum.

Voting. If you hold shares in more than one account (e.g., you are a shareholder of record, own shares in the Company’s 401(k) Plan or Non-Qualified Retirement Plan, and beneficially own shares in one or more personal brokerage accounts, or any combination of the foregoing), you may receive more than one Notice and/or proxy card. Accordingly, in order to vote all of your shares, you will need to vote more than once by following the instructions on each of the items you receive.

You may vote using the following methods:

Internet. You may vote on the Internet up until 11:59 PM Eastern Time the day before the meeting by going to the website for Internet voting on the Notice or proxy card (www.proxyvote.com) and following the instructions on the website. Have your Notice or proxy card available when you access the web page. If you vote over the Internet, you should not return your proxy card.

Telephone. If you received your proxy materials by mail, or if you received a Notice and requested a paper copy of the materials, you may vote by telephone by calling the toll-free telephone number on your proxy card (1-800-690-6903), 24 hours a day up until 11:59 PM Eastern Time the day before the Annual Meeting, and following the prerecorded instructions. Have your proxy card available when you call. If you vote by telephone, you should not return your proxy card. Notice recipients should first visit the Internet site listed on the Notice to review the proxy materials before voting by telephone.

Mail. If you received your proxy materials by mail, or if you received a Notice and requested a paper copy of the materials, you may vote by mail by marking your proxy card, dating and signing it, and returning it in the postage-paid envelope provided or as directed on the voting instruction form so that it arrives before the Annual Meeting.

In Person. You may vote your shares in person by attending the Annual Meeting and submitting your proxy at the meeting. If your shares are held in the name of a bank, broker or other holder of record (i.e., your shares are held in “street name”), you must obtain a legal proxy executed in your favor from the holder of record and bring it to the Annual Meeting in order to vote at the Annual Meeting.

You can revoke your proxy at any time before the Annual Meeting or when prompted during the Annual Meeting. If your shares are held in street name, you must follow the instructions of your broker to revoke your voting instructions. If you are a holder of record and wish to revoke your proxy instructions, you must advise the Secretary in writing before the proxies vote your common stock at the meeting, deliver later-dated proxy instructions, or attend the meeting and vote your shares in person. Unless you decide to attend the meeting and vote your shares in person after you have submitted voting instructions, we recommend that you revoke or amend your prior instructions in the same way you initially gave them – that is, by Internet, telephone, or mail. This will help to ensure that your shares are voted the way you have finally determined you wish them to be voted.

All shares that have been voted properly by an unrevoked proxy will be voted at the Annual Meeting in accordance with your instructions. If you sign and submit your proxy card, but do not give voting instructions, the shares represented by that proxy will be voted as our Board recommends.

If your shares are held in street name, you may receive voting instructions from the holder of record. If you do not provide voting instructions to your broker, your shares will not be voted on any proposal on which your broker does not have discretionary authority to vote. Brokers do not have discretionary authority to vote on the election of Directors (Proposal 1) or the advisory vote on NEO compensation (Proposal 2). Please instruct your broker so your votes can be counted.

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Dissenters’ rights. Under Connecticut law, dissenters’ rights are not available with respect to the matters included in the formal agenda for the 2019 Annual Meeting of Shareholders.

Miscellaneous. The cost to prepare and mail these proxy materials will be borne by the Company. Proxies may be solicited by mail, in person or by telephone by Directors, officers and regular employees of the Company without extra compensation and at the Company’s expense. The Company will also ask bankers and brokers to solicit proxies from their customers holding shares of MBIA common stock and will reimburse them for reasonable expenses.

A copy of the Company’s Annual Report on Form 10-K is available on the Company’s website, www.mbia.com, under the “SEC Filings” link or by writing to Shareholder Information at MBIA Inc., 1 Manhattanville Road, Suite 301, Purchase, New York 10577.

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Summary of Board of Director Nominees

The following table provides summary information about each Director nominee. See page 49 for more information about each Director and the Company’s Proposal 1: Election of Directors.

E: Executive, FR: Finance and Risk, CG: Compensation and Governance, A: Audit

● : Member, C : Chair

Board of Directors corporate governance

The Board of Directors and its committees

The Board of Directors supervises the overall affairs of the Company. To assist it in carrying out these responsibilities, the Board has delegated authority to the three regular committees described below, as well as the Executive Committee on an as-needed basis. The Board of Directors met five times in regular sessions during 2018. The Board of Directors has regularly scheduled non-management Director meetings. Pursuant to the MBIA Inc. Board Corporate Governance Practices (the “Board Practices”), each Director is expected to attend at least 75% of all Board meetings and committee meetings of which that Director is a member, on a combined basis. All of the Directors met this requirement in 2018. The Board Practices can be found on the Company’s website, www.mbia.com, under the “Ethics and Governance” link, and are available in print to any shareholder who requests a copy by writing to Shareholder Information at MBIA Inc., 1 Manhattanville Road, Suite 301, Purchase, New York 10577. Pursuant to the Board Practices, Directors are required to attend annual shareholder meetings, barring unusual circumstances. The 2018 Annual Meeting was attended by each of the Company’s Directors.

Regular Board committees. Each regular Board committee and the Executive Committee has a charter, which can be found on the Company’s website, www.mbia.com, under the “Ethics and Governance” link, and is available in print to any shareholder who requests a copy by writing to Shareholder Information at MBIA Inc., 1 Manhattanville Road, Suite 301, Purchase, New York 10577. The committees are described below.

Executive Committee. The Executive Committee, which at year-end consisted of Messrs. Rinehart (Chair), Fallon, Gilbert, Shasta and Vaughan, did not meet during 2018. Mr. Fallon was appointed a member of the Committee on May 2, 2018. This Committee is authorized to exercise powers of the Board during intervals between Board meetings, subject to limitations set forth in the By-Laws of the Company and the Committee’s Charter.

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Finance and Risk Committee. The Finance and Risk Committee, which at year-end consisted of Messrs. Vaughan (Chair), Rinehart, Chin, Dewbrey, Gilbert and Shasta, met four times in regular sessions during 2018. Ms. Dewbrey was appointed as a member of the Committee on November 13, 2018. This Committee assists the Board in monitoring the Company’s (i) proprietary investment portfolios, (ii) capital and liquidity, (iii) exposure to changes in market value of assets and liabilities, (iv) credit exposures in the insured portfolios, and (v) financial risk management policies and procedures, including regulatory requirements and limits.

