AMBAC FINANCIAL GROUP, INC.
One World Trade Center
New York, New York 10007

PROXY STATEMENT

GENERAL INFORMATION

INFORMATION ABOUT THE ANNUAL MEETING AND VOTING

Proxy Materials

Why did I receive these Proxy Materials?

The Board of Directors of Ambac Financial Group, Inc. ("Ambac" or the "Company") has made these materials available to you on the internet or, upon your request, has delivered printed proxy materials to you, in connection with the solicitation of proxies for use at Ambac’s ~~2020~~2022 Annual Meeting of Stockholders (the "Annual Meeting"), which will take place on ~~June 2, 2020~~May 24, 2022 at ~~11:00~~10:30 a.m. (Eastern). The meeting will be ~~held at One World Trade Center, 64th floor,~~conducted in ~~New York City. Please note that we are actively monitoring~~a virtual format only. Stockholders can participate from any geographic location with Internet connectivity. We believe this format is particularly important this year in light of the continued public health and ~~travel concerns concerning~~safety considerations posed by COVID-19 ~~(a/k/~~and its variants. Stockholders may view a ~~Coronavirus) and the protocols that federal, state, and local governments have imposed. In the event it is not possible or advisable to hold~~live webcast of the Annual Meeting ~~in person, we will announce alternative arrangements for~~and submit questions digitally during the meeting ~~which may include a change in venue or holding the meeting solely by means of remote communication.~~at www.virtualshareholdermeeting.com/AMBC2022. Please ~~monitor the Company’s website at www.ambac.com under the heading “Investor Relations” for updated information. If you are planning to attend the meeting, please check the website one week prior~~refer to the ~~meeting date.~~Participating in the Annual Meeting section of the Proxy Statement for more details. As a stockholder, you are invited to ~~attend~~participate in the Annual Meeting and are requested to vote on the items of business described in this Proxy Statement. This Proxy Statement includes information that we are required to provide to you under SEC rules and that is designed to assist you in voting your shares.

Why did I receive a notice in the mail regarding the internet availability of proxy materials instead of a full set of proxy materials?

In accordance with rules adopted by the SEC, we may furnish proxy materials, including this Proxy Statement and our ~~2019~~2021 Annual Report to Stockholders, to our stockholders by providing access to such documents on the internet instead of mailing printed copies. Stockholders will not receive printed copies of the proxy materials unless they request them. Instead, the Internet Notice, which was mailed to our stockholders, will instruct you as to how you may access and review all of the proxy materials on the internet. The Internet Notice also instructs you as to how you may submit your proxy on the internet, by phone or by mail. If you would like to receive a paper or email copy of our proxy materials, you should follow the instructions for requesting such materials in the Internet Notice.

What is included in the proxy materials?

The proxy materials (collectively, “Proxy Materials”) include:

•Our Proxy Statement for the ~~2020~~2022 Annual Meeting of Stockholders;

•Our ~~2019~~2021 Annual Report to Stockholders, which includes our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2019;~~2021; and

•The proxy card or a voting instruction card for the Annual Meeting.



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How can I access the Proxy Materials over the internet?

The Internet Notice, proxy card or voting instruction card will contain instructions on how to:

•View our Proxy Materials for the Annual Meeting on the internet and vote your shares; and

•Instruct us to send our future Proxy Materials to you electronically by email.

Our Proxy Materials are available at www.proxyvote.com.

Choosing to receive your future Proxy Materials by email will save us the cost of printing and mailing documents to you, and will reduce the impact on the environment of printing and mailing these materials. If you choose to receive future Proxy Materials by email, you will receive an email next year with instructions containing a link to those materials and a link to the proxy voting site. Your election to receive Proxy Materials by email will remain in effect until you terminate it.

What information is contained in this Proxy Statement?

The information in this Proxy Statement relates to the proposals to be voted on at the Annual Meeting and details regarding the voting process, the compensation of our directors and certain of our executive officers, corporate governance, and certain other required information.

Why did I only receive one set of materials when there is more than one stockholder at my address?

If two or more stockholders share one address, each such stockholder may not receive a separate copy of our Proxy Materials or Internet Notice. Stockholders who do not receive a separate copy of our Proxy Materials or Internet Notice and want to receive a separate copy may request to receive a separate copy of, or additional copies of, our Proxy Materials or Internet Notice via the internet, phone or email, as outlined above. Upon such request we shall furnish such copy, or additional copies, promptly. Stockholders who share an address and receive multiple copies of our Proxy Materials or Internet Notice may also request to receive a single copy by writing to our Investor Relations Department, Ambac Financial Group, Inc., One World Trade Center, New York, New York 10007.

Voting Information

What items of business will be voted on at the Annual Meeting?

The items of business scheduled to be voted on at the Annual Meeting are:

• The election of seven directors to our Board of Directors.

•To approve, on an advisory basis, the compensation of our named executive officers.

• The ratification of the appointment of KPMG LLP as Ambac’s independent registered public accounting firm for the fiscal year ending December 31, ~~2020.~~

~~The approval of Ambac's 2020 Incentive Compensation Plan.~~2022.

We will also consider any other business that properly comes before the Annual Meeting.

How does the Board of Directors recommend that I vote?

Our Board of Directors recommends that you vote your shares:


ü	~~"FOR” each of its nominees to the Board of Directors.~~


ü	~~"FOR” the approval, on an advisory basis, of the compensation of our named executive officers.~~


ü	~~"FOR” the ratification of the appointment of KPMG LLP as our independent registered public accounting firm for the 2020 fiscal year.~~

ü "FOR” each of its nominees to the Board of Directors.

ü "FOR” the approval, on an advisory basis, of the compensation of our named executive officers.

ü "FOR” the ratification of the appointment of KPMG LLP as our independent registered public accounting firm for the 2022 fiscal year.



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ü	~~"FOR” the approval of Ambac's 2020 Incentive Compensation Plan.~~

What shares can I vote?

Each share of Ambac common stock issued and outstanding as of the close of business on the Record Date for the ~~2020~~2022 Annual Meeting of Stockholders is entitled to be voted with respect to all items on which stockholders may vote at the Annual Meeting. You may vote all shares owned by you as of the Record Date, including (i) shares held directly in your name as the stockholder of record, and (ii) shares held for you as the beneficial owner in street name through a broker, bank, trustee, or other nominee. On the Record Date, we had ~~45,779,023~~46,545,232 shares of common stock issued and outstanding.

How many votes am I entitled to per share?

Each holder of shares of common stock is entitled to one vote for each share of common stock held as of the Record Date. The voting rights of certain substantial holders of common stock are restricted. A holder (including any group consisting of such holder and any other person with whom such holder or any affiliate or associate of such holder has any agreement, contract, arrangement or understanding with respect to acquiring, voting, holding or disposing of our common stock) will be entitled to vote only such number of shares that would equal (after giving effect to this restriction) one vote less than 10% of the votes entitled to be cast by all holders of our outstanding common stock. This restriction does not apply if the acquisition or ownership of common stock has been approved, whether before or after such acquisition or first time of ownership, by the Wisconsin Insurance Commissioner. Our certificate of incorporation also restricts the right of certain transferees to vote certain of their shares to the extent that, as a result of a transfer of shares (or any series of transfers of which such transfer is a part), either (i) any person or group of persons shall become a five-percent stockholder or (ii) the percentage stock ownership interest in our shares of any five-percent stockholder (including a group of persons treated as a five-percent stockholder) shall be increased.

What is the difference between holding shares as a stockholder of record and as a beneficial owner?

Most Ambac stockholders hold their shares as a beneficial owner through a broker or other nominee rather than directly in their own name. If your shares are registered directly in your name with our transfer agent, Computershare Inc., you are considered, with respect to those shares, the stockholder of record. If your shares are held in an account at a brokerage firm, bank, broker-dealer, trust, or other similar organization, like the vast majority of our stockholders, you are considered the beneficial owner of shares held in street name.

How can I vote my shares at the Annual Meeting?

Shares held in your name as the stockholder of record or held beneficially in street name may be voted by you in person at the Annual Meeting or by proxy. Even if you plan to ~~attend~~participate in the virtual Annual Meeting, we recommend that you also submit your proxy or voting instructions as described below so that your vote will be counted if you later decide not to ~~attend~~participate in the virtual Annual Meeting. If you provide specific instructions with regard to certain items, your shares will be voted as you instruct on such items. If no instructions are indicated, the shares will be voted as recommended by the Board of Directors.

How can I vote my shares without attending the Annual Meeting?

Whether you hold shares directly as the stockholder of record or beneficially in street name, you may direct how your shares are voted without ~~attending~~participating in the virtual Annual Meeting. You can vote by proxy over the internet or by phone by following the instructions provided in the Internet Notice, or, if you requested to receive printed Proxy Materials, you can also vote by mail pursuant to instructions provided on the proxy card. If you hold shares through a bank or broker, please refer to your proxy card or other information forwarded by your bank or broker to see which voting options are available to you.



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•You may submit your proxy by using the internet. The address of the website for submitting your proxy via the Internet is www.proxyvote.com for both registered holders and beneficial owners of our common stock holding in street name. Internet proxy submission is available 24 hours a day and will be accessible until 11:59 p.m. Eastern Time on ~~June 1, 2020.~~May 23, 2022. Easy-to-follow instructions allow you to submit your proxy and confirm that your instructions have been properly recorded.

•You may submit your proxy by calling. The phone number for submitting your proxy by phone is 1-800-690-6903. Submitting your proxy by phone is available 24 hours a day and will be accessible until 11:59 p.m. Eastern Time on ~~June 1, 2020.~~May 23, 2022.

•You may submit your proxy by mail. As a result of implementing “Notice and Access,” you may request to receive printed copies of Proxy Materials by mail or electronically by email by following the instructions provided in the Internet Notice. You may submit your request in writing to our Corporate Secretary at Ambac Financial Group, Inc., One World Trade Center, New York, New York 10007 (or you can send an email to corporatesecretary@ambac.com). Once you receive your Proxy Materials, simply mark your proxy card, date and sign it, and return it in the postage-paid envelope.

Can I change my vote or revoke my proxy?

You may change your vote at any time prior to the taking of the vote at the Annual Meeting. You may change your vote by (i) granting a new proxy bearing a later date (which automatically revokes the earlier proxy) using any of the methods described above (until the applicable deadline for each method), (ii) providing a written notice of revocation to Ambac’s Corporate Secretary at Ambac Financial Group, Inc., One World Trade Center, New York, New York 10007 (and you can send a copy via email to corporatesecretary@ambac.com), prior to your shares being voted, or (iii) ~~attending~~participating in the virtual Annual Meeting and ~~voting~~casting a vote. Participation in ~~person. Attendance at~~ the meeting will not cause your previously granted proxy to be revoked unless you specifically so request or cast a vote ~~in person~~ at the virtual Annual Meeting.

Is my vote confidential?

Proxy instructions, ballots and voting tabulations that identify individual stockholders are handled in a manner that protects your voting privacy. Your vote will not be disclosed to parties other than Ambac, except:

•As necessary to meet applicable legal requirements;

•To allow for the tabulation and certification of votes; or

•To facilitate a proxy solicitation.

How many shares must be present or represented to conduct business at the Annual Meeting?

The presence, in person or by proxy, of the holders of a majority of the voting power of Ambac’s shares of common stock outstanding as of the Record Date will constitute a quorum. Both abstentions and broker non-votes (described below) are counted for the purpose of determining the presence of a quorum.

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How may I vote in the election of directors, and how many votes must the nominees receive to be elected?

With respect to the election of directors, you may:

•vote “FOR” all seven nominees for director;

•vote “FOR” some of the nominees; or

•“WITHHOLD” from voting with respect to one or more of the nominees for director.

Our directors are elected by a plurality of the shares of common stock present or represented by proxy and entitled to vote on the election of directors. This means that the seven individuals nominated for election to the Board


Ambac Financial Group, Inc. \| 15 \| 2022 Proxy Statement

who receive the most “FOR” votes among votes properly cast will be elected. Only “FOR” ~~or “WITHHELD”~~ votes are counted in determining whether a plurality has been cast in favor of a director nominee. A “WITHHELD” vote is not considered a vote cast "FOR" or "AGAINST" a director nominee under a plurality vote standard. You cannot abstain in the election of directors and broker non-votes are not counted. Each holder of our common stock is entitled to one vote for each share held as of the Record Date. There are no cumulative voting rights associated with any of Ambac's common stock.

How may I vote for the non-binding advisory ~~vote approving~~resolution regarding executive compensation, and how many votes must this proposal receive to pass?

With respect to this proposal, you may:

•vote “FOR” the approval of the non-binding resolution regarding executive compensation;

•vote “AGAINST” the approval of the non-binding resolution regarding executive compensation; or

•"ABSTAIN” from voting on the proposal.

In accordance with applicable law, this vote is “advisory,” meaning it will serve as a recommendation to our Board of Directors, but will not be binding. However, our Board of Directors and the Compensation Committee thereof will consider the outcome of the vote when making future compensation decisions for our executive officers.

