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## Notes to Consolidated Financial Statements - (Continued) 

## Radian Group Inc. 

In addition to the 2008 Equity Plan, we have granted long-term incentive awards pursuant to a long-term performance- based incentive cash program. This program is conducted pursuant to two plans, the Radian Group Inc. 2008 Long-Term Performance Cash Plan (the “Of ficer LTI Plan”) and the 2008 Executive Long-Term Incentive Cash Plan (the “Executive LTI Plan” and together with the Of ficer LTI Plan, the “Cash Based LTI Plans”). Participants in the Cash Based LTI Plans include certain officers of Radian Group and its subsidiaries. In 2008, we granted an award under the Of ficer LTI Plan for which performance was based on our stock price growth (above a minimum threshold price), with a range of possible payouts corresponding to ranges of stock prices achieved. See “ Officer LTI Plan (Cash Settled)” below .  In addition to the 2008 award under the Officer LTI Plan, the Compensation and Human Resources Committee of our board of directors (the “Compensation Committee”) has granted cash incentive awards under the Cash Based L TI Plans that are not directly correlated with our stock price, but contain discretionary payments based on various fundamental business metrics. See “ Other Compensation Programs”  below. 

We use the Monte Carlo valuation model to determine the fair value of all cash settled awards where stock price is a factor in determining the vesting, as well as for cash or stock settled performance awards where there exists a similar stock price based market condition (we refer to these awards as “Market Condition Awards”). The Monte Carlo valuation model incorporates multiple input variables, including expected life, volatility , risk-free rate of return and dividend yield for each award to estimate the probability that a vesting condition will be achieved. In determining these assumptions for the Monte Carlo valuations, we consider historic and observable market data. 

Depending on certain characteristics of the awards granted under the various compensation programs noted above, they are accounted for as either liabilities or equity instruments. The following table summarizes awards outstanding and compensation expense recognized for each type of market condition award as of and for the periods indicated: 

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(1) For purposes of calculating compensation cost recognized, we consider awards ef fectively vested (and we recognize the full compensation costs) when grantees become retirement eligible. Under the terms of our awards, legal vesting upon retirement occurs when the grantee actually separates from service, except for awards granted to certain senior executives in which case vesting remains dependent on performance for the full term of the awards notwithstanding an executive’ s early retirement. 