Compensation and Governance Committee. The Compensation and Governance Committee (the “Compensation Committee”), which at year-end consisted of Messrs. Gilbert (Chair), Chin, Dewbrey, Rinehart, Shasta and Vaughan, met five times in regular sessions during 2018. Ms. Dewbrey was appointed a member of the Committee on November 13, 2018. In accordance with the Compensation Committee Charter, the provisions of Rule 10C-1(b)(1) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the listing standards of the New York Stock Exchange (the “NYSE”), the Board of Directors has affirmatively determined that each of the Compensation Committee members is independent. As part of its specific role, the Compensation Committee is responsible for (i) setting the overall compensation principles of the Company, (ii) overseeing executive compensation, (iii) reviewing the Company’s compensation and benefits program, (iv) overseeing the retention of the Committee’s advisers, (v) overseeing significant organizational and personnel matters, (vi) determining the membership, size and composition of the Board, (vii) setting Directors’ compensation, (viii) selecting Directors to serve on the Board committees, and (ix) developing corporate governance principles and practices. The Board approves the CEO’s compensation level and approves the recommendations of the Compensation Committee for the other NEOs’ compensation levels. Since 2005, the Compensation Committee has retained compensation consulting firms to assist and advise it in conducting reviews of the Company’s compensation plans for appropriateness and to assess the competitiveness of the Company’s compensation levels relative to market practice.

Compensation and Governance Committee interlocks and insider participation. No member of the Compensation Committee has ever been an officer or employee of the Company or any of its subsidiaries. During 2018, no

NEO served as a Director or member of the compensation committee (or other committee serving an equivalent function) of any other entity, one of whose executive officers is or has been a Director of the Company or a member of the Company’s Compensation Committee.

Audit Committee. The Audit Committee, which at year-end consisted of Messrs. Shasta (Chair), Chin, Dewbrey, Gilbert, Rinehart and Vaughan, met five times in regular sessions during 2018. Ms. Dewbrey was appointed a member of the Committee on November 13, 2018. In accordance with the Audit Committee Charter and the listing standards of the NYSE, each of the Audit Committee members is independent. In addition, the Board has designated Messrs. Chin, Dewbrey, Gilbert, Rinehart, Shasta and Vaughan as the “audit committee financial experts” (as defined under applicable Securities and Exchange Commission (“SEC”) rules) on the Audit Committee. This Committee assists the Board in monitoring the (i) integrity of the financial statements of the Company and of other material financial disclosures made by the Company, (ii) qualifications and independence of the Company’s independent auditor, (iii) performance of the Company’s internal audit function and independent auditor, (iv) Company’s compliance policies and procedures and its compliance with legal and regulatory requirements, and (v) performance of the Company’s operational risk management function which includes protecting the enterprise from cyber risks.

Process for Director searches

Potential Director nominees are selected in light of the Board’s needs at the time of recommendation. The Compensation Committee assesses potential nominees based on various criteria, such as relevant business and other skills and experience, personal character and judgment and diversity of experience. A nominee’s self-identified specific diversity characteristics are also considered in accordance with the Board Practices, discussed further below. The Compensation Committee also considers the ability of potential nominees to devote significant time to Board activities. The independence and financial literacy of potential nominees, as well as their knowledge of and familiarity with the Company’s businesses, are additional considerations in the Compensation Committee’s selection process.

The Compensation Committee uses both referrals and third-party search firms to assist in identifying and evaluating potential nominees for election as directors. Ms. Dewbrey, who was elected to the Board in 2018, was recruited through referrals without the use of a third-party search firm. Potential candidates are first reviewed and evaluated by the Chair of the

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Compensation Committee. If the Chair of the Compensation Committee concludes that a candidate merits further consideration, then one or more other members of the Compensation Committee designated by the Chair will interview the candidate and decide whether the candidate should be interviewed by other board members. Potential nominees are then interviewed by all of the other members of the Compensation Committee, the Chairman of the Board and by the CEO prior to any recommendation to the Board that the potential nominee be nominated or elected as a Director by the Board.

The Board Practices provide that Director candidates may be identified by the Company’s Board of Directors or a corporate shareholder. Shareholders may recommend a potential nominee by sending a letter to the Company’s Corporate Secretary at MBIA Inc., 1 Manhattanville Road, Suite 301, Purchase, New York 10577. No potential nominees were recommended by shareholders in 2018.

Consideration of Board diversity. The Board Practices include guidelines for selecting Directors, pursuant to which Board selections should reflect sensitivity to diversity. We believe that diversity among members of the Board is important to optimize its ability to perform its duties. Accordingly, in recommending nominees, the Compensation Committee considers a wide range of individual perspectives and backgrounds in addition to diversity in professional experience and training. Under the Board Practices, in selecting nominees for the Board, the Board seeks a combination of active or former senior business executives of major complex businesses (from different industry sectors), leading academics, and individuals with substantial records of business achievement, government service or other leadership roles in the not-for-profit sector, including individuals with specific knowledge and experience relevant to the Company’s business. In addition, the Compensation Committee strives to promote a Board that reflects the diversity and values of our key constituencies (clients, employees, business partners and shareholders). These guidelines for selecting candidates for nomination to the Board promote diversity among the Directors, and the Compensation Committee and the Board evaluate the composition of the Board in order to assess the effectiveness of the guidelines. The results of these evaluations inform the process for identifying candidates for nomination to the Board.

Board leadership structure

The offices of Chairman of the Board and CEO of the Company are separate. The Chairman is responsible for presiding over meetings of the Board and the Company’s shareholders and performing such other duties as directed by the Board. The CEO is responsible for formulating policy and strategic direction for the Company and executing the Company’s business plan and strategy under plans approved by the Board, providing management of the Company’s day-to-day operations, hiring, directing and retaining senior management, serving as spokesperson for the Company and performing such other duties as directed by the Board or required by law.

Given that the roles of CEO and Chairman are well defined, the Board does not believe there is a risk of confusion or duplication between the two positions.

Board and Board committee roles in risk oversight

The Board and its committees oversee various risks faced by the Company and its subsidiaries. The Board regularly evaluates and discusses risks associated with strategic initiatives, and the CEO’s risk management performance is one of the criteria

used by the Board in evaluating the CEO. On an annual basis, the Board also evaluates and approves the Company’s Risk Management and Tolerance Policy. The purpose of the Risk Management and Tolerance Policy is to set the policy that defines the risks the Company is willing to accept in pursuit of its goal of optimizing long term risk adjusted value for shareholders. The Board’s Audit Committee and its Finance and Risk Committee also play an important role in overseeing different types of risks.

The Audit Committee oversees risks associated with financial and other reporting, auditing, legal and regulatory compliance, and risks that may otherwise result from the Company’s operations, including risks associated with cyber intrusions. The Audit Committee oversees these risks by monitoring (i) the integrity of the financial statements of the Company and of other material financial disclosures made by the Company, (ii) the qualifications and independence of the Company’s independent auditor, (iii) the performance of the Company’s internal audit function and independent auditor, (iv) the Company’s compliance policies and procedures and its compliance with legal and regulatory requirements, and (v) the performance of the Company’s operational risk management function.

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The Finance and Risk Committee oversees the Company’s credit risk governance framework, market risk, liquidity risk and other material financial risks. The Finance and Risk Committee oversees these risks by monitoring the Company’s (i) proprietary investment portfolios, (ii) capital and liquidity, (iii) exposure to changes in the market value of assets and liabilities, (iv) credit exposures in the insured portfolios, and (v) financial risk management policies and procedures, including regulatory requirements and limits. The Finance and Risk Committee’s responsibilities help manage risks associated with the Company’s investment and insured portfolios, liquidity and lines of business.