How may I vote for the proposal to ratify the appointment of our independent registered public accounting firm, and how many votes must this proposal receive to pass?

With respect to this proposal, you may:

•vote “FOR” the ratification of the accounting firm;

•vote “AGAINST” the ratification of the accounting firm; or

•“ABSTAIN” from voting on the proposal.

In order to pass, the proposal must receive the affirmative vote of a majority of the votes entitled to be cast by holders of our common stock who are present in person, or by proxy at the Annual Meeting.

~~How may I vote for the proposal to approve Ambac's 2020 Incentive Compensation Plan, and how many votes must this proposal receive to pass?~~

~~With respect to this proposal, you may:~~

~~vote “FOR” the proposal to approve Ambac's 2020 Incentive Compensation Plan;~~

~~vote “AGAINST” the proposal to approve Ambac's 2020 Incentive Compensation Plan; or~~

~~“ABSTAIN” from voting on the proposal.~~

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What are broker non-votes?

If you hold shares beneficially in street name and do not vote your shares as described in this Proxy Statement, your shares may constitute “broker non-votes.” Broker non-votes occur on a matter when a broker is not permitted to vote on that matter without instructions from the beneficial owner and instructions are not given. These matters are referred to as “non-routine” matters. All of the matters scheduled to be voted on at the Annual Meeting are “non-routine,” except for the proposal to ratify the appointment of KPMG LLP as Ambac’s independent registered public accounting firm for the fiscal year ending December 31, ~~2020.~~2022. In tabulating the voting result for any “non-routine” proposal, shares that constitute broker non-votes are not considered voting power present with respect to that proposal. Thus, broker non-votes will not affect the outcome of any “non-routine” matter being voted on at the Annual Meeting, assuming that a quorum is obtained. Abstentions are considered voting power present at the meeting and thus will have the same effect as votes against each of the matters scheduled to be voted on at the Annual Meeting (other than the election of directors).

Brokers may not vote your shares on the election of directors, certain executive compensation matters, or certain corporate governance matters in the absence of your specific instructions as to how to vote, so we encourage you to provide instructions to your broker regarding the voting of your shares.


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Who will bear the cost of soliciting votes for the Annual Meeting?

Ambac pays the entire cost of preparing, assembling, printing, mailing, and distributing the Proxy Materials and soliciting votes. If you choose to access the Proxy Materials and/or vote over the internet, you are responsible for internet access charges you may incur. If you choose to vote by phone, you are responsible for any phone charges you may incur. In addition to the mailing of these Proxy Materials, the solicitation of proxies or votes may be made in person, by telephone, or by electronic communication by our directors, officers, and employees, who will not receive any additional compensation for such solicitation activities.

What happens if additional matters are presented at the Annual Meeting?

Other than the ~~four~~three items of business described in this Proxy Statement, we are not aware of any other business to be acted upon at the Annual Meeting. If you grant a proxy, the persons named as proxy holders, Stephen M. Ksenak or William J. White, will have the discretion to vote your shares on any additional matters properly presented for a vote at the Annual Meeting. If for any reason, any of the nominees for director included in this Proxy Statement is not available as a candidate for director, the persons named as proxy holders will vote your proxy for such other candidate or candidates as may be nominated by the Board of Directors.

Where can I find the voting results of the Annual Meeting?

We will announce preliminary voting results at the Annual Meeting and publish final voting results in the Annual Meeting of Stockholders section of our Investor Relations website at http://ir.ambac.com. We will also disclose the final voting results on a Current Report on Form 8-K filed with the SEC within four business days following the date on which the Annual Meeting concludes.

~~Attending~~Participating in the Annual Meeting

How can I ~~attend~~participate in the Annual Meeting?

~~Only~~We are conducting a virtual Annual Meeting so our stockholders ~~their proxy holders and our guests may attend the Annual Meeting. Verification of ownership will be requested~~can participate from any geographic location with Internet connectivity. Participation opportunities are reasonably comparable to those provided at the ~~admissions desk. If you are a holder~~in-person portion of ~~record~~our past meetings.We have structured our virtual meeting to provide stockholders the same rights as if the meeting were held in person, including the ability to vote shares electronically during the meeting and ~~plan to attend~~ask questions in accordance with the rules of conduct for the meeting.

•To participate in the Annual Meeting, ~~please indicate~~including to vote and to view the list of registered stockholders as of the record date during the meeting, you must access the meeting website at www.virtualshareholdermeeting.com/AMBC2022 and enter the 16-digit control number found on the Notice of Internet Availability of Proxy Materials or on the proxy card or voting instruction form provided to you with this ~~when~~Proxy Statement.

•Whether or not you ~~vote. When~~plan to participate in the virtual Annual Meeting, it is important that your shares be represented and voted. We encourage you ~~arrive at~~to access www.proxyvote.com or call 1-800-690-6903 and vote in advance of the Annual Meeting.

•Stockholders are able to submit questions for the Annual Meeting’s question and answer session during the meeting through www.virtualshareholdermeeting.com/AMBC2022. We will respond as practical to questions during the meeting. Additional information regarding the rules and procedures for participating in the Annual Meeting ~~you~~ will be ~~asked to present photo identification, such as a driver’s license. If your shares are held~~set forth in our meeting rules of conduct, which stockholders can view during the ~~name of your broker, bank~~meeting at the meeting website or ~~other nominee, you must bring~~during the ten days prior to the meeting ~~an account statement or letter from~~at www.proxyvote.com.

•We encourage you to access the ~~nominee indicating that you were~~Annual Meeting before it begins. Online check-in will be available at www.virtualshareholdermeeting.com/AMBC2022 approximately 15 minutes before the ~~beneficial owner of the shares~~meeting starts on ~~April 7, 2020~~,May 24, 2022 ~~the record date for voting.~~. If you ~~want~~have difficulty accessing the meeting, please call 800-586-1548 (toll free) or 303-562-9288 (international). We will have technicians available to ~~vote your common stock held in street name in person, you must get a written proxy in your name from the broker, bank or other~~assist you.



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~~nominee that holds your shares. If you wish to obtain directions to attend the meeting in person, you may send an email to: corporatesecretary@ambac.com or call (212) 658-7456.~~ Please note that we are actively monitoring the public health and travel concerns concerning COVID-19 (a/k/a Coronavirus) and the protocols that federal, state, and local governments have imposed. In the event it is not possible or advisable to hold the Annual Meeting in person, we will announce alternative arrangements for the meeting, which may include a change in venue or holding the meeting solely by means of remote communication. Please monitor the Company’s website at ~~www.ambac.com~~ ~~under the heading “Investor Relations” for updated information. If you are planning to attend the meeting, please check the website one week prior to the meeting date.~~

Do directors attend the Annual Meeting?

It is currently expected that all of our continuing directors will ~~attend our~~participate in the virtual Annual Meeting of Stockholders. All of our directors who were on the Board last year ~~attended~~participated in the ~~2019~~virtual 2021 Annual Meeting of Stockholders.

How can I find out if I am a stockholder of record entitled to vote?

~~For~~A complete list of stockholders of record entitled to vote at the Annual Meeting will be available at the Annual Meeting as described above and for a period of at least ten days before ~~the Annual Meeting, a complete list of stockholders entitled to vote at~~ the Annual Meeting will be available for inspection by stockholders of record during ordinary business hours at our principal executive offices at One World Trade Center, New York, New York 10007.

Other Questions Related to the Meeting or Ambac

Who will serve as inspector of elections?

The inspectors of election will be representatives from Broadridge Financial Solutions, Inc.

How can I contact Ambac’s transfer agent?

Contact our transfer agent by either writing to Computershare Inc., PO Box 505000, Louisville, KY 40233, or 462 South 4th Street, Suite 1600, Louisville, KY 40202, by telephoning 1-800-662-7232 or via the web at www.computershare.com/~~investor~~investor.

Whom should I call if I have any questions?

If you have any questions about the Annual Meeting or voting, please contact William J. White, Corporate Secretary, at (212) 658-7456 or by email at corporatesecretary@ambac.com. If you have any questions about your investment in Ambac common stock, please contact ~~Lisa Kampf, Managing Director,~~Ambac's Investor Relations department at (212) 208-3177 or by email at ir@ambac.com.

How can a stockholder communicate directly with our Board?

Stockholders and other interested parties may communicate with Ambac’s Board by writing to Ambac’s Corporate Secretary at Ambac Financial Group, Inc., One World Trade Center, New York, New York 10007 or by sending an email to Ambac’s Corporate Secretary at corporatesecretary@ambac.com. Ambac’s Corporate Secretary will then forward your questions or comments directly to the Board.

Please note that material that is directly or indirectly hostile or threatening, illegal or otherwise unsuitable will not be forwarded to our Board. Any communication that is relevant to Ambac’s business and is not forwarded will be retained for one year and will be made available to our independent directors on request. The independent directors grant the Corporate Secretary discretion to decide what correspondence shall be shared with Ambac management and specifically instruct that any personal employee complaints be forwarded to our Human Resources Department.

What is the deadline to propose actions for consideration at next year’s Annual Meeting of Stockholders or to nominate individuals to serve as directors?

For Stockholder Proposals that are to be included in our Proxy Statement under Rule 14a-8. Pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, as amended (“Exchange Act”), if a stockholder wants Ambac to include a proposal in our proxy statement and form of proxy for presentation at our ~~2021~~2023 Annual Meeting of

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Stockholders (other than a proposal relating to the nomination of a specific individual for election to our Board of Directors), the proposal must be received by us at our principal executive offices at One World Trade Center, New York, New York 10007, not later than December ~~15, 2020.~~16, 2022. The proposal must be sent to the attention of our Corporate Secretary, and must comply with the requirements of Regulation 14A under the Exchange Act (including, but not limited to, Rule 14a-8 or its successor provision).


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Other Proposals and Nominations. Our by-laws govern the submission of nominations for director or other business proposals that a stockholder wishes to have considered at a meeting of stockholders, but which are not included in our proxy statement for that meeting. Under our by-laws, nominations for director or other business proposals to be addressed at our next annual meeting in 2023 may be made by a stockholder entitled to vote who has delivered a notice to the Corporate Secretary of Ambac Financial Group, Inc. no later than the close of business on~~April4, 2021,~~ March 25, 2023, and not earlier than ~~March 5, 2021,~~February 23, 2023, except if the date of our next annual meeting is not within 30 days before or after the anniversary of our ~~2020~~2022 Annual Meeting of Stockholders, such notice must be delivered no earlier than the 90^th day before our ~~2021~~2023 Annual Meeting of Stockholders and no later than the later of the 60^th day before our ~~2021~~2023 Annual Meeting of Stockholders and the 15^th day following the day on which public announcement of the date of our ~~2021~~2023 Annual Meeting of Stockholders is first made by the Company. The notice must set forth and describe the information required by Article II of our by-laws.

These advance notice and information requirements are in addition to, and separate from, the requirements that a stockholder must meet in order to have a proposal included in our proxy statement under the rules of the SEC. A proxy granted by a stockholder will give discretionary authority to the proxies to vote on any matters introduced pursuant to the above-referenced by-law provisions, subject to applicable rules of the SEC.

INCORPORATION BY REFERENCE

To the extent that this Proxy Statement has been or will be specifically incorporated by reference into any other filing of Ambac under the Securities Act of 1933, as amended, or the Exchange Act, the sections of this Proxy Statement entitled “Report of the Audit Committee” (to the extent permitted by the rules of the SEC) shall not be deemed to be so incorporated, unless specifically provided otherwise in such filing.



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DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE

Board of Directors

The Board oversees the business of Ambac and monitors the performance of management. Addressing the issues ~~following Ambac’s emergence from Chapter 11~~ and the challenges confronting our ~~principal~~largest operating subsidiary, AAC, a financial guarantee insurance company in run-off, as well as overseeing Ambac's expansion into new businesses in specialty property and casualty insurance, managing general agency/underwriting and potentially other insurance related businesses requires a high level of focus, time commitment and engagement from our directors. The Board meets approximately five times per year in regularly scheduled meetings, but will meet more often, if necessary. The Board met ~~fourteen~~twelve times in ~~2019.~~2021. Outside of formal meetings, directors frequently engage with management concerning Ambac’s business and strategies. In ~~2019,~~2021, each director attended at least ~~89%~~82% of the total number of meetings of the Board and any committees on which he or she served. All of our current directors also serve as directors of ~~AAC.~~AAC, which involves different work streams and considerations than their directorships at AFG.

Directors

The names of our directors and their ages, positions, and biographies are set forth below. There are no family relationships among any of our directors or executive officers.