At each regular meeting of the Board, the Chairs of each of these committees report to the full Board regarding the meetings and activities of the committee.

Shareholder communications

Shareholders or interested parties wishing to communicate with our Chairman or with the non-management Directors as a group may do so by submitting a communication in a confidential envelope addressed to the Chairman or the non-management Directors, in care of the Company’s Corporate Secretary, 1 Manhattanville Road, Suite 301, Purchase, New York 10577.

Company Standard of Conduct

The Company has adopted a Standard of Conduct that applies to all Directors and employees, including the Chief Executive Officer, Chief Financial Officer and Controller, and certain third parties. The Standard of Conduct, which also constitutes a code of ethics as that term is defined in Item 406(b) of Regulation S-K, can be found on the Company’s website, www.mbia.com, under the “Ethics and Governance” link, and is available in print to any shareholder who requests a copy by writing to Shareholder Information at MBIA Inc., 1 Manhattanville Road, Suite 301, Purchase, New York 10577. The Company intends to satisfy the disclosure requirements of Form 8-K regarding an amendment to, or waiver from, an element of its code of ethics enumerated in Item 406(b) of Regulation S-K by posting such information on the Company’s website, www.mbia.com, under the “Ethics and Governance” link.

Independent Directors’ compensation

Directors’ retainer and meeting fees. In 2018, the Company paid Directors who are not Executive Officers an annual retainer fee of $75,000 plus an additional $2,000 for attendance at each Board meeting and each meeting of each committee on which they served (and $1,000 for each special telephonic meeting). The Company also paid each Committee Chair an annual Committee Chair retainer of $25,000. The Chairman is paid an additional retainer of $125,000. New Directors are paid a fee of $2,000 for each day of orientation.

An eligible Director may elect annually to receive retainer and meeting fees either in cash or in shares of MBIA common stock on a quarterly basis with no deferral of income, or to defer receipt of all or a portion of such compensation until a time following termination of such Director’s service on the Board. A Director electing to defer compensation may choose to allocate deferred amounts to either a hypothetical investment account (the “Investment Account”), or a hypothetical share account (the “Share Account”), which have been set up to credit such deferred payments. Such deferral elections are made under the MBIA Inc. 2005 Non-employee Director Deferred Compensation Plan (the “Plan”).

Amounts allocated to the Investment Account are credited to a hypothetical money market account. Amounts allocated to the Share Account are converted into share units with each such unit representing the right to receive a share of MBIA common stock at the time or times distributions are made under the Plan. Dividends are paid as stock units each quarter if applicable. Distributions of amounts allocated to the Share Account are made in shares of common stock.

Directors’ restricted stock grants. In addition to the annual cash fees payable to Directors for 2018, the Company also granted Directors an award of time-based restricted stock in 2018 with a value of $100,000 at the time of grant. New Directors elected to the Board also receive a one-time grant of restricted stock with a value of $100,000 at the time of grant. The Directors’ restricted stock grants are awarded under the MBIA Inc. 2005 Omnibus Incentive Plan (the “Omnibus Plan”), which is a shareholder approved compensation plan.

The restricted stock granted in 2018 is subject to a one-year restricted period during which the shares are subject to forfeiture restrictions and restrictions on transferability. The restricted period applicable to a restricted stock award will lapse

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and the shares will become freely transferable prior to the first anniversary of the date of the restricted stock grant upon the earlier of: (i) the death or disability of a participating Director, (ii) a change of control in the Company as defined in the Omnibus Plan, (iii) the Company’s failure to nominate a participating Director for re-election, or (iv) the failure of the shareholders to elect a participating Director at any shareholders meeting. Unless otherwise approved by the Compensation Committee, if a participating Director leaves the Board for any reason other than the foregoing at any time prior to the first anniversary of the date of the restricted stock grant, the restricted stock will revert back to the Company. During the restricted period, a participating Director receives dividends, if applicable, with respect to, and may vote the restricted shares.

Directors’ total compensation components. Directors’ compensation for 2018 consisted of the following components. There was no change from 2017.

Directors’ total compensation for 2019. No change to Director compensation is expected for 2019.

Directors’ total compensation paid in 2018. The amounts shown below represent compensation paid and stock awarded in 2018 for each of the Directors. The Company does not provide perquisites to its Directors.

On May 14, 2018, Messrs. Chin, Gilbert, Rinehart, Shasta and Vaughan received a grant of 11,287 shares of restricted stock. On November 13, 2018, Ms. Dewbrey received a grant of 11,086 shares of restricted stock. See the section “Directors’ restricted stock grants” for award vesting provisions. The award amounts shown vary from the grant date target amount of $100,000 due to the rounding of fractional shares.

Directors’ deferred compensation balances and equity holdings as of December 31, 2018. As described under “Directors’ retainer and meeting fees” above, a Director may choose to allocate deferred amounts to either an Investment Account or a Share Account. The following table represents Directors’ account balances under the Investment

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and Share Accounts (deferred retainer and meeting fees) and restricted stock holdings as of December 31, 2018. Amounts shown for stock holdings are based on $8.92 per share, the closing fair market value of the shares on December 31, 2018.

Executive Officer Directors. Mr. Fallon received no compensation for his services as a Director during 2018.

Directors’ stock ownership guidelines. The Company has Director stock ownership guidelines to align Directors’ interests with those of our shareholders. Under these guidelines, within four years of first being elected, a Director is expected to own Company stock worth approximately five times their annual retainer. This includes shares of MBIA common stock held directly, common stock equivalent deferral units held under the MBIA Inc. 2005 Non-employee Director Deferred Compensation Plan and restricted stock awarded to directors. Five out of our six Directors have met and exceeded the Company’s stock ownership guidelines for Directors. The remaining Director was appointed in 2018 and is on track to meet the ownership guidelines.

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Audit Committee report

The Audit Committee is composed of six Independent Directors who are not employees or officers of the Company. In the business judgment of the Board, these Directors are free of any relationship that would interfere with their independent judgments as members of the Audit Committee.

This report of the Audit Committee covers the following topics:

1. Respective roles of the Audit Committee, Company management and the Independent Auditors

We are appointed by the Board of Directors of the Company to monitor (i) the integrity of the financial statements of the Company and of other material financial disclosures made by the Company, (ii) the qualifications and independence of the Company’s independent auditor, (iii) the performance of the Company’s internal audit function and independent auditor, (iv) the Company’s compliance policies and procedures and its compliance with legal and regulatory requirements and (v) the performance of the Company’s operational risk management function which includes protecting the enterprise from cyber risk. We also recommend to the Board of Directors the selection of the Company’s outside auditors.

The function of the Audit Committee is oversight. The management of the Company is responsible for the preparation, presentation and integrity of the Company’s financial statements. Management and the Company’s Internal Audit Department are responsible for maintaining appropriate accounting and financial reporting principles and policies and internal controls and procedures designed to assure compliance with accounting standards and applicable laws and regulations.

The independent auditors, PricewaterhouseCoopers LLP (“PwC”), are responsible for performing an independent audit of the consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (“PCAOB”) and expressing an opinion with respect to the fair presentation of the consolidated financial statements in accordance with accounting principles generally accepted in the United States of America and the effectiveness of internal control over financial reporting.

2. 2018 Activities

In performing our oversight role for 2018, we have:

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Based on the reviews and discussions we describe in this report, and subject to the limitations on the role and responsibilities of the Audit Committee referred to below and in the Audit Committee Charter, we recommended to the Board of Directors that the Company’s audited financial statements be included in the Annual Report on Form 10-K for the fiscal year ended December 31, 2018.

3. Limitations of the Audit Committee

As members of the Audit Committee, we are not employees of the Company nor are we professionally engaged in, nor experts in the practices of, auditing or accounting. Nor are we experts with respect to determining auditor independence. We rely on the information, representations, opinions, reports or statements, including financial statements and other financial data prepared or presented by officers or employees of the Company, its legal counsel, independent accountants or other persons with professional or expert competence. Therefore, we do not assure that the audit of the Company’s financial statements has been carried out in accordance with the standards of the PCAOB, that the financial statements are presented in accordance with generally accepted accounting principles or that PwC is in fact “independent.” Furthermore, the Audit Committee has not conducted independent procedures to ensure that management has maintained appropriate accounting and financial reporting principles or internal controls designed to assure compliance with accounting standards and applicable laws and regulations.

Date: February 12, 2019

The Audit Committee

Mr. Theodore Shasta (Chair)

Mr. Francis Y. Chin

Ms. Diane L. Dewbrey

Mr. Steven J. Gilbert

Mr. Charles R. Rinehart

Mr. Richard C. Vaughan

This report of the Audit Committee shall not be deemed incorporated by reference by any general statement incorporating by reference this proxy statement into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that the Company specifically incorporates this information by reference, and shall not otherwise be deemed filed under such Acts.

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Compensation Discussion & Analysis

This section is organized as follows:

You will find that the following terms are used in this section and we note below the meanings in the interest of clarity.

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Letter from the Compensation and Governance Committee

On behalf of the Compensation & Governance Committee (the “Committee”), and the MBIA Board of Directors (the “Board”), I am pleased to introduce our Compensation Discussion & Analysis (“CD&A”). This section of our Proxy Statement provides insight into our executive compensation program, including the key decisions made during the year and the associated outcomes.

Highlights of the 2018 executive compensation program

At our 2018 Annual Meeting, our shareholders overwhelmingly voted in support of the compensation program of our Named Executive Officers (“NEOs”), by a margin of over 97%. Through this vote, shareholders acknowledged our efforts, over a two-year period, to make a series of significant changes to the structure of our executive compensation program. As a Committee, we were pleased to see shareholder recognition of these efforts, which had incorporated shareholder feedback and reflected our own developing views.

MBIA continues to be a company in transition, with a unique and significant role in the complex field of municipal finance, yet operating at a time of ceased new business initiatives and facing continuing uncertainty and challenges. Thus, throughout 2018, having completed that two-year period of change, the Committee continued to reflect on how best to manage compensation in light of MBIA’s operating challenges, and to maintain those aspects of our compensation program which had met with the widespread approval of our shareholders. The Committee deliberated over the optimal balance of, on the one hand, providing the financial inducement required to ensure the ongoing retention and motivation of the experienced leadership team through the Company’s current period of transition, and on the other, ensuring that its actions in that regard fully aligned the Company’s NEOs with the long term goals of the Company and its shareholders.

Accordingly, in November, the Committee and Board approved the award to NEOs of one-time, off-cycle restricted stock awards that will not vest until 2025, absent a change of circumstance described more fully in the November 9, 2018 Form 8-K filing announcing the award, and conditioned on the NEOs remaining with the Company during that time. The significant length of time prior to vesting provides sufficient motivation for long-term retention, provides no immediate or short-term economic benefit, and allows the Company adequate time by which to accomplish or achieve material progress towards all of its present, longer term strategic goals for the benefit of shareholders.

In summary, and as discussed in more detail throughout this CD&A, our executive compensation program today features the following shareholder-approved aspects, all of which are changes from that which existed two years ago:

These changes demonstrate our ongoing commitment to align our executive compensation program with shareholder expectations. Further, the one-time, long-vesting restricted stock award enhances the likelihood that our NEOs will remain

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with the Company on a long-term basis, and confirms our determination to deliver sustainable performance to shareholders by promoting continuity and stability, and to help the Company realize its strategic priorities.

As a Committee and a Company, we will continue to monitor feedback and engage with major shareholders in recognition of the value this input has into our decision-making process.

Pay and performance for 2018

Central to our revised executive compensation program is a mandate to objectively and demonstrably ensure the alignment of executive pay and company performance. This is evidenced by our significant use of performance-based pay, which aligns NEO compensation to long-term shareholder value creation and the accomplishment of MBIA’s strategic goals. If the annual performance measurements we approve for senior management are not met, the performance-based portions of their compensation, if paid at all, will fall below target.

As noted above, over the past two years, we formally introduced a performance-based share component to our long-term incentive program. Prior to that time, performance-based share awards had generally been made on an ad-hoc basis. By formalizing this program, we provide an on-going ability to more meaningfully adjust pay based on annual and longer-term performance. Additionally, we can better align our programs with the experience of our shareholders, while minimizing the potential need to consider ad-hoc awards.   Last year, taking pay-for-performance one step further, we also changed our approach to annual incentive awards. The

Committee limited its own discretion and determined to predicate NEO annual awards on the outcomes reflected in the MBIA scorecard of performance metrics, which are defined, measurable and/or objective, and discussed in more detail further in this CD&A. The performance measures are all derived from MBIA’s three-year tactical and strategic plan, thus providing incentives to enhance, and provide current rewards for, success in MBIA’s long-term strategic objectives.

In 2018, given the Company’s modest eclipsing of its collective performance goals, application of the performance-based approach to annual incentive awards resulted in an annual bonus award to NEOs at slightly greater than target, after 2017’s below-expectation performance had yielded annual NEO incentive awards significantly below target.

The performance-based share awards made to NEOs in 2017 are subject to performance conditions tied to our adjusted book value (“ABV”), leverage and MBIA’s value that is measured through absolute total shareholder return. For awards made in early 2018 and 2019, in respect of 2017 and 2018, respectively, performance will be based solely on absolute total shareholder return. Thus, we once again reinforce our commitment to rewarding our NEOs only when our shareholders also benefit.

As shown in the graph above, 76% of the CEO’s target total compensation for 2018 was variable, the majority of which is performance-based. These amounts exclude the one-time restricted stock grant, discussed separately above and below. For 2019, 76% of the CEO’s target total compensation and 73% of the other NEOs’ respective target total compensation will be variable.