Committee Membership

Name

Director Since

Age

Independent

Audit

Compensation

Governance and Nominating

Strategy

Ian D. Haft

2016

l è

Director

David L. Herzog

2016

q è

Director

Lisa G. Iglesias

2021

l è

Director

Joan Lamm-Tennant

2018

Director

Claude LeBlanc

2017

President and Chief Executive Officer and Director

C. James Prieur

2016

l è

Director

Jeffrey S. Stein

2013

Chairman of the Board

q Chairman l Member è Audit Committee Financial Expert


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Committee Membership
Name Director Since Age Independent Audit Compensation Governance and Nominating Strategy
Alexander D. Greene 2015 61 l q l l
Director
Ian D. Haft 2016 49 l
l è
l q
Director
David L. Herzog 2016 60 l
q è
l
Director
Joan Lamm-Tennant 2018 67 l
l è
l
Director
Claude LeBlanc 2017 54
President and Chief Executive Officer and Director
C. James Prieur 2016 68 l
l è
l q
Director
Jeffrey S. Stein 2013 50 l l
Chairman of the Board
q Chairman l Member è Audit Committee Financial Expert

Our Board of Directors is currently comprised of ~~directors~~individuals with diverse skill sets, which is necessary in light of the unique nature of Ambac’s business.

Two of our directors self-identify as women; five of our directors self-identify as men; and one of our directors self-identifies as Hispanic.

CEO

Experience

CFO

Experience

Insurance

Expertise

Risk

Management

Investment

Experience

Restructuring

Expertise

~~Alexander~~Ian D. ~~Greene~~Haft

~~Ian D. Haft~~

David L. Herzog

Lisa G. Iglesias

Joan Lamm-Tennant

Claude LeBlanc

C. James Prieur

Jeffrey S. Stein

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~~Alexander D. Greene~~

Mr. Greene has been a director since April 2, 2015. Mr. Greene has over thirty-five years of corporate finance and private equity experience. From December 2005 to March 2014, he was a Managing Partner and head of U.S. Private Equity at Brookfield Asset Management, a global asset management company. Previously, Mr. Greene was a Managing Director and co-head of Carlyle Strategic Partners, a private equity fund; and a Managing Director and investment banker at Wasserstein Perella & Co., and Whitman Heffernan Rhein & Co. He is a director of Element Fleet Management Corp., GP Natural Resource Partners LLC and chairman of the Board of Directors of USA Truck, Inc. He is president of the Armonk Independent Fire Company and serves on the Budget and Finance Advisory Committee for the Town of North Castle, New York. He holds a Bachelor of Business Administration in Finance from George Washington University.

~~Experience, Qualifications and Skills:~~

~~With over thirty-five~~ years of corporate finance and private equity experience, Mr. Greene has substantial insight and understanding of the issues affecting Ambac. In particular, his service at Brookfield Asset Management, where he led a team that invested in companies where operational improvement and strategic guidance were primary drivers of value creation, is invaluable to Ambac. He has served as an adviser to boards of directors and other constituencies, focusing on leveraged finance, merger and acquisition and recapitalization transactions. This background, as well as his financial expertise and other board experience, makes Mr. Greene well qualified to serve on our Board of Directors, its Strategy Committee and Governance and Nominating Committee, and to chair our Compensation Committee.

Ian D. Haft

Mr. Haft has been a director since March 28, 2016. He is the Managing Partner and Chief Executive Officer of Surgis Capital LLC, an investment manager and consulting firm he founded in 2018. He is also the Chief Financial Officer of Electric Monster Media, Inc., a digital media company focused on acquiring, optimizing and operating digital content properties. From 2009 until 2017, Mr. Haft was a founding partner and Vice President and Secretary of Cornwall Capital Management LP (“Cornwall”), an investment manager. At Cornwall, Mr. Haft previously held the positions of Chief Financial Officer (until November 2011) and Chief Operating Officer and Chief Compliance Officer (until the end of 2015). Mr. Haft was also a member of Cornwall GP, LLC, the general partner of Cornwall Master LP. Prior to joining Cornwall, Mr. Haft was a Principal at GenNx360 Capital Partners, a private equity fund, from 2008 to 2009. From 2002 to 2008, Mr. Haft was a Senior Associate and then Vice President (from 2004) at ACI Capital Co., LLC, where he focused on middle market leveraged buyouts and growth equity investments on behalf of two private equity funds. Mr. Haft began his career at The Boston Consulting Group in 1993 and was also employed by Merrill Lynch & Co. and The Blackstone Group prior to joining ACI Capital in 2002. Mr. Haft ~~currently serves~~served as member of the board of directors of Keweenaw Land Association ~~Reef Communications Group and Baseline Data Services~~from 2018 until 2021. Mr. Haft graduated magna cum laude with a BA in economics and mathematics from Dartmouth College in 1993 and he received his JD and MBA from Columbia University in 2000. Mr. Haft has extensive experience working with companies of all sizes and identifying, understanding and utilizing areas of value creation.

Experience, Qualifications and Skills:

Mr. Haft has over twenty years of experience working in alternative asset management, investment banking and management ~~consulting.~~consulting and has served on the boards of three public companies and nine private companies. Through this experience, he has developed strong capabilities in business strategy, strategic analysis of industries and companies, mergers and acquisitions, valuation, debt and equity financing, derivatives and hedging, financial controls and regulatory compliance. Mr. Haft’s background and experience make him well-qualified to serve on our Board of Directors and to serve on its Audit Committee and Compensation Committee, and to chair the Strategy Committee.

David L. Herzog

Mr. Herzog has been a director since March 28, 2016. He was the Chief Financial Officer and Executive Vice President of AIG from October 2008 until his retirement from AIG in April 2016. Mr. Herzog served as Senior Vice President and Comptroller of AIG from June 2005 to October 2008, Chief Financial Officer for worldwide life insurance operations from April 2004 to June 2005 and Vice President, Life Insurance from 2003 to 2004. In

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addition, Mr. Herzog has served in other senior officer positions for AIG and its subsidiaries, including as the Chief Financial Officer and Chief Operating Officer of American General Life following its acquisition by AIG.


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Previously, Mr. Herzog served in various executive positions at GenAmerica Corporation and Family Guardian Life, a Citicorp Company, and at a large accounting firm that is now part of ~~PricewaterhouseCoopers LLP.~~PricewaterhouseCoopers. Mr. Herzog currently serves as a member of the Board of Directors of MetLife, Inc., DXC Technology ~~Company~~ and PCCW Ltd. Mr. Herzog received a bachelor's degree in accounting from the University of Missouri-Columbia and a master of business administration in finance and economics from the University of Chicago. In addition, Mr. Herzog holds the designations of Certified Public Accountant, a Fellow in the National Association of Corporate Directors and Fellow, Life Management Institute.

Experience, Qualifications and Skills:

Mr. Herzog was a key member of the AIG restructuring teams that orchestrated the repayment of US Government support provided following the 2008 financial crisis, and the repositioning of AIG’s debt capital structure. Mr. Herzog's financial and management experience in the oversight of AIG and its subsidiaries make him well qualified to serve on our Board of Directors and its Strategy Committee and to chair the Audit Committee.

Lisa G. Iglesias

Ms. Iglesias has been a director of AFG and AAC since August 4, 2021. She is currently the Executive Vice President, General Counsel of Unum Group, a position she has held since January 2015. As the General Counsel of Unum Group, Ms. Iglesias has overall responsibility for the legal affairs of Unum, and heads a team of lawyers handling transactions, finance and investments, SEC reporting, corporate governance, regulatory matters and relationships, compliance and complex litigation. She also oversees the company’s Enterprise Audit and Corporate Services functions. Prior to joining Unum Group, Ms. Iglesias served as Senior Vice President, General Counsel and Secretary of WellCare Health Plans, Inc., a managed care company, from February 2012 to December 2014, having first joined WellCare in February 2010 as Vice President, Securities and Assistant General Counsel. Prior to that, she served as General Counsel and Corporate Secretary for Nordstrom, Inc., a fashion specialty retailer, from 2007 to 2008, and as General Counsel and Secretary of Spherion Corporation, a recruiting and staffing company, from 1999 to 2007. Earlier in her career Ms. Iglesias was an SEC and Mergers & Acquisitions attorney with the law firm of Greenberg Traurig from 1994 to 1998 and a tax CPA with KPMG Peat Marwick from 1989 to 1991. Ms. Iglesias serves on the board of the Public Education Foundation of Chattanooga, Tennessee. Ms. Iglesias received her bachelor’s and master’s degrees in accounting from the University of South Florida, and her law degree from the University of Miami. Honors and awards include being named in Latino Leaders magazine as one of the Top Latinos in Corporate America in 2020 and one of the Top Latino Lawyers in 2018. In 2014 Ms. Iglesias was named one of the Top Women Legal officers in Corporate Counsel magazine.

Experience, Qualifications and Skills:

Ms. Iglesias has over twenty-five years of experience in finance and investments, risk management, corporate governance, regulatory matters, compliance, privacy, government affairs and litigation.Ms. Iglesias’ legal, finance and risk management experience make her well-qualified to serve on our Board of Directors and its Audit Committee.

Joan Lamm-Tennant

~~Joan~~Ms. Lamm-Tennant has been a director since March 1, 2018. She is ~~currently~~ the ~~Chief Executive Officer~~independent Chair of the Boards of Directors of Equitable Holdings, Inc. and AllianceBernstein Holdings L.P. Ms. Lamm-Tennant was the Founder of Blue Marble Microinsurance, and from January 2016 to June 2020 served as its Chief Executive Officer. Blue Marble Microinsurance is a corporation formed by a consortium of eight insurance entities for the purpose of developing service ventures enabling the insurers to enter the microinsurance market. Previously, Ms. Lamm-Tennant was the Global Chief Economist and Risk Strategist of Guy Carpenter & Company, LLC, the reinsurance and risk advisory operating company of Marsh & McLennan Companies. Prior to joining Guy Carpenter in 2007, Ms. Lamm-Tennant was the founding President of General Reinsurance Capital Consultants. She was an Adjunct Professor at the Wharton School, University of Pennsylvania from September 2005 to May 2016 and held the Laurence and Susan Hirsch Chair in International Business. Ms. Lamm-Tennant was a tenured Professor at


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Villanova from September 1989 to May 2000 and was awarded the Thomas Labrecque Chair Professorship in Business in 1999. ~~She is currently an Adjunct Professor at the Wharton School, University of Pennsylvania and held the Laurence and Susan Hirsch Chair in International Business.~~ She currently serves on the Board of ~~Hamilton Insurance Group,~~ Equitable Holdings, Inc., AllianceBernstein Holdings L.P., and Element Fleet Management Corp. ~~as well as~~Ms. Lamm-Tennant is the Executive Expert on Resilience and Sustainability for the International Insurance ~~Society. Ms. Lamm-Tennant~~Society and author / commentator on environment, social and governance (ESG) matters. She holds a Ph.D. in Finance and Investments from the University of Texas, Austin; an M.B.A. in Finance from St. Mary's University, San Antonio, Texas and a B.B.A. with Honors in Accounting from St. Mary's University, San Antonio, Texas.

Experience, Qualifications and Skills:

Ms. Lamm-Tennant has over ~~twenty~~thirty years of finance, and risk management experience in the insurance industry. She served as a risk strategist for Marsh & McLennan and formalized the enterprise wide risk oversight function resulting in the appointment of a Chief Risk Officer and a dedicated Board Risk Committee. Her expertise in emerging market strategy, enterprise risk modeling, implementation of risk-based decision processes and high value strategies resulting in capital efficiencies and profitable growth make her well-qualified to serve on our Board of Directors and its ~~Audit~~Compensation Committee and Strategy Committee, and to chair the Governance and Nominating Committee.

Claude LeBlanc

Mr. LeBlanc has served as President and Chief Executive Officer, and director of Ambac Financial Group, Inc. and Ambac Assurance Corporation since January 1, 2017. In this role Mr. LeBlanc is responsible for providing strategic leadership and oversight with regard to Ambac’s strategic priorities and vision with a view towards creating long-term ~~shareholder~~stockholder value. Mr. LeBlanc is also responsible for all day-to-day management decisions and for ensuring the execution of the Company’s short and long term plans. In 2018, Mr. LeBlanc led Ambac through a holistic, transformational restructuring transaction that culminated in the exit of AAC's Segregated Account from rehabilitation and in 2020, materially advanced the Company' new business specialty program insurance platform with the establishment of the Everspan Group of companies and the acquisition of Xchange Affinity Underwriting Agency, LLC and Xchange Benefits, LLC. Previously, Mr. LeBlanc was the Chief Financial Officer and Chief Restructuring Officer of Syncora Holdings Ltd., from 2010 until December 24, 2016. Mr. LeBlanc joined Syncora in 2006 as Executive Vice President and was responsible for all corporate development activities, strategic development, capital planning, and management of key bank and rating agency relationships. Prior to joining Syncora, Mr. LeBlanc served as Senior Vice President of Corporate Development

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and Strategy and as a member of the executive management group for XL Capital Ltd. In this role, he led various global corporate development initiatives, oversaw and managed significant capital market transactions, and, reporting to the Chief Financial Officer and Chief of Staff, was responsible for global strategy development and capital management. Prior to joining XL Capital in 2002, he served as Chief Operating Officer and a member of the executive management team for Transworld Network International, a North American telecommunications group where he led corporate development, financial planning, and certain business operations. Mr. LeBlanc began his career in 1991 at PricewaterhouseCoopers and later served as Vice President of Financial Advisory Services in 1997 when he advised on mergers and acquisitions, corporate restructurings, and transaction advisory. Mr LeBlanc previously served as a director on the Board of Maiden Holdings, Ltd. until May 2021. Mr. LeBlanc holds a BA in Economics from York University, a BComm from the University of Windsor and an MBA from the Schulich School of Business. He is a Chartered Accountant and Certified Public Accountant.

Experience, Qualifications and Skills:

Mr. LeBlanc has ~~twenty-eight~~thirty years of experience in the financial services sector and over that period has held a number of senior leadership roles overseeing strategy, corporate development, finance and risk. Immediately prior to joining Ambac, Mr. LeBlanc actively led global remediation and asset recovery initiatives at Syncora Holdings Ltd., evaluating strategic alternatives and overseeing all aspects of Syncora's finance function. He also served as Special Advisor to Syncora’s Board of Directors and led the successful restructuring of Syncora during the


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2008-2009 financial crisis and again in its 2016 restructuring. Mr. LeBlanc's extensive experience in financial services and insurance makes him a valued member of our Board of Directors.

C. James Prieur

Mr. Prieur has been a director since January 5, 2016. Mr. Prieur has over thirty years of finance, investment management, risk management, and international business experience. Mr. Prieur served as Chief Executive Officer and director of CNO Financial Group, Inc. from 2006 until his retirement in 2011. CNO Financial Group is a life insurance holding company focused on the senior middle income market in the U.S. Prior to joining CNO Financial Group, Mr. Prieur had been with Sun Life Financial since 1979. He began his career at Sun Life Financial in ~~Investments,~~investments, and in 1997 he was named Senior Vice President and General Manager for U.S. operations, and became corporate President and Chief Operating Officer in 1999, a position Mr. Prieur occupied until he left Sun Life Financial to join CNO Financial Group. While at Sun Life Financial, Mr. Prieur managed multiple lines of business, including life, annuities, and health products in the United States, Canada, the United Kingdom and Asia. Mr. Prieur is currently a director of Manulife Financial Corporation. Mr. Prieur is a Chartered Financial Analyst and has a BA from the Royal Military College and a MBA from Western University in Ontario.

Experience, Qualifications and Skills:

Mr. Prieur has over thirty years of finance, investment management, risk management, and international business experience in the insurance industry. He brings a very useful C-suite perspective into the Board room. Mr. Prieur’s experience as a former Chief Executive Officer of CNO Financial Group, Inc. and his knowledge of the insurance industry are highly valued by the Board and management. This background, as well as his financial expertise and other board experience, makes Mr. Prieur well qualified to serve on our Board of Directors and its Audit Committee and ~~Compensation~~Governance and Nominating Committee, and to chair its ~~Governance and Nominating~~Compensation Committee.

Jeffrey S. Stein

Mr. Stein has been Chairman of the Board since January 1, 2015 and has served as a director since May 1, 2013. Mr. Stein is Founder and Managing Partner of Stein Advisors LLC, a financial advisory firm that provides consulting services to public and private companies and institutional investors. Mr. Stein ~~is an~~ provides the perspective of a successful investment professional with over ~~twenty-seven~~twenty-nine years of experience in ~~the high yield, distressed~~both debt and ~~special situations~~ equity asset ~~classes who~~classes. Mr. Stein has substantial experience investing in the financial services industry. Previously, Mr. Stein was a Co-Founder and Principal of Durham Asset Management LLC, a global event-driven distressed debt and special situations equity asset management firm. From January 2003 through December 2009, Mr. Stein served as ~~the~~ Co-Director of Research at Durham responsible for the identification, evaluation and management of

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investments for the various Durham portfolios. From July 1997 to December 2002 Mr. Stein served as Co-Director of Research at The Delaware Bay Company, Inc., a boutique research and investment banking firm focused on the distressed debt and special situations equity asset classes. From September 1991 to August 1995, Mr. Stein was an ~~Associate/~~Associate and Assistant Vice President at Shearson Lehman Brothers in the Capital Preservation & Restructuring Group. Mr. Stein currently serves as a director on the board of Intelsat Connect Finance S.A. and as a board observer on the Board of TORM plc. Mr. Stein previously served as a director on the Boards of Dynegy Inc., NMC Health plc, and Westmoreland Coal Company. Mr. Stein received a B.A. in Economics from Brandeis University and an M.B.A. with Honors in Finance and Accounting from New York University.

Experience, Qualifications and Skills:

Mr. Stein is an ~~investment professional with over twenty-seven years~~accomplished corporate executive and director, including leadership and committee positions, of ~~experience in institutional asset management~~both public and private companies, who has substantial experience investing in the financial services industry. ~~In addition,~~ Mr. Stein has ~~significant experience~~served as an Executive Chairman, Chief Restructuring Officer and Liquidating Trustee and as a director on audit, compensation, corporate governance, finance, restructuring and risk committees (including as Chairman of those committees). In his capacity as a corporate executive and director, ~~and in his capacity as such~~Mr Stein has specifically focused on capital allocation, operating and financial performance, capital structure optimization, asset


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acquisitions and dispositions, corporate strategy, risk management and investor communications. As a result Mr. Stein has a wealth of knowledge with ~~respect~~respect to the financial, institutional and risk management issues currently facing Ambac. His breadth of experience makes Mr. Stein well qualified to be Chairman of our Board, and to serve on the Governance and Nominating Committee.

Board Leadership Structure

The Board does not have a policy on whether or not the roles of Chief Executive Officer and Board Chair should be separate and, if they are to be separate, whether the Chair should be selected from the non-employee directors, an employee or an outsider. The Board believes that it should be free to make this choice in the manner that it deems best for Ambac at any given point in time. While the Board has no fixed policy with respect to combining or separating the offices of Board Chair and Chief Executive Officer, those two positions have been held by separate individuals for the last several years, with the position of Chair of the Board currently being filled by Mr. Stein and the position Chief Executive Officer by Mr. LeBlanc. The Board believes this is the appropriate leadership structure for it at this time.

A majority of our directors are independent, and the Board believes that the independent directors provide effective oversight of management. See “Director Independence.”

Board Committees

The current members of each of the committees of the Board, as well as the current Chairman of each of the committees of the Board, are identified in the following paragraphs. Each of the standing committees operates under a written charter adopted by the Board, which is available in the Corporate Governance section of our Investor Relations website: ~~http:~~https://~~ir.ambac.com/governance.cfm~~.ambac.com/investor-relations/governance/governance-documents/default.aspx. A copy of each charter is also available to stockholders free of charge on request to our Corporate Secretary, at corporatesecretary@ambac.com.

Audit Committee

The Audit Committee is currently comprised of Messrs. Haft, Herzog (Chairman) and Prieur, and Ms. ~~Lamm-Tennant.~~Iglesias. The main function of our Audit Committee is to oversee our accounting and financial reporting processes. The Audit Committee’s responsibilities include:

• Appointing, compensating, retaining, and overseeing the work performed by our independent registered public accounting firm's engagement.

• Approving the audit, non-audit and tax services to be performed by our independent registered public accounting firm.

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• Evaluating the experience, performance, qualifications, and independence of our independent registered public accounting firm.

•Reviewing the activities and organizational structure of the internal audit function, as well as the qualifications of its personnel.

• Reviewing the integrity of our financial statements and our compliance with legal and regulatory requirements as they relate to financial statements or accounting matters.

• Reviewing with management the design, operation and effectiveness of our internal controls over financial reporting and our critical accounting policies.

• Reviewing with management our annual audited financial statements, quarterly financial statements, earnings releases and any other material press releases related to accounting or financial matters announcements.


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•Reviewing with management our major financial risk exposures and the steps that management has taken to monitor and control such exposures.

• Reviewing and approving the Audit Committee report for inclusion in our annual proxy statement.

• Reviewing our Regulation FD Policy.

• Establishing procedures for the confidential and anonymous receipt, retention and treatment of complaints regarding accounting, internal accounting controls or auditing matters.

Our Board has determined that each of the directors serving on our Audit Committee is independent within the meaning of the Listing Rules of New York Stock Exchange ("NYSE"). The Board of Directors has determined that, based on each member’s professional qualifications and experience, each of the members of the Audit Committee are financially literate and that Messrs. Haft, Herzog and Prieur and Ms. ~~Lamm-Tennant~~Iglesias qualify as "audit committee financial experts" as defined under the rules and regulations of the SEC. The Audit Committee regularly meets in executive session with both our independent registered public accounting firm, and internal audit, without Ambac management present. The Audit Committee met ~~eight~~six times in ~~2019.~~2021.

Compensation Committee

The Compensation Committee is currently comprised of Messrs. ~~Greene~~Prieur (Chairman), and Haft and ~~Prieur.~~Ms. Lamm-Tennant. The purpose of our Compensation Committee is to assist the Board in overseeing our compensation programs. The Compensation Committee’s responsibilities include:

• Reviewing the overall compensation principles governing the compensation and benefits of our executive officers and other employees.

• Evaluating the performance of our Chief Executive Officer.

• Reviewing the procedures for the evaluation of our executive officers, other than our Chief Executive Officer.

• Reviewing and approving the selection of our peer companies to use as a reference in determining competitive compensation packages.

• Determining all executive officer compensation (including but not limited to salary, bonus, incentive compensation, equity awards, benefits and perquisites).

• Reviewing and approving the terms of any employment agreements and severance arrangements, change-in-control agreements, and any special or supplemental compensation and benefits for our executive officers and individuals who formerly served as executive officers.

• Acting as the administering committee for our stock and bonus plans and for any equity compensation arrangements that may be adopted by Ambac from time to time.

~~Making and approving grants of equity based awards to directors under Ambac’s compensation plans.~~

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• Reviewing and discussing with management the annual Compensation Discussion and Analysis (CD&A) disclosure, and, based on this review and discussion, making a recommendation to include the CD&A disclosure in our annual proxy statement.

• Preparing the annual Compensation Committee Report for inclusion in our annual proxy statement.

Each member of our Compensation Committee is a “non-employee” director within the meaning of Rule 16b-3 of the Exchange Act. Our Board of Directors has determined that each of the directors serving on our Compensation Committee is independent within the meaning of the Listing Rules of NYSE. The Compensation Committee met ~~eight~~seven times in ~~2019.~~2021.

In ~~2018,~~2021, the Compensation Committee directly engaged Meridian Compensation Partners, LLC, a nationally recognized independent compensation consulting firm, to assist it with benchmarking and compensation analyses, as well as to provide information and advice on executive compensation practices and determinations, including


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information on award design for both our Short Term Incentive Plan (“STIP”) and Long Term Incentive Plan (“LTIP”).

From time to time, our Chief Executive Officer will attend meetings of the Compensation Committee and express his view on the Company’s overall compensation philosophy. Following year-end, the Chief Executive Officer makes recommendations to the Compensation Committee as to the total compensation package (salary, and STIP and LTIP awards) to be paid to each of our executive officers.

Our Chief of Staff serves as management’s main liaison with the Compensation Committee and assists the Compensation Committee Chairman in setting the agenda and gathering the requested supporting material for each Compensation Committee meeting. Our Corporate Secretary serves as secretary to the Compensation Committee.

Governance and Nominating Committee

The Governance and Nominating Committee is currently comprised of Ms. Lamm-Tennant (Chair), and Messrs. ~~Greene,~~ Prieur ~~(Chairman)~~ and Stein. Our Governance and Nominating Committee’s purpose is to assist our Board of Directors in identifying individuals qualified to become members of our Board of Directors based on criteria set by our Board of Directors, to oversee the evaluation of the Board of Directors and management, and to develop and update our corporate governance principles. The Governance and Nominating Committee’s responsibilities include:

• Evaluating the composition, size, organization, and governance of our Board of Directors and its committees, determining future requirements, and making recommendations regarding future planning, the appointment of directors to our committees, and the selection of chairs of these committees.

• Periodically reviewing the standards for director independence and providing the Board with an assessment of which directors should be deemed independent.

• Determining the criteria for Board ~~membership.~~membership, including the need for both gender and ethnic diversity.

~~Evaluating~~• Overseeing policies and practices relating to environmental, social, and governance (“ESG”) matters relevant to the ~~participation of members~~Company.

• Overseeing the process for the self-evaluation of the Board ~~in continuing education.~~and its committees.

• Reviewing and recommending to our Board of Directors the compensation of our non-employee directors.

• Reviewing plans for the succession of our executive officers.

• Reviewing and approving related party transactions according to our Related Party Transaction Policy.

• Administering a procedure to consider stockholder recommendations for director nominees.

• Evaluating and recommending candidates for election or re-election to our Board of Directors, including nominees recommended by stockholders.

• Reviewing periodically Ambac’s Code of Business Conduct and compliance therewith.

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Our Board of Directors has determined that each of the directors serving on our Governance and Nominating Committee is independent within the meaning of the Listing Rules of NYSE. The Governance and Nominating Committee met ~~six~~five times in ~~2019.~~2021.