2018 One-Time Restricted Stock Award

As noted above, in 2018, having successfully revised MBIA’s executive compensation program to more closely and objectively tie NEO compensation to company performance, the Committee considered it a principal responsibility to ensure that the senior management team was appropriately motivated to remain with the Company and drive shareholder value over the long term, as they navigate a particularly challenging operating environment. The Committee believes that each individual NEO is experienced and uniquely skilled, highly marketable, and, absent the proper incentives, might not remain with the

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Company long enough to see it through this period of challenge and generate the returns for shareholders whose interests are the principal focus of the Board.

In particular, at present, the Company’s multi-billion dollar insurance portfolios are in run-off, and achieving successful outcomes on those credits in remediation, including Puerto Rico and its instrumentalities, are absolutely critical to maximizing shareholder value. The NEOs are each centrally involved in the Company’s goal to maximize value, bringing to bear their own individual and collective experiences, leadership, perspectives and efforts, as well as their significant institutional knowledge of the Company and the financial guarantee industry. The Committee believes that losing any of the NEOs could have an adverse impact on the Company’s multi-year strategy. As a consequence, following months of deliberation and consultation with its executive compensation advisors, the Committee approved the issuance of the one-time, off-cycle restricted stock award to NEOs.

Looking to the future

We are pleased that our shareholders have recognized and supported the changes made to our executive compensation program during the past two years, and we are determined to maintain the current performance-oriented structure. We believe the changes also demonstrate our commitment to being responsive to shareholder feedback, and we will continue to actively engage with our shareholders. These changes have placed an emphasis on aligning pay with performance, and maintain a means through which to attract, retain and motivate a committed senior leadership team as we continue to navigate challenging market conditions.

As noted, we do not anticipate major or structural changes to our programs in 2019. In keeping with the Company’s commitment to its employees and the community in which we operate, we have provided additional clarity in our annual performance goals confirming our ongoing focus on corporate culture, diversity, and human capital management. We continue to welcome shareholder feedback and will keep our programs, policies and practices subject to annual review.

On behalf of the Compensation & Governance Committee,

Steven J. Gilbert

Compensation & Governance Committee

Steven J. Gilbert, Chair

Francis Y. Chin

Diane L. Dewbrey

Charles R. Rinehart

Theodore E. Shasta

Richard C. Vaughan

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Executive Officers

Following are our Named Executive Officers (“NEOs”) in 2018, who are listed in the Summary Compensation Table.

Compensation Design

Our approach to compensation encompasses a number of components which, working in tandem, generate the solid executive compensation program we have in place as we head into 2019. As you will see in the sub-sections that follow, our compensation strategy is tied closely with our overall corporate strategies in a number of key ways, and those strategies are executed via policies and practices that best support shareholder interests.

Compensation Strategy

Our compensation program is designed to attract, retain and motivate a highly skilled team of senior executives whose collective performance will build sustainable shareholder value, align our senior executives’ interests with those of shareholders and avoid unnecessary or excessive risk.

We achieve these goals through a combination of fixed and variable compensation elements, with variable compensation contingent on successful performance in areas of critical strategic significance to MBIA and its shareholders, thus tying pay with MBIA’s performance.

Alignment with MBIA’s Corporate Strategies

To be successful in effectively tying pay to MBIA’s performance, it is critical that we align our compensation strategy with our overall corporate strategies.

MBIA is one of the largest operators in the financial guaranty insurance industry. Our primary business has been to provide financial guarantee insurance to the United States’ public finance markets through our indirect, wholly-owned subsidiary, National. National’s financial guarantee insurance policies provide investors with unconditional and irrevocable guarantees of the payment of the principal, interest or other amounts owing on insured obligations when due. MBIA has also provided financial guarantee insurance in the international and structured finance markets through its subsidiary, MBIA Insurance.

MBIA’s overarching focuses today are threefold:

In February 2018, consistent with these areas of focus, senior management proposed a draft scorecard of corporate metrics to the Board, against which MBIA’s performance in 2018 would be measured. The Board considered the proposal, participated in a discussion regarding it with management during the Board meeting, and ultimately approved the final scorecard. This scorecard identified several broad performance categories for the MBIA Inc. holding company, National, MBIA Insurance, and the collective enterprise, with sub-goals established to measure performance within each category. The Board uses the quantitative score generated by this scorecard as the basis for evaluating and approving NEO annual incentive awards.

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The 2018 performance metrics represented in the 2018 scorecard include the following:

Compensation Practices

As with all things, execution matters, and MBIA has adopted a number of policies and practices which we believe are in the best interests of our shareholders.

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Compensation Approach

The MBIA executive compensation program comprises three core elements: a base salary, annual cash incentive opportunity and long-term incentive opportunity, delivered in the form of MBIA stock.

The majority of compensation for our CEO and other NEOs is delivered in the form of performance-based compensation, the weighting of which has increased in recent years based on shareholder feedback. In 2018, 62% of the CEO’s target compensation and 59% of the other NEOs’ respective target compensation (on average) was performance-based. In February 2019 the Committee approved no changes in target total compensation for the CEO and other NEOs in respect of 2019.

Base salary reflects the salary set in respect of the relevant year; annual incentive reflects the target value of the award in respect of the year, paid within 2 months thereafter; time and performance-based long-term incentives reflect the target value of the award in respect of the year, granted within 2.5 months thereafter. CEO data reflects Mr. Fallon, and NEO data is the average for the other NEOs.

In addition to the compensation outlined on the following page, MBIA’s executives receive the same benefits as our general employee population. This includes participation in healthcare benefits, where MBIA shares in the cost of employee health insurance coverage; supplemental disability insurance to bring the income replacement benefit to a level equivalent to 70% of base salary; and contributions to defined contribution retirement programs based on a stated percentage of the employee’s compensation. No perquisites are paid to current NEOs.

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The table below describes each compensation element – as mentioned previously, no structural change to any element has been made for 2019:

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Compensation Governance

There are a number of factors that come together to ensure proper governance of MBIA’s compensation programs. This section will look at these in turn, discussing the importance and function of each.

Compensation Oversight

The Compensation and Governance Committee (the “Committee”) comprises MBIA’s six independent outside directors, each of whom was recruited to join MBIA on account of their expertise and seniority in a substantive area (such as municipal finance, banking, accounting and/or asset management) of relevance to MBIA’s core strategic agenda. During 2018, the Committee met five times in regular session and has overall responsibility for overseeing MBIA’s compensation programs, approving as a Committee and providing input and recommendations to the Board regarding our NEOs’ compensation.

The Committee receives information and support from management, and expert guidance from an independent committee advisor, both of which impact the ultimate recommendations the Committee makes to the Board.

Additional information on the Committee can be found on page 3 in the Board of Directors – corporate governance section.

Use of an Independent Advisor

Since 2009, the Committee has retained Willis Towers Watson as an advisor to provide independent advice on a range of compensation issues. This primarily involves assisting in analyzing the competitiveness of NEO and non-employee director compensation, reviewing incentive design, periodically assisting in reviewing the competitive peer group and other activities as directed by the Committee. The Committee uses Willis Towers Watson’s advice and insight to inform the eventual decision making process.

In assessing Willis Towers Watson’s independence, the Committee considered the six independence factors for compensation consultants listed in the NYSE listing requirements and determined that Willis Towers Watson did not have a conflict of interest.

Shareholder Engagement

MBIA takes shareholder outreach and feedback seriously, and senior management interacts regularly with our shareholders. Additionally, in recent years the Committee has promoted and, on occasion, participated directly in an extensive shareholder engagement program to ensure we are able to receive direct and constructive feedback to inform our thinking on NEO compensation and other issues of importance to shareholders. This feedback has had a meaningful impact on both our compensation philosophy and program design.

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the feedback received regarding our executive compensation program was uniformly positive. Consequently, the Committee and the Board of Directors have not made any material program changes for 2019.

Looking to the future, MBIA is committed to maintaining ongoing dialogue with our major shareholders to ensure we remain fully aware of shareholder expectations and concerns.

The Annual Process

The Committee is responsible for reviewing the design, levels and outcomes under MBIA’s NEO compensation program, along with associated feedback from shareholders. It typically meets five times per year to execute upon the various procedural steps outlined below.

•  Review and assess prior year performance of CEO and leadership team   •  Recommend compensation to be paid to CEO and leadership team for the prior year   •  Review and approve CEO’s recommendations for aggregate level of compensation to be paid to all other employees for the prior year   •  Evaluate compensation policies and practices to determine whether either will create risks   •  Review and approve the overall compensation policy taking into consideration results of say-on-pay vote from prior year   •  Establish and recommend target compensation to be paid to CEO and leadership team for current year   •  Review and approve CEO goals and objectives for current year   •  Review and approve compensation disclosures in Proxy and Form 10-K		•  Recommend committee and chair assignments for Board members   •  Discuss investor outreach and status of shareholder votes   •  Discuss shareholder advisory reports		•  Perform peer group review   •  Receive regulatory update   •  Review the results of the say on pay vote		•  Oversee annual evaluation of the Board and Board Committees, including the Committee structure   •  Review Director performance   •  Review and approve Committee Charter   •  Review NEO compensation relative to market   •  Review Director compensation relative to market   •  Preview drafts of Proxy tables   •  Assess external advisor independence

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Managing Compensation-Related Risks

Risk is a central part of MBIA’s business, and appropriately managing that risk is critical to our success. Our approach to risk management is evident in the very core of our business. Our values embrace integrity, through our Standard of Conduct, and underscore our commitment to performance excellence.

The Committee’s role relative to risk mitigation is to design and review our compensation programs to ensure that they do not encourage unnecessary, inappropriate or excessive risk-taking. The Committee’s role spans the structure of the programs themselves, including the weighting of the relative components of compensation, along with the targets attached to variable compensation opportunities. Each year, the Committee assesses MBIA’s compensation policies and practices to evaluate whether they create risks that are reasonably likely to have a material adverse effect on MBIA.

In conducting this assessment the Committee considered a range of areas, including:

Based on its assessment for 2018, the Committee concluded that MBIA’s compensation policies and practices do not create incentives to take risks that are reasonably likely to have a material adverse effect on MBIA, while providing adequate incentives to build sustainable long-term shareholder value.

There are a number of features of our executive compensation programs that demonstrate our strong commitment to appropriately mitigating compensation-related risk which are considered as part of this assessment, and we will look at each of these in turn.

Use of Discretion and Judgment. To discourage imprudent risk taking by our NEOs, when assessing outcomes under the annual incentive plan, the Committee takes account of performance against the established Company objectives, as well as a macro level view of performance and behaviors. This enables the Committee to assess not only MBIA’s accomplishments, but also how these accomplishments were achieved.

If needed, the Committee can use its discretion to adjust, up or down, annual incentive awards to take into account any unanticipated or extraordinary events, or broader performance that did not align with expectations or poor risk management.

In 2018, no discretion was exercised to adjust the outcome of the objective application of the Company scorecard to determine NEO annual incentive awards.

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Clawback. In February 2013, MBIA adopted a Clawback Policy which covers all compensation paid or awarded after January 1, 2010. The policy is intended to promote ethical behavior and accountability with respect to the accuracy of financial reporting. The following table summarizes the key features of the policy:

This policy will be reviewed from time to time, to consider potential changes that may reflect evolving best practices, regulation, MBIA’s circumstances, or other relevant factors.

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Stock Ownership Guidelines. MBIA has implemented stock ownership guidelines which were adopted to align senior management’s interests with those of our shareholders. Under these guidelines, certain senior employees are expected to own MBIA stock worth a value equal to a multiple of their base salary.

As of December 31, 2018, the Chief Executive Officer and Chief Financial Officer have already exceeded their ownership guidelines, with other NEOs making progress toward their guidelines in light of their respective appointment dates. In assessing achievement, stock owned directly and any stock held in retirement plans will be counted. Interests such as the value of unvested restricted stock or unvested stock options are not counted.

Stock Holding Periods. Once an NEO has achieved his or her ownership guideline, they are permitted to divest 25% of any excess above the guidelines during any 12-month period while the individual is still employed. Individuals are also permitted to sell stock for the purpose of settling taxes on long-term incentive awards. Notably, no current NEO has ever sold any MBIA stock other than as an offset to the taxes incurred when shares vested.

Upon retirement, individuals are permitted to sell one-third of his or her holdings immediately, one-third a year after termination and the final third two years after termination. This does not preclude any individual electing to maintain his or her holdings for a longer period of time.

Anti-Hedging Policy. MBIA’s Insider Trading Policy prohibits Directors, officers and employees from engaging in short sales or transactions involving puts, calls and other types of options in MBIA’s securities, including equity swaps and similar derivative transactions. The Insider Trading Policy also prohibits Directors, officers and employees from (i) engaging in hedging transactions, (ii) pledging MBIA securities as a collateral, or (iii) holding MBIA securities in a margin account, without the prior approval of such transactions by the MBIA Legal Department.

Compensation Peer Group

Another integral part of our compensation governance is the review of where MBIA’s compensation programs fall relative to what others are doing in the market. When reviewing our compensation programs, while keeping a keen focus on what is in MBIA’s and shareholders’ best interests, the Committee’s understanding of market practices to assess the competitiveness and appropriateness of compensation is an important consideration as well.

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2018 Compensation Peer Group

We consider it important to evaluate ourselves against a robust peer group that is large enough to withstand potential changes to the composite companies. As of December 31, 2018, MBIA is ranked in the first quartile of the peer group from a revenue perspective and in the second quartile from a market capitalization perspective.