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Strategy Committee

The Strategy Committee is currently comprised of Messrs. ~~Greene,~~ Haft (Chairman), Herzog and Ms. Lamm-Tennant, and ~~it's~~its responsibilities include:

•Reviewing and making recommendations to the Board regarding strategic plans and initiatives, including potential material investments in joint ventures, mergers, acquisitions and other business combinations.

•Reviewing, evaluating and making ~~recommending~~recommendations to the Board regarding solicited or unsolicited strategic transactions, opportunities and alternatives involving the Company or the interest of the Company in any direct or indirect subsidiary.

The Strategy Committee met ~~fourteen~~five times in ~~2019.~~2021.

Board’s Role in Risk Oversight

Among other things, the Board is responsible for understanding the risks to which Ambac is exposed, overseeing management's strategy to manage these risks, and measuring management's performance against the strategy.

Our management team is responsible for managing the risks to which Ambac is exposed and reports on such matters to the Board and to the ~~Audit Committee.~~relevant committees of the Board depending on the nature of the risk, as described below.

The Audit Committee oversees the management of risk associated with the integrity of our financial statements and our compliance with legal and regulatory requirements. In addition, the Audit Committee reviews policies and procedures with respect to risk assessment and risk management, including major financial risk exposure and the steps management has taken to monitor and control such exposures. The Audit Committee reviews with management, our internal auditors, and our independent registered public accounting firm Ambac's critical accounting policies, the system of internal controls over financial reporting and the quality and appropriateness of disclosure and content in the financial statements and other external financial communications.

The Compensation Committee oversees the management of risk primarily associated with (i) our ability to attract, motivate and retain high-quality and talented employees, particularly executives; and (ii) compensation structures that might lead to undue risk ~~taking; and disclosure of our executive compensation philosophies, strategies and activities.~~taking.

The Governance and Nominating Committee oversees the management of risk primarily associated with our ability to attract, motivate and retain high-quality directors, our corporate governance and ESG programs and practices and our compliance therewith. Additionally, the Governance and Nominating Committee establishes a framework for the Board and each of its committees to conduct an annual self-evaluation process and ensures that risk management effectiveness is a part of this evaluation. The Governance and Nominating Committee also performs oversight of the business ethics and compliance program by conducting an annual review and assessment of our Code of Business Conduct.

The Strategy Committee oversees the management of risk and risk appetite primarily with respect to strategic plans and initiatives.

The full Board also receives quarterly updates from Board committees and the Board provides guidance to individual committee activities as appropriate.

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Director Independence

The Governance and Nominating Committee annually reviews the relationships that each director has with Ambac. In conducting this review, the Committee considers all relevant facts and circumstances, including any consulting, legal, accounting, charitable and familial relationships and such other criteria as the Governance and Nominating Committee may determine from time to time. Following such annual review, the Committee reports


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its conclusions to the full Board, and only those directors whom the Board affirmatively determines to have no material relationship with Ambac and otherwise satisfy the criteria for director independence established by the committee are considered independent directors.

Based on the review and recommendation of the Governance and Nominating Committee, the Board has determined that none of Messrs. ~~Greene,~~ Haft, Herzog, Prieur or Stein, or ~~Ms.~~Messes. Iglesias or Lamm-Tennant has a relationship that, in the opinion of the Board of Directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director, and each of them is an independent director as defined in the Listing Rules of NYSE. In determining the independence of our directors, the Board of Directors has adopted the independence standards specified by applicable laws and regulations of the SEC and the Listing Rules of NYSE.

Compensation Committee Interlocks and Insider Participation

None of the current members of the Compensation Committee has been an officer or employee of Ambac. In ~~2019,~~2021, each of Messrs. ~~Greene,~~ Haft, Prieur, and ~~Prieur~~Ms. Lamm-Tennant served as members of the Compensation Committee. None of our executive officers serves on the board of directors or compensation committee of a company that has an executive officer that serves on our Board of Directors or the Compensation Committee.

Consideration of Director Nominees

Stockholder Recommendations and Nominees

The Governance and Nominating Committee considers properly submitted recommendations for candidates to the Board of Directors from stockholders. In evaluating such recommendations, the Governance and Nominating Committee seeks to achieve a balance of experience, knowledge, expertise, and capability on the Board of Directors and to address the membership criteria set forth under “Director Selection Process and Qualifications” below. There are no differences in the manner in which the Governance and Nominating Committee evaluates nominees for director based on whether the nominee is recommended by a stockholder or otherwise. Any stockholder recommendations for consideration by the Governance and Nominating Committee should be sent, together with the information required by Article II of our by-laws, c/o: Ambac Financial Group, Inc., Attn: Corporate Secretary, One World Trade Center, New York, New York 10007. Stockholder nominations for directors that a stockholder wishes to have considered at a meeting of stockholders should be made in accordance with the provisions of our by-laws, as described under “Other Questions related to the Meeting or Ambac-What is the deadline to propose actions for consideration at next year’s Annual Meeting of Stockholders or to nominate individuals to serve as directors?” above.

Director Selection Process and Qualifications

Our Governance and Nominating Committee will evaluate and recommend candidates for membership on the Board of Directors consistent with our Corporate Governance Guidelines regarding the selection of director nominees. Pursuant to these guidelines, the Governance and Nominating Committee screens candidates and evaluates the qualifications of the persons nominated by or recommended by our stockholders for membership to our Board. Board diversity, both ethnic and gender, is an important consideration in evaluating Board composition. Thus, in assessing potential director candidates for the Board, the Governance and Nominating Committee ~~considers~~endeavors to select the best directors from a pool of diverse candidates considering individuals ~~representative of~~with differing perspectives, backgrounds, genders and ~~backgrounds~~ethnicities, in addition to ~~the following qualities, among others:~~ character, judgment, business experience ~~diversity~~ and acumen.

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In evaluating non-incumbent candidates for the Board, the Governance and Nominating Committee reviews the composition of the Board as a whole, as well as the committees, and assesses the appropriate knowledge, experience, skills, expertise and gender and ethnic diversity in the context of the current make-up and perceived needs of the Board at the time of consideration. It also reviews the composition of the Board to ensure that it


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~~The Governance~~directors and ~~Nominating Committee also monitors the composition of the Board to determine if it meets the needs of our business.~~other professional commitments. We believe that it is important to have a Board that is reflective of the core values and diversity of our key constituents including our employees, clients and partners and shareholder base, and, in furtherance of this goal, the Governance and Nominating Committee proposes the nomination of directors who are representative of diverse backgrounds and experience for purposes of obtaining the appropriate members and skills. It also reviews the composition of the Board to ensure that it contains at least the minimum number of independent directors required by applicable law and stock exchange listing requirements.stockholder base.

The Governance and Nominating Committee uses a variety of methods for identifying and evaluating nominees for directors. The Committee considers the current directors who have expressed an interest in and that continue to satisfy the criteria for serving on the Board as set forth in our Corporate Governance Guidelines. Other nominees who may be proposed by current directors, members of management or by stockholders are also considered. The Committee may, at Ambac’s expense, engage search firms, consultants and other advisors to identify, screen and/or evaluate ~~candidates.~~candidates in order to ensure that the Committee has a diverse pool of qualified candidates that includes both gender diversity and candidates from under represented minority groups.

The Governance and Nominating Committee recommends director nominees who are ultimately approved by the full Board of Directors.

Executive Sessions

Executive sessions of independent directors are held in connection with each regularly scheduled meeting of the Board of Directors and at other times as appropriate. The Board of Directors’ policy is to hold executive sessions without the presence of management, including the Chief Executive Officer.

Outside Advisors

Our Board of Directors and each of its committees may retain outside advisors and consultants of their choosing at our expense. The Board of Directors and its committees need not obtain management’s consent to retain outside advisors.

Board Effectiveness

The Governance and Nominating Committee retained a third party advisor to facilitate the Board's annual self-evaluation process in ~~2019.~~2021. The effectiveness of the Board as a whole, and each of its individual committees, was assessed against the roles and responsibilities set forth in Ambac's Corporate Governance Guidelines, the relevant committee charters, and best practices. Matters considered as part of the evaluation included:

•the effectiveness of discussion and debate at Board and committee meetings;

•the effectiveness of Board and committee processes and in interacting with management;

•the quality and timeliness of Board and committee agendas, and preparation of reference materials to inform the Board and committees and support effective decision making; and

•the composition of the Board and each committee, focusing on the blend of skills, experience, independence and knowledge of the group and its ~~diversity.~~diversity, both ethnic and gender.

This self-evaluation process is managed by the Chair of the Governance and Nominating Committee.



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~~Table of Contents~~

Corporate Governance Guidelines

The Corporate Governance Guidelines reflect the Board's commitment to monitor the effectiveness of policy and decision making at both the Board and management levels, with a view to enhancing long term stockholder value. The Corporate Governance Guidelines address, among other things, such topics as the role of directors; goals and development of long ~~range~~term strategy; size of the Board, communication protocols for directors prior to accepting an appointment to another public company’s board of directors; Board membership criteria; term limits; Board meeting procedures; and retirement policy. Ambac’s Corporate Governance Guidelines can be found in the Corporate Governance section of Ambac’s Investor Relations website at https://~~ir.ambac.com/governance.cfm.~~ambac.com/investor-relations/governance/governance-documents/default.aspx.

Code of Business Conduct

Ambac has a Code of Business Conduct which reflects the Board's commitment to maintaining strong standards of integrity for handling business situations appropriately and effectively. The Code of Business Conduct can be found in the Corporate Governance section of Ambac’s Investor Relations website at ~~http:~~https://~~ir.ambac.com/governance.cfm~~.ambac.com/investor-relations/governance/governance-documents/default.aspx. Ambac will disclose on its website any amendment to, or waiver from, a provision of its Code of Business Conduct that applies to its Chief Executive Officer, Chief Financial Officer or Chief Accounting Officer. Charters for Ambac's Audit Committee, Governance and Nominating Committee, Strategy Committee and Compensation Committee are also available in the Corporate Governance section of Ambac’s Investor Relations website at ~~http:~~https://~~ir.ambac.com/governance.cfm~~ambac.com/investor-relations/governance/governance-documents/default.aspx.

Board Compensation Arrangements for Non-Employee Directors

Ambac's director compensation program is designed to enable continued attraction and retention of highly qualified non-employee directors by ensuring that director compensation is reflective of the time, effort, expertise, and accountability required of board membership. The program is structured to recognize the unique nature of our business and the level of experience and oversight needed at the Board level, particularly ~~since our emergence from Chapter 11 bankruptcy protection in May 2013 and the exit from rehabilitation of AAC’s Segregated Account in February 2018, and given~~with respect to the ongoing runoff of ~~AAC.~~AAC, as well as overseeing Ambac's expansion into new businesses in specialty property and casualty insurance, managing general agency/underwriting and potentially other insurance related businesses. It is essential that our Board members not only understand the risks that the Company faces and the steps that management is taking to manage those risks, but to also have a deep understanding of the appropriate level of risk for the Company as it actively prioritizes the runoff of AAC and pursues ~~and prioritizes runoff.~~new business opportunities. Additionally, it is critical that our non-employee director compensation program is appropriately designed to attract and retain Board members that are highly capable and well-suited to help us effectively achieve our goals.

The amount and composition of total compensation paid to our non-employee directors is considered in light of competitive compensation levels for directors in the financial ~~service~~services industry. ~~However, the~~The Governance and Nominating ~~Committee does not rely on this information to target any specific pay percentile for our directors. Instead, the~~ Committee uses this information to provide a general review of market pay levels and practices and to ensure that it makes informed decisions regarding our non-employee director compensation program. The amount and composition of our non-employee director compensation program had not changed since January 1, 2017, when it was reduced by 33% from the prior level in place from 2013 through 2016, in response to stockholder feedback received during the 2016 proxy solicitation process. ~~As such,~~In 2020, the Governance and Nominating Committee ~~did not engage~~reviewed the ~~services of an independent consultant~~non-employee director compensation program that was put in place for the 2021 fiscal year, including comparisons to ~~provide such information or make recommendations with respect~~director compensation programs at other similarly-situated companies. The Governance and Nominating Committee concluded that no changes were appropriate for the 2021 fiscal year, other than a change to the ~~programs~~timing of grants for directors stock based compensation from one-time annual grants of restricted stock units with a grant date value of $200,000 per director to four quarterly grants of restricted stock units, each with a grant date value of $50,000 per director. This conclusion was based on the ~~2019~~Committee’s views that the Company faces many of the same risks and ~~2020 fiscal years.~~issues as it has faced in recent years and is embarking on new


Ambac Financial Group, Inc. \| 31 \| 2022 Proxy Statement

business, and further noted that the workload of the directors remains similar to that of recent years in overseeing the activities of the Company and the complexity of the issues faced by the Company, including those relating to the runoff of AAC and its subsidiaries, particularly troubled credits like Puerto Rico, as well as certain longstanding litigation to recover billions of dollars in losses. The Committee will review the compensation program for non-employee directors on an annual basis to assess whether such compensation is appropriate in light of directors’ time commitments and contributions.

Director Compensation Program Components

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~~Table of Contents~~

committees, to create an incentive for continued service on the Board, and to align the interests of directors and stockholders. In furtherance of such alignment, a significant portion of each non-employee director’s annual compensation is at-risk and granted in the form of restricted stock units on or about the ~~last~~second business day ~~in April, which~~following the issuance of the Company quarterly earnings release. These quarterly grants vest on the one year anniversary of the grant date. Restricted stock units granted in prior years that have vested will not settle and convert into shares of common stock until the director resigns from, or otherwise ceases to be a member of, the Board of Directors of Ambac. In 2022 the Governance and Nominating Committee recommended, and the Board of Directors approved, a change to fix the quarterly grant dates to be the first business day of each calendar quarter. This change in timing took effect on April 1, 2022. Restricted stock units granted during the course of the year would all vest on the one-year anniversary of the grant date, subject to accelerated vesting under certain circumstances.

Upon a non-employee director’s first appointment or election to our Board of Directors, such non-employee director will receive a one-time off-cycle pro-rata grant of restricted stock units, based on his or her expected time of service on the Board of Directors prior to the ~~annual~~next quarterly restricted stock unit ~~grant in April.~~grant.

Mandatory Director Shareholding Requirements

To further align the interests of our Board of Directors with our stockholders, within five years of becoming a director, each non-employee director is required to acquire and hold shares of our common stock equal to the lesser of $800,000 in value or 40,000 shares. This requirement may be satisfied by restricted stock unit holdings and other share acquisitions. The Board has formalized this requirement into binding policy, and is committed to keeping such formal, binding policy in place ~~for~~ at least through the ~~next two~~2022 fiscal ~~years.~~year.

Compensation for Non-Employee Directors ~~in 2019~~

~~In 2019~~Our non-employee director compensation ~~was~~is paid as follows:

•An annual cash retainer of $100,000, paid in monthly installments, and ~~a grant~~four quarterly grants of ~~$200,000~~$50,000 of stock-based compensation, comprised of restricted stock units of Ambac (rounded up to the nearest whole unit), as permitted under Ambac’s ~~2013~~2020 Incentive Compensation Plan; and

~~As a non-employee director, our~~•The Chairman of the Board received an additional fee of $125,000; the Audit Committee Chair received an additional fee of $35,000; the Compensation Committee Chair received an additional fee of $25,000; and the chairs of each of the Governance and Nominating Committee and the Strategy Committee received an additional fee of ~~$15,000; and~~

In addition, each non-employee director was also entitled to receive a fee of $2,000 (A) for each Board meeting attended, which only applied after he or she attended eight Board meetings in a calendar year, and (B) for each committee meeting attended as a committee member, which applied with respect to each committee after he or she attended eight meetings of such committee in a calendar year. These Board and committee meeting fees have been eliminated for fiscal years 2020 and 2021.$15,000.

the one year anniversary of each quarterly grant date. Due to the timing of the change from an annual grant cycle to quarterly grant cycle beginning in May 2, the directors only received three RSU grants in 2021.



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~~Table of Contents~~

The following table summarizes compensation paid to non-employee directors during ~~2019.~~2021.


Name(1)	Year	Fees Earned or Paid in Cash(2) ($)	Stock Awards (3) ($)	All Other Compensation ($)	Total ($)
Alexander D. Greene	2021	$—	$42,425	—	$42,425
Ian D. Haft	2021	$115,000	$140,459	—	$255,459
David L. Herzog	2021	$135,000	$140,459	—	$275,459
Lisa G. Iglesias	2021	$40,860	$98,034	—	$138,894
Joan Lamm-Tennant	2021	$106,129	$140,459	—	$246,588
C. James Prieur	2021	$119,086	$140,459	—	$259,545
Jeffrey S. Stein	2021	$225,000	$140,459	—	$365,459

Name Year
Fees Earned
or Paid in Cash⁽¹⁾
($)
Stock
Awards ⁽²⁾
($)
All Other
Compensation
($)
Total
($)
Alexander D. Greene 2019 $141,000 $200,000 — $341,000
Ian D. Haft 2019 $137,000 $200,000 — $337,000
David L. Herzog 2019 $157,000 $200,000 — $357,000
Joan Lamm-Tennant 2019 $118,000 $200,000 — $318,000
C. James Prieur 2019 $131,000 $200,000 — $331,000
Jeffrey S. Stein 2019 $243,000 $200,000 — $443,000
(1) On August 4, 2021, Mr. Greene retired from our Board of Directors and Ms. Iglesias joined the Board.

⁽¹⁾

(2) Fees earned or paid in cash include an annual cash retainer and chairman or committee chair fees.

(3) The value of the restricted stock units (“RSUs”) received in 2021 and reported in the table above is based on the grant date fair value of awards computed in accordance with FASB ASC Topic 718. The grant date fair values of RSUs granted to each non-employee director on May 12, 2021, August 9, 2021 and November 10, 2021 were $42,425, $49,218 and $48,816, respectively. The number of RSUs granted on each quarterly grant date is set forth in the table below and was calculated based on an average closing price of Ambac common stock on the NYSE for the immediately preceding twenty trading days prior to the grant date:


	Number of RSUs Granted on
Name	May 12, 2021	August 9, 2021	November 10, 2021
Alexander D. Greene	2,936	—	—
Ian D. Haft	2,936	3,437	3,051
David L. Herzog	2,936	3,437	3,051
Lisa G. Iglesias	—	3,437	3,051
Joan Lamm-Tennant	2,936	3,437	3,051
C. James Prieur	2,936	3,437	3,051
Jeffrey S. Stein	2,936	3,437	3,051

Fees earned or paid in cash include an annual cash retainer, chairman or committee chair fees and individual meeting fees for Board and committee meetings attended in excess of eight meetings for each of the Board or any of its committees.

⁽²⁾

The value of the restricted stock units (“RSUs”) received in 2019 and reported in the table above is based on the grant date fair value of awards computed in accordance with FASB ASC Topic 718. The number and grant date fair value of RSUs granted on April 30, 2019 (based on the closing price of our common stock on the NASDAQ Stock Market at the time of the grant) were as follows: Mr. Greene, 10,696 RSUs valued at $200,000; Mr. Haft, 10,696 RSUs valued at $200,000; Mr. Herzog, 10,696 RSUs valued at $200,000; Ms. Lamm-Tennant, 10,696 RSUs valued at $200,000; Mr. Prieur, 10,696 RSUs valued at $200,000; and Mr. Stein, 10,696 RSUs valued at $200,000. The total number of RSUs held by each of the non-employee directors as of December 31, 2019 was as follows: Mr. Greene, 59,824; Mr. Haft, 49,580; Mr. Herzog, 49,580; Ms. Lamm-Tennant, 24,649; Mr. Prieur, 54,190; and Mr. Stein, 85,466.

Compensation for Non-Employee Directors in ~~2020~~2022

In 2021, the Governance and Nominating Committee directly engaged Meridian Compensation Partners, LLC, a nationally recognized independent compensation consulting firm, to assist it with benchmarking and compensation analyses for non-employee director compensation. The ~~Board~~Governance and Nominating Committee reviewed the non-employee director compensation ~~structure~~program that ~~has been~~was put in place ~~since January 1, 2017,~~for the 2021 fiscal year, including ~~comparisons to~~a benchmarking report and analysis prepared by Meridian Compensation Partners, LLC, comparing Ambac's director compensation programs atwith other similarly-situated companies, and concluded that no changes were appropriate for the ~~2020~~2022 fiscal year, other than a change to fix the ~~elimination~~quarterly grant dates to be the first business day of ~~meeting fees. This~~each calendar quarter. The conclusion that the amount of non-employee director compensation should remain unchanged from the 2021 fiscal year was based on the ~~Board’s~~Committee’s views that the Company continues to face many of the same risks and issues as it has faced in recent years, notably risks posed by legacy financial guaranty exposures such as Puerto Rico and military housing, and the risks associated with large-scale litigation to recover losses on insured RMBS. The Committee members also noted the need to oversee the transformation of the business to a specialty P&C insurance platform, and that Board members serve on the ~~amount~~Boards of both Ambac and AAC, which involve different work ~~involved in overseeing the activities~~streams and considerations that diverge increasingly over time. The workload and time commitment of the ~~Company and~~directors related to both of these entities has remained steady. It was further noted that the ~~complexity~~overall size of the ~~issues faced by~~Board (six independent directors) has contributed to a total Board cost that compares favorably to peer companies.

Accordingly, except for the ~~Company, including those relating to~~change fixing the ~~runoff~~grant date for each quarterly award on the first business day of ~~AAC and its subsidiaries, particularly troubled credits like Puerto Rico, as well as certain longstanding litigation matters to recover billions of dollars in losses.~~

~~Accordingly,~~each calendar quarter beginning on April 1, 2022, the non-employee director compensation program described above for the ~~2019~~2021 fiscal year ~~other than the meeting fees,~~ will continue to apply to our non-employee directors ~~who are elected to the Board of Directors by our stockholders~~ in ~~2020, effective following the Annual Meeting, with retroactive effect to January 1, 2020.~~

2022.



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~~Table of Contents~~

COMMON STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table shows the amount of our common stock beneficially owned as of ~~April 7, 2020,~~March 28, 2022, by those known to us to beneficially own more than 5% of our common stock, by our directors, director nominees and named executive officers individually and by our directors, director nominees and executive officers as a group.

The percentage of shares outstanding provided in the table is based on ~~45,779,023~~46,545,232 shares of our common stock, par value $0.01 per share, outstanding as of ~~April 7, 2020.~~March 28, 2022. Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. The SEC’s rules generally attribute beneficial ownership of securities to each person who possesses, either solely or shared with others, the voting power or investment power, which includes the power to dispose of those securities. The rules also treat as outstanding all shares of capital stock that a person would receive upon exercise of stock options held by that person that are immediately exercisable or exercisable within 60 days. Under these rules, one or more persons may be a deemed beneficial owner of the same securities and a person may be deemed a beneficial owner of securities to which such person has no economic interest.

Except as otherwise indicated in the footnotes to this table, each of the beneficial owners listed has, to our knowledge, sole voting and investment power with respect to the indicated shares of Common Stock. Unless otherwise indicated, the address for each beneficial owner who is also a director or executive officer is c/o Ambac Financial Group, Inc., One World Trade Center, New York, New York 10007.


	Amount and Nature of Shares Beneficially Owned
Name	Number (1)	Percent of Class (2)
5% or Greater Stockholders
BlackRock Inc.(3)(5)	6,453,584	13.9%
The Vanguard Group(4)(5)	4,981,390	10.7%
Executive Officers and Directors
David Barranco	71,376	*
Stephen M. Ksenak	92,665	*
Claude LeBlanc	403,600	*
R. Sharon Smith	55,183	*
David Trick	127,532	*
Ian D. Haft	74,000	*
David L. Herzog	86,820	*
Lisa G. Iglesias	18,156	*
Joan Lamm-Tennant	49,069	*
C. James Prieur	103,610	*
Jeffrey S. Stein	119,886	*
All executive officers and directors as a group (11 persons)	1,091,165	2.7%

Amount and Nature
of Shares
Beneficially Owned
Name
Number ⁽¹⁾
Percent of
Class ⁽²⁾
5% or Greater Stockholders
BlackRock Inc.⁽³⁾⁽⁵⁾
6,431,985
14.1%
The Vanguard Group⁽⁴⁾⁽⁵⁾
4,420,597
9.7%
Executive Officers and Directors
David Barranco 39,602
*
Stephen M. Ksenak 63,281
*
Claude LeBlanc 170,739
*
R. Sharon Smith 25,762
*
David Trick 89,784
*
Alexander D. Greene 72,824
*
Ian D. Haft 49,580
*
David L. Herzog 62,400
*
Joan Lamm-Tennant 24,649
*
C. James Prieur 69,190
*
Jeffrey S. Stein 112,133
*
All executive officers and directors as a group (13 persons) 866,169
1.8%


*	* Beneficial ownership representing less than 1% is denoted with an asterisk (*).