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2018 Compensation Decisions and Outcomes

An Overview of Performance in 2018

Like 2017, 2018 was a challenging year for MBIA. Nevertheless, the Committee believes that the efforts of our senior team and broader employee base have positioned MBIA to deliver long-term value for its shareholders.

After 2017’s determination to shut down National’s new business efforts, and the Company’s subsequent right-sizing of the organization, which reduced the annual operating expense run rate by over $25 million to less than $75 million, the Company focused in 2018 on (i) ensuring that adequate liquidity exists at the holding company to satisfy all outstanding obligations, (ii) maximizing the economics of National’s existing insured portfolio through effective surveillance and remediation activity, and by managing its investment portfolio, and (iii) satisfying claims by MBIA Corp. policyholders, pursuing various actions focused on maximizing the collection of recoveries for its senior lending and surplus note holders, and then its preferred stock holders, and reducing and mitigating potential losses on its insurance exposures. These efforts coalesced around the Company’s continuing effort to remediate its troubled Puerto Rico credits. The Company achieved a significant success in this regard in 2018 when it, along with other parties, reached a comprehensive settlement with the Oversight Board responsible for managing Puerto Rico’s bankruptcy-like (Title III of PROMESA) restructuring processes, concerning the debt of COFINA, and in February of this year, when the Court overseeing the Title III process approved the settlement and entered an order confirming the Third Amended Title III Plan of Adjustment for COFINA. Under the terms of the Plan, National (as insurer of senior COFINA bonds in excess of $1.2 billion as of 12/31/18) received its pro rata allocation of new securities and cash equal in value to a recovery of approximately 93% of its pre-petition claims prior to accounting for any commutations and the receipt of certain other transaction fees. In total, COFINA exposure accounts for approximately 30% of total par (on an accreted basis) and 52% of total debt service to Puerto Rico.

The market recognized the successes achieved by the Company in 2018, driving up our stock price by almost 22% in a year when the S&P Financials Index was down over 13% and the broader S&P Index was down over 4%.

When these developments and others, including achieving several liquidity initiatives at the holding company and at MBIA Insurance Corp., were measured against the Company’s annual performance scorecard, as discussed further below, performance for the period ended December 31, 2018 resulted in annual incentive awards at 107% of target.

The compensation of our NEOs in 2018 is explained in the following sections and in the Summary Compensation Table that follows.

Base Salary

Base salaries are generally set based on the job content of each position, informed by salary data for comparable positions within our compensation peer group. From time to time, adjustments are also made based on the executive’s experience, performance and potential. The Committee generally targets base salaries for the NEOs around the market median for executives in similar positions within the compensation peer group.

The Committee has determined to make no changes to base salaries for the NEOs with respect to 2019.

2018 Annual Incentive

The annual incentive is a performance bonus, paid in cash, which is designed to compensate NEOs for progress against MBIA’s shorter-term tactical and strategic objectives.

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Annual Incentive Awards for 2018 Performance

The 2018 annual incentive for NEOs, as well as other associates at MBIA more broadly, is based on a scorecard of performance in four key areas: performance in our two operating subsidiaries, National and MBIA Insurance; performance at the corporate holding company level; and enterprise-wide performance. The objectives in each of these areas, along with the underlying performance targets, align to MBIA’s shorter-term tactical and strategic plan, providing direct alignment to our business strategy.

The table below details the bonus scorecard for 2018, including the four areas and underlying performance objectives. Each area and goal had an associated weighting which was used to determine the overall score under the plan, and the chart below reflects the performance level assigned to each goal. The goals have been identified as strategic priorities, and are appropriate for inclusion in the annual incentive plan as they focus on areas that are of critical importance to the value proposition of shareholders, and on which senior leaders can take action today.

2018 Annual Incentive Scorecard

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In 2018, target bonus opportunities for the NEOs were as follows. The maximum bonus opportunity is capped at two-times the target opportunity. Company performance resulted in a final annual incentive outcome of 107% of target, which equated to the following annual incentive awards in respect of 2018 performance for our NEOs:

The Committee has determined to make no changes to the bonus target values for the NEOs for 2019.

2018 Long-Term Incentive Awards

In response to feedback from our shareholders, since March 2017 long-term incentive awards to NEOs are made in the form of a combination of performance-based and time-based share awards. This combination provides immediate alignment to shareholder value creation and long-term shareholder interests, as well as a focus on the strategic drivers of MBIA’s long-term performance.

For 2018, our NEOs’ long-term incentive awards feature the same ratio of performance-based to time-based shares as has been applied since 2017, as shown below.

Any shares that are earned will vest in equal installments on the third, fourth, and fifth anniversary of the grant date:

Performance-Based Award				Time-Based Award
Grant made March 2018				Grant made March 2018
Performance assessed at December 31, 2020
1/3rd earned shares vest March 2021				1/3rd vests March 2021
1/3rd earned shares vest March 2022				1/3rd vests March 2022
1/3rd earned shares vest March 2023				1/3rd vests March 2023

The same vesting approach will apply to awards made in March 2019.

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2018 Performance-Based Share Awards.

Performance-based share awards are made in the form of MBIA equity. Long-term incentive awards made in March 2018 (for the 2017 performance year) to each of the NEOs, comprised a combination of performance-based shares and time-based shares. The aggregate annual target value of the long-term incentive awards for each NEO was 150% of base salary, with two-thirds of the award (100% of base salary) being in the form of performance-based shares and one-third (50% of base salary) in the form of time-based shares, except for Mr. Fallon, whose target percentage was raised to 175% (pro-rata increased between performance and time-based shares) of base salary upon becoming CEO in September 2017. This mix continues to align NEOs with delivering sustainable shareholder value creation, while linking pay to MBIA performance.

Vesting of the performance-based shares is based on performance against company value, which provides direct alignment with the shareholder experience of value creation, assessed via absolute total shareholder return (TSR) over a three year period ending on December 31, 2020.

The table below sets out the associated performance requirements for TSR for awards made in March 2018, along with the corresponding percentage of shares that can be earned, ranging from 0% to 200% of the target award.

TSR is the change in the value of the common stock over the three year period, taking into account both stock price appreciation and the reinvestment of dividends if applicable. TSR will be calculated on a compound annualized basis over the three year period. The beginning stock price is the closing share price as of December 31, 2017. The ending stock price will be the average stock price over the 60 trading days preceding and including the last day of the performance period if the Company pays no dividends, or if dividends are paid, the closing share price on December 31, 2020. Straight-line interpolation will apply to performance levels between the TSR values. Stock price values are shown in the table above for reference.

The following performance-based share awards were made with these conditions to NEOs in March 2018:

The performance period for these awards will conclude on December 31, 2020, with the vesting of any shares that have been earned taking place equally on the third, fourth and fifth anniversary of the date of grant.