⁽¹⁾

The share ownership listed in the table includes shares of our common stock that are subject to issuance in the future with respect to deferred stock units (“DSUs”), RSUs and vested stock options, in the following aggregate amounts: Mr. Barranco, 5,915 shares; Mr. Ksenak, 7,393 shares; Mr. LeBlanc, 35,609 shares; and Mr. Trick, 9,714 shares; Ms. Smith, 5,674 shares; Mr. Greene, 59,824 shares; Mr. Haft, 49,580 shares; Mr. Herzog, 49,580 shares; Ms. Lamm-Tennant, 24,649 shares; Mr. Prieur, 54,190 shares; and Mr. Stein, 102,133 shares. The RSUs granted to each of our non-executive directors shall not settle and convert into shares of common stock until such director resigns from, or otherwise ceases to be a member of, the Board of Directors of the Company. Each DSU and RSU represents a contingent right to receive one share of the Company’s common stock. RSUs granted to our named executive officers, and RSUs and stock options granted to the directors, that vest more than 60 days after the Record Date for voting at the Annual Meeting

~~Ambac Financial Group, Inc. |~~32 | ~~2020 Proxy Statement~~

~~Table~~(1)The share ownership listed in the table includes shares of ~~Contents~~

our common stock that are subject to issuance in the future with respect to RSUs, in the following aggregate amounts: Mr. Haft, 74,000 shares; Mr. Herzog, 74,000 shares; Ms. Iglesias, 9,856 shares; Ms. Lamm-Tennant, 49,069 shares; Mr. Prieur, 78,610 shares; and Mr. Stein, 109,886 shares. The RSUs granted to each of our non-executive directors shall not settle and convert into shares of common stock until such director resigns from, or otherwise ceases to be a member of, the Board of Directors of the Company. Each RSU represents a contingent right to receive one share of the Company’s common stock. RSUs granted to our directors and named executive officers that vest more than 60 days after the Record Date for voting at the Annual Meeting have not been included in the table above in accordance with SEC rules. ~~DSUs vest immediately and were granted to our executive officers as part of their annual incentive awards.~~

⁽²⁾

In computing the number of shares of common stock beneficially owned by a person and the percentage ownership of that person, we deemed outstanding shares of common stock subject to options, DSUs, RSUs or warrants held by that person that are currently exercisable or exercisable within 60 days of the Record Date. We did not deem these shares outstanding, however, for the purpose of computing the percentage ownership of any other person. Each holder of common stock as of the record date is entitled to one vote per share of common stock on all matters submitted to our stockholders for a vote.


⁽³⁾	According to the Schedule 13G filed on February 4, 2020, BlackRock Inc. beneficially owned 6,431,985 shares of our Common Stock. BlackRock Inc. reported sole voting power with respect to 6,318,690 shares and sole dispositive power with respect to 6,431,985 shares. The address of BlackRock Inc. is 55 East 52nd Street, New York, New York 10055.

⁽⁴⁾

According to the Schedule 13G/A filed on February 12, 2020, The Vanguard Group beneficially owned 4,420,597 shares of our Common Stock. The Vanguard Group reported sole voting power with respect to 45,002 shares, shared voting power with respect to 8,200 shares, sole dispositive power with respect to 4,375,010 shares, and shared dispositive power with respect to 45,587 shares. The address of The Vanguard Group is 100 Vanguard Blvd., Malvern, Pennsylvania 19355.

⁽⁵⁾

See Note 1 to the Consolidated Financial Statements in Part II, Item 8 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019 for description of the limitations on voting and transfer of Ambac’s common stock pursuant to Ambac’s Amended and Restated Certificate of Incorporation. Ambac has determined that the holdings described above do not violate the restrictions set forth in its Amended and Restated Certificate of Incorporation.



Ambac Financial Group, Inc. \|33 34 \| ~~2020~~2022 Proxy Statement

(2)In computing the number of shares of common stock beneficially owned by a person and the percentage ownership of that person, we deemed outstanding shares of common stock subject to options, RSUs or warrants held by that person that are currently exercisable or exercisable within 60 days of the Record Date. We did not deem these shares outstanding, however, for the purpose of computing the percentage ownership of any other person. Each holder of common stock as of the record date is entitled to one vote per share of common stock on all matters submitted to our stockholders for a vote.

(3)According to the Schedule 13G/A filed on January 27, 2022, BlackRock Inc. beneficially owned 6,453,584 shares of our Common Stock. BlackRock Inc. reported sole voting power with respect to 6,361,332 shares and sole dispositive power with respect to 6,453,584 shares. The address of BlackRock Inc. is 55 East 52nd Street, New York, New York 10055.

(4)According to the Schedule 13G/A filed on February 9, 2022, The Vanguard Group beneficially owned 4,981,390 shares of our Common Stock. The Vanguard Group reported shared voting power with respect to 38,031 shares, sole dispositive power with respect to 4,907,036 shares, and shared dispositive power with respect to 74,354 shares. The address of The Vanguard Group is 100 Vanguard Blvd., Malvern, Pennsylvania 19355.

(5)See Note 1 to the Consolidated Financial Statements in Part II, Item 8 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021 for description of the limitations on voting and transfer of Ambac’s common stock pursuant to Ambac’s Amended and Restated Certificate of Incorporation. Ambac has determined that the holdings described above do not violate the restrictions set forth in its Amended and Restated Certificate of Incorporation.

~~Table of Contents~~


Ambac Financial Group, Inc. \| 35 \| 2022 Proxy Statement

EXECUTIVE COMPENSATION

Executive Officers

The names of our executive officers and their ages, positions, and biographies as of ~~April 7, 2020~~March 30, 2022 are set forth below. Our executive officers are appointed by, and serve at the discretion of, our Board.



Name	Age	Position with Ambac
Claude LeBlanc	5456	President and Chief Executive Officer and Director
David Barranco	4951	Senior Managing Director
Robert B. Eisman	5254	Senior Managing Director, Chief Accounting Officer and Controller
Stephen M. Ksenak	5456	Senior Managing Director and General Counsel
~~Michael Reilly~~Daniel McGinnis	6350	Senior Managing Director, Chief ~~Administrative Officer and Chief Information~~Operating Officer
R. Sharon Smith	4951	Senior Managing Director, Chief of Staff
David Trick	4850	Executive Vice President, Chief Financial Officer and Treasurer

Claude LeBlanc was appointed President and Chief Executive Officer of Ambac effective January 1, 2017. Mr. LeBlanc provides strategic leadership to Ambac by working with the Board and other members of senior management in developing and implementing the Company’s corporate strategies to maximize long-term stockholder value. Mr. LeBlanc actively oversees the Company's overall day to day operations and strategic advancement, including the pursuit of potential new business opportunities that meet acceptable criteria that the Company believes will generate long-term stockholder value with attractive risk-adjusted returns. See full biography under “Board of Directors - Directors” above.

David Barranco has served as Senior Managing Director of Ambac since February 2012. Mr. Barranco is the head of Risk Management, a position he has held since October 2016. Mr. Barranco has executive responsibility for risk remediation, credit risk management, surveillance and other related risk management responsibilities across the insured portfolio. Previously, he was head of the Restructuring Group and had responsibility for corporate development and strategy. Since September 2011, Mr. Barranco has served as Executive Director of Ambac Assurance UK Limited, Ambac’s London-based financial guarantee subsidiary. Mr. Barranco joined Ambac in 1999.

Robert B. Eismanhas served as the Chief Accounting Officer, Controller, and a Senior Managing Director of Ambac since January 2010. Mr. Eisman ~~has responsibility~~is responsible for establishing Ambac’s U.S. GAAP and Ambac Assurance Corporation's U.S. statutory accounting policies and managing ~~Ambac’s~~their respective financial reporting in compliance with SEC and U.S. insurance ~~company~~ regulatory requirements. ~~Mr. Eisman~~He is also responsible for ~~establishing Ambac’s U.S. GAAP and statutory accounting policies,~~enterprise-wide budgeting and forecasting and providing accounting services to ~~Ambac Assurance UK Limited. From August 2010 through September 2015, Mr. Eisman served as an Executive Director of~~Ambac’s subsidiaries, including Ambac Assurance UK Limited. Mr. Eisman joined Ambac in 1995 from KPMG LLP where he was an Audit Manager in the Financial Services group with a specialization in insurance companies.

Stephen M. Ksenak has served as Senior Managing Director and General Counsel of Ambac since July 2011. Mr. Ksenak has executive responsibility for managing Ambac’s legal affairs. Prior to joining Ambac as Vice President and Assistant General Counsel in 2002, Mr. Ksenak practiced at the law firm of King & Spalding LLP.

~~Michael Reilly~~Daniel McGinnis has served as Chief ~~Administrative Officer, Chief Information~~Operating Officer and Senior Managing Director of Ambac since ~~February 2012.~~ December 2021. He oversees key business areas for both Ambac’s legacy Financial Guarantee and new specialty Property and Casualty insurance businesses, including Operations, Technology and Human Resources. Mr. ~~Reilly has executive responsibility for managing Ambac’s Human Resources, Administration,~~McGinnis brings over 25 years of experience as a senior insurance industry professional, having previously worked as Chief Underwriting Officer and Chief Operating Officer of CapSpecialty, Inc. Previous to CapSpecialty, Mr. McGinnis was Division Executive of the Small Business ~~Solutions and Information Technology. From October 2009~~Division at American International Group (AIG). Previous to ~~January 2012,~~AIG, he was ~~Managing Director~~ with ~~the responsibility for managing Information Technology. Mr. Reilly joined Ambac in 2009.~~American Reinsurance Company and Marsh USA, where he was Vice President of Finite Risk Underwriting and Vice President of Marsh Risk Finance, respectively



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~~Table of Contents~~

R. Sharon Smith has served as Chief of Staff and Senior Managing Director of Ambac since May 2017. Ms. Smith has executive responsibility for Ambac's Corporate Services Group which encompasses certain key functions within the Company including, Strategy, ~~Investor Relations,~~Corporate Communications and Model Governance and Analytics, as well as oversight of Internal Audit. Ms. Smith joined Ambac from Syncora Guarantee Inc., ("Syncora"), where she served in numerous capacities during her tenure, including as Associate General Counsel and Head of Investor Relations. Ms. Smith was also General Counsel and Chief Compliance Officer for Camberlink LLC (a wholly owned subsidiary of Syncora). Earlier in her career, Ms. Smith was Vice President and Assistant General Counsel of the Corporate Securities Department of New York Life Investment Management LLC, and an attorney for Clifford Chance; Skadden, Arps, Slate, Meagher & Flom LLP and Weil, Gotshal & Manges LLP.

David Trick was named Executive Vice President of Ambac in November 2016. He has served as Chief Financial Officer of Ambac since January 2010 and as a Senior Managing Director from January 2010 until his appointment as Executive Vice President. Mr. Trick was interim President and Chief Executive Officer of AAC from January 2015 until March 2016. As Chief Financial Officer, Mr. Trick has executive responsibility for managing Ambac’s financial affairs, including financial reporting, asset and liability management, investment management, financial planning, tax strategy, capital resources, operations, capital markets and ~~liquidity.~~liquidity and Investor Relations function. In addition, since May 2006, he has served as Treasurer of ~~Ambac and AAC.~~Ambac. Since September 2015, Mr. Trick has served as an Executive Director of Ambac Assurance UK Limited. Mr. Trick joined Ambac in 2005 from The Bank of New York Mellon, where he was a senior banker responsible for delivering strategic solutions to insurance industry clients ~~including those in the financial guaranty industry,~~ with regard to a broad range of treasury, credit, and capital markets products.



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Compensation Discussion and Analysis



WE ASK THAT YOU VOTE TO APPROVE OUR ~~2020~~2022 SAY ON PAY PROPOSAL
At our ~~2020~~2021 Annual Meeting, our stockholders will again have an opportunity to cast an advisory say on pay vote on the compensation paid to our named executive officers. We ask that our stockholders vote to approve executive officer compensation. Please see “Proposal No. 2—Advisory Vote to Approve Named Executive Officer Compensation.”

This Compensation Discussion and Analysis (“CD&A”) describes our executive compensation program, including important changes the Committee has made since our ~~2019~~2021 annual meeting of stockholders, and decisions relating to the fiscal year ~~2019~~2021 compensation of our named executive officers (“NEOs”), identified in the table below.

Our Named Executive Officers



Claude LeBlanc						Stephen M. Ksenak
President and Chief Executive Officer and Director						Senior Managing Director and General Counsel
David Trick						R. Sharon Smith
Executive Vice President, Chief Financial Officer and Treasurer						Senior Managing Director and Chief of Staff
David Barranco
Senior Managing Director



Table of Contents

Executive Summary			3739
~~2019~~Key Strategic Priorities and 2021 Company Performance			3739
~~2019~~2021 Pay Decisions			3840
~~2019~~2021 Say on Pay Vote and Stockholder Outreach			3941
Our Compensation Philosophy and Objectives			3942
Elements of Pay			4245
Pay Mix			4346
Compensation for Each of ~~our~~O ur Named Executive Officers ~~for 201~~9in 2021			4851
Impact of Regulatory Requirements on Compensation			5357
Compensation Risk Management			5357
Risk Mitigating Policies			5457
Conclusion			5559



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Executive Summary

Our compensation programs are designed to reward execution and value creation relating to the implementation of our strategies. InTo ensure that our compensation programs align with the expectations of our stockholders, in the Fall of each year, Ambac proactively seeks out opportunities to engage in a dialogue with our stockholders. ~~In 2019, we solicited feedback from stockholders representing approximately 47% of our outstanding common stock.~~ As a result of these stockholder engagements, over the ~~last three~~ years our Compensation Committee has made important enhancements to our compensation programs and processes. These enhancements include changes to the design of our annual and long-term incentive plans, and the implementation of important compensation-related policies, ~~i.e.~~e.g., a Stock Ownership Policy and a Recoupment Policy, and ~~changes to~~ the ~~compensation benchmarking peer group. In 2019, we added~~addition of a relative Total Shareholder Return ("rTSR") modifier as an additional metric with respect to our LTIP award payouts. The rTSR modifier ~~will cause any final PSU award payout at the end~~was added to further align compensation to Ambac's stock performance. In 2021, we solicited feedback from stockholders representing approximately 63% of ~~a three year performance period~~our outstanding common stock, which informed certain changes to ~~be increased or decreased by 10% if the Company's stock performance compared to a peer group is at or above the 75th percentile or at or below the 25th percentile, respectively. In addition,~~our executive compensation program in 2018, we eliminated the "retesting" feature in the Long-Term Incentive Compensation Program that allowed performance at AAC to be measured by the greater of two metrics: an improved asset liability ratio ("ALR") or improved Net Asset Value over a three year performance period.2022. See "2021 Say on Pay Vote and Stockholder Outreach."

~~With the implementation of these changes, key~~Key features of our compensation program include:

•Competitive compensation levels and practices;

•Performance-based incentive plans (annual STIP awards and three year LTIP PSU awards) that are based on quantitative goals and objectives, and aligned with our key business strategies;

~~Greater~~•Significant weighting on equity-based compensation as a component of total compensation, ~~and~~including the existence of ~~an Executive~~a Stock Ownership ~~Policy;~~Policy applicable to our executives;

•rTSR modifier aligns compensation results with actual stock performance compared to peers; and

•Policies to manage compensation-related risk and support good governance, including a Recoupment Policy.

~~2019~~Key Strategic Priorities and 2021 Company Performance

Our primary business objective is to maximize stockholder value through the execution of our key strategic priorities, ~~specifically:~~which were outlined in 2021 as follows:

•Active runoff of AAC and its subsidiaries through transaction terminations, ~~policy~~ commutations, ~~reinsurance, settlements~~restructurings, and ~~restructurings,~~reinsurance with a focus on our watch list credits and known and potential future adversely classified credits, that we believe will improve our risk profile, and maximizing the risk-adjusted return on invested assets;

•Ongoing rationalization of Ambac's capital and liability structures;

•Loss recovery through active litigation management and exercise of contractual and legal rights;

•Ongoing review ~~and adjustments focused on improving~~of the effectiveness and efficiency of Ambac's operating platform; and

~~Evaluation of opportunities in certain business sectors that meet acceptable criteria~~•Further expanding into specialty property and casualty program insurance, managing general agency/underwriting and potentially other insurance and insurance related businesses that will generate long-term ~~stockholder~~shareholder value with attractive risk-adjusted ~~returns.~~

returns and meet other preestablished criteria.



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In ~~2019,~~2021, we took important steps to ~~enhance the Company’s ability to achieve this objective.~~advance these strategic objectives. Key highlights and results include the following:




l~~Executed the COFINA Plan of Adjustment in the first quarter resolving 78% of Ambac's total exposure to Puerto Rico.~~
l~~Ceded $1.5 billion of performing par exposure to third party reinsurers, including $662 million of Adversely Classified and Watch List Credits.~~
l~~Realized $142 million in proceeds related to the settlement between the United States Securities and Exchange Commission and Citigroup Global Markets.~~
lDecreased our insured portfolio net par outstanding at AAC by ~~19%~~17% to ~~$38.0~~$28.0 billion from year-end ~~2018.~~2020.
l			Decreased Adversely Classified Credits and Watch List Credits at AAC by 23%, to $10 billion.
l			Active de-risking transactions accounted for $3 billion of the $6 billion reduction in net par in 2021 and $2 billion of the $3 billion reduction in adversely classified and watch list net par exposure
l			Executed a plan support agreement with the Oversight Board for the Commonwealth of Puerto Rico to restructure AAC’s insured PRIFA Rum Tax exposure; Joined plan support agreements that the Oversight Board had previously entered into with other major creditors that addressed the restructuring of AAC’s GO, PBA, HTA and CCDA exposures
l			Trial date for the Bank of America/Countrywide case is scheduled for September 7, 2022
l			Executed an exchange transaction for junior surplus notes resulting in extinguishment of $76 million in debt and accrued interest.
l			Material advancement and growth of the Company' specialty P&C insurance platform, including: ◦The establishment of the Everspan Group of companies with an A.M. Best financial strength rating of 'A-' (Excellent), Class VIII designation; ◦Ten program partners signed to date; ◦Platform expansion with the acquisition of four additional admitted carriers; and ◦Admitted capabilities in all 50 states.
l~~Decreased Adversely Classified and Watch list Credits~~			Xchange Benefits, LLC ("Xchange") was onboarded in early 2021 following its acquisition by ~~28% to $14.3 billion.~~Ambac in late December of 2020.
l~~Executed additional headcount~~			Xchange successfully expanded its distribution and ~~other cost reductions including the consolidation~~carrier network and distributed approximately $6 million of ~~space for the New York headquarters.~~earnings to Ambac, consistent with our current ownership stake.
l~~Ended 2019 with total Ambac stockholders’ equity (“Book Value“) of $1.5 billion, or $32.41 per share, and Adjusted Book Value~~⁽¹⁾ ~~of $1.3 billion, or $28.83 per share.~~


⁽¹⁾	Adjusted Book Value is a non-GAAP measure. A reconciliation of this non-GAAP financial measure and the most directly comparable GAAP financial measure is presented in Appendix A. In this Proxy Statement, we refer to Total Ambac Financial Group, Inc. stockholders' equity as "Book Value."

~~2019~~

2021 Pay Decisions

~~2019~~2021 compensation decisions reflect our compensation principles:

•Link short-term incentives to ~~Company~~the Company's operational, strategic, and financial performance;

•Use long-term incentives to further align the interests of our executives with stockholders by providing that all LTIP awards are denominated in stock units, ~~that are earned~~with payouts based on ~~Company performance;~~performance metrics that we believe drive long-term value for stockholders; and

•Support the retention and attraction of key executive talent.

Base salaries in ~~2019~~2021 for each of our NEOs were reviewed and approved by the Compensation Committee, based on a review of relevant market data and each executive’s performance for the prior year, as well as each executive’s experience, expertise and position. ~~Each of Messrs. LeBlanc, Trick~~

In 2021, the Compensation Committee incorporated appropriate financial performance metrics related to our specialty P&C insurance business, in particular for the Everspan and ~~Ksenak is a party~~Xchange platforms, into the incentive compensation plans for senior management. In 2022, the Committee increased the weightings assigned to ~~an employment agreement with~~financial performance metrics for the ~~Company that provides for a minimum annual base salary during the term of the respective agreement.~~ specialty P&C insurance business.


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~~See "Agreement with Claude LeBlanc," and “Agreements with Other Executive Officers.”~~

STIP awards for ~~2019~~2021 were determined based on a structured and objective approach in which ~~60%~~50% of an executive officer's annual STIP award was based on the Company’s achievement of pre-established financial

performance targets at the Company related to ~~changes~~reductions in: (i) Net ~~Asset Value~~Par Outstanding¹, in the insured portfolio, and (ii) Gross Operating Run Rate ~~Expense~~ Expense;¹~~, and (iii) Watch List and Adversely Classified Credits~~¹; and the remaining ~~40%~~50% of an executive officer's ~~annual~~ STIP award for 2021 was based on ~~other~~strategic performance ~~considerations,~~goals, including business unit results and individual performance. ~~The Compensation Committee, after receiving advice from Meridian Compensation Partners on~~

¹Net Asset Value is calculated by reducing Assets by Liabilities, determined as of December 31, 2019. See the definitions of Assets and Liabilities set forth in the CD&A under under "Pay Mix -- AAC LTIP Metric". Gross Operating Run Rate Expense is measured by comparing actual gross operating run rate expenses to performance goals established against budgeted amounts. Reductions in Watch List and Adversely Classified Credits as of December 31, 2019 under the STIP were measured against Watch List and Adversely Classified Credits as of January 1, 2019.

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current market practices, and noting management's increased equity ownership overall, discontinued the practice of awarding deferred stock units ("DSUs") and approved an all cash payment of the 2019 STIP awards.

Long-term incentive awards granted in early ~~2020~~2021 were also reviewed and approved by the Compensation Committee, based on a review of relevant market data and each executive’s performance for the prior year. The ~~2020~~2021 long term incentive awards include restricted stock units ~~(25%~~(40% of total long term incentive award) which vest annually over a three year period and performance stock units ~~(75%~~(60% of total long term incentive award), tied to metrics that reflect the long term goals that the Compensation Committee believes will drive ~~shareholder~~stockholder value. Vesting of ~~the the~~ performance stock units is subject to the satisfaction of certain performance goals, which will be determined at the end of a ~~three~~two year performance ~~period.~~period, and application of the rTSR modifier at the end of three years (described below).

~~2019~~2021 Say on Pay Vote and Stockholder Outreach

At our ~~2019~~2021 annual meeting of stockholders, our Say on Pay proposal received support from stockholders representing approximately ~~91%~~75% of our common stock present, in person or by proxy at the ~~meeting voted to approve, on an advisory basis, the compensation of our named executive officers described in our 2019 proxy statement. We~~meeting. While we greatly appreciate the ~~affirmative~~ support of a significant majority of our stockholders with regard to our executive compensation program, our Compensation Committee also endeavors to understand the concerns of the minority of our stockholders who did not support our executive compensation program. We are committed to a corporate governance approach that aligns the ~~interest~~interests of management, the Board of Directors and our stockholders. ~~In pursuit~~

Over the course of ~~this approach, in the fall of 2019 our investor relations department reached out to stockholders representing approximately 47% of our outstanding common stock to offer a meeting with the with~~2021, the Chairman of the Board, ~~and~~along with the Chairs of the Compensation Committee and the Governance and Nominating Committee ~~to solicit~~solicited feedback from stockholders representing approximately 63% of our outstanding common stock and from certain proxy advisory firms. These stockholders onand proxy advisory firms provided important feedback concerning our executive compensation ~~and corporate governance matters. Our Chief Executive Officer provided a brief business update and participated in a discussion regarding~~program.

While the ~~event driven nature of our business at the outset of each meeting before excusing himself and turning the meeting over to the directors. The~~ feedback on our executive compensation program was ~~very~~generally favorable, ~~with~~ a number of stockholders ~~expressing~~provided input on certain changes they would like the ~~view~~Company to adopt. As a result of the feedback received from stockholders, the Compensation Committee made the following changes to the 2022 compensation program.


WHAT WE HEARD	WHAT WE DID
Place a greater emphasis on total stockholder return as part on of the compensation program	l	Increased the impact of the rTSR modifier from +/- 10% to +/- 20% with respect to our LTIP Awards beginning in 2022 so that any final performance stock unit ("PSU") award payout at the end of the three year performance period may be increased or decreased by 20% if the Company's stock performance compared to a peer group is at or above the 75th percentile or at or below the 25th percentile, respectively.
Provide for a three year measurement period in judging performance under the LTIP.	l	Changed the performance measurement period from two years to three years for determining the achievement of goals against pre-set metrics for 2022 LTIP awards.
Provide enhanced disclosure around the performance considerations utilized to judge performance results under the STIP’s strategic performance goals.	l	Materially enhanced the disclosure included in the CD&A related to the performance considerations underlying the strategic performance goals and the rigor in the process utilized to judge performance pursuant the STIP.

1 Reductions in Net Par Outstanding as of December 31, 2021 under the STIP were measured against Net Par Outstanding as of January 1, 2021. Gross Operating Run Rate Expense is measured by comparing actual gross operating run rate expenses to performance goals established against budgeted amounts.


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The Compensation Committee also made the following additional changes to the design of the 2022 compensation program, with an increased emphasis on the specialty P&C insurance business.

Changes to the 2022 Short Term Incentive Plan Design, include:

•Increase in the weighting of the financial performance metrics from 50% to 60%; and

•Inclusion of an additional financial performance metric for the specialty P&C insurance business with aggregate increased weighting.

Changes to the 2022 Long Term Incentive Plan Design, include:

•Increase in the proportion of PSUs to restricted stock units ("RSUs") granted from 60%/40% to 70%/30%, respectively; and

•Increase in the weighting related to results from the specialty P&C insurance business from 25% to 40% with a corresponding reduction in weighting of performance metrics related to our legacy financial guarantee business, from 75% to 60%.

It is the intention of the Compensation Committee that ~~a meeting with our Board~~as Ambac's specialty P&C insurance business continues to grow, and ~~committee chairs was unnecessary at~~ the ~~time because they were very satisfied with~~legacy financial guarantee business shrinks, the Company's ~~executive compensation program and had no concerns about other governance matters.~~performance metrics will accordingly shift to be more heavily weighted to the achievement of results in the specialty P&C insurance business.

Our Compensation Philosophy and Objectives

Our executive compensation program is designed to support achievement of our key business objectives. The Compensation Committee monitors and oversees all facets of the program, including incentive plan design, benchmarking, and the performance goal-setting process, and approves executive pay programs that tie a substantial portion of compensation to goal achievement. The Compensation