2018 Time-Based Share Awards. Time-based share awards are made in the form of MBIA equity and will vest in equal installments on the third, fourth and fifth anniversaries of the date of grant. The following time-based share awards were made to NEOs during 2018:

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2018 One-Time Restricted Stock Retention Award

As discussed in the Letter from the Committee which opened this CD&A, throughout 2018 the Committee gave significant consideration to ensuring that the Company’s senior management team was appropriately motivated to remain with the Company and drive shareholder value over the long term. The Company’s current period of challenge, coupled with the NEOs’ significant institutional experience, skill, and marketability, led the Committee to conclude that absent the proper incentives, the Company might lose the services of one or more NEOs, impairing the Company’s efforts to generate long-term returns for shareholders.

Accordingly, in November 2018, following lengthy deliberation and consultation with its independent executive compensation advisor, the Committee approved the issuance of one-time, off-cycle restricted stock awards to NEOs, as discussed above and in amounts set forth in the chart below. The awards are in the form of restricted stock, and are not intended to vest until 2025, ensuring that no NEO receives any short-term benefit from the award. Details and other considerations concerning the terms of the awards can be found in the Form 8-K filed by the Company on November 9, 2018.

2019 Long-Term Incentive Awards

Long-term incentive awards made to each of the NEOs in early 2019 (for the 2018 performance year), again comprised a combination of performance-based shares and time-based shares. The aggregate annual target value of the long-term incentive awards for our CEO is 175% of base salary and, for our other NEOs, 150% of base salary, in all cases with two-thirds of the award being in the form of performance-based shares and one-third in the form of time-based shares. This mix continues to align NEOs with delivering sustainable shareholder value creation, while linking pay to MBIA performance.

The vesting of the March 2019 performance-based share awards will be contingent on TSR over the three years ending on December 31, 2021.

The table below sets out the associated performance requirements for stock price and TSR for awards made in 2019, along with the corresponding percentage of shares that can be earned, ranging from 0% to 200% of the target award.

Consistent with the definitions used for the March 2018 awards, TSR performance will be assessed based on the compound annual return to shareholders over the three year performance period. Straight-line interpolation will apply to performance levels between the TSR values. Stock price values are shown in the table above for reference.

In 2019, for the long-term incentive awards, there will be no changes to the vesting terms associated with the performance-based share awards.

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Other Elements of Compensation

In addition to the three core elements of compensation (base salary, annual cash incentive and long-term incentives in the form of time- and performance-based restricted stock), MBIA also provides other forms of indirect compensation which are summarized below.

Perquisites. MBIA does not provide any perquisites to current NEOs or any perquisites in connection with any severance or retirement agreements.

Benefits. MBIA’s NEOs receive the same benefits as our general employee population. This includes participation in the healthcare program, whereby MBIA shares in the cost of employee health insurance coverage; supplemental disability insurance to bring the income replacement benefit to a level equivalent to 70% of base salary; and contributions to defined contribution retirement programs based on a stated percentage of the employee’s compensation.

Retirement Programs. As noted above, NEOs receive contributions to defined contribution retirement programs based on a stated percentage of their respective compensation amounts. Our retirement program includes two qualified defined contribution plans as well as a non-qualified retirement plan. We do not maintain any defined benefit retirement plans.

Under the qualified retirement plans, all employees, including our NEOs, receive the same Company contribution percentages, which include (subject to IRS limitations):

The Company’s non-qualified deferred compensation and excess benefit retirement plan provides participants with benefits that are in excess of those amounts that can be provided within the qualified plans or that otherwise do not meet IRS requirements. Participant contributions to this plan are tax deferred until the time of distribution. The Company gives executives the benefit of this non-qualified plan because we believe that all eligible employees should receive proportionate contributions to their pension and retirement plans.

For compensation awarded for the 2018 performance year, non-qualified plan participants are eligible to receive Company pension contributions based on aggregate salary and bonus compensation of up to $2.0 million.

Change In Control, Termination and Retirement Arrangements. In 2006, the Committee adopted a Key Employee Employment Protection Plan (the “KEEP Plan”), the purpose of which is to assure the Company of the services of key executives during a change in ownership or control of the Company, and to provide these executives with financial assurances so they can focus on their responsibilities without distraction and can exercise their judgment without bias due to personal circumstances. Mr. Fallon is covered under the KEEP Plan. The Company does not intend to cover any other executives under the KEEP Plan in the future.

In addition to the KEEP Plan, the Company’s compensation and benefit plans provide certain compensation payments and benefits due to retirement and under various other termination events, which are described under “Executive compensation tables – Potential payments upon termination or change in control as of December 31, 2018.”

Additional Information

Tax and Accounting Considerations

Our plans have generally been designed so that amounts paid under the plans are deductible for Federal income tax purposes, despite the limits imposed under Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), including by qualifying the compensation payable under such plans as “performance-based compensation” within the meaning of Section 162(m) of the Code or by paying compensation that does not materially exceed the $1 million annual cap imposed by Section 162(m) of the Code. Although we believe that tax deductibility is an important factor in making compensation decisions, we reserve the right to pay amounts that are not deductible in specific circumstances. Where

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relevant, we have also designed our plans and programs to comply with, or to be exempt from the application of, Section 409A of the Code.

The Committee has considered the impact of the tax reform changes on our compensation programs, and will continue to do so during the course of 2019, as part of its annual review of compensation effectiveness.

CEO Pay Ratio

As is permitted under the SEC rules, to determine our median employee we used 2018 total cash compensation as our consistently applied compensation measure, which we calculated as the sum of salary paid in 2018 and cash incentive bonus paid for 2018 performance. Excluding our CEO, we examined a total of 95 employees as of the determination date of December 31, 2018 whether employed on a full-time or part-time basis.

We believe the use of total cash compensation for all employees is a consistently applied compensation measure. After identifying the median employee based on total cash compensation, we calculated annual total compensation for such employee using the same methodology we use for our named executive officers as set forth in the 2018 Summary Compensation Table in this proxy statement.

For 2018, the annual total compensation of our median employee, the annual total compensation of our CEO (pursuant to the methodology described above) and the resulting pay ratio are shown in the table below. The annual total compensation for our CEO and resulting pay ratio are shown with and without the one-time restricted stock award granted to our CEO in 2018.

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Compensation and Governance Committee report

The Compensation and Governance Committee has reviewed the Compensation Discussion and Analysis (“CD&A”) set forth above and has discussed the disclosures contained therein with key members of the Company’s management team including the Chief Executive Officer. Based on our knowledge of the Company’s compensation program, we believe that the CD&A fairly and accurately discloses the practices, policies and objectives of the Company with respect to executive compensation for the year 2018. Based upon this review and discussion, we have recommended to the Company’s Board of Directors that the CD&A as presented to us be included in this proxy statement and in the Company’s Form 10-K filing with the Securities and Exchange Commission.

Date: February 22, 2019

The Compensation and Governance Committee

Mr. Steven J. Gilbert, Chair

Mr. Francis Y. Chin

Ms. Diane L. Dewbrey

Mr. Theodore Shasta

Mr. Charles R. Rinehart

Mr. Richard C. Vaughan

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Executive compensation tables

MBIA Inc.

Summary compensation table for 2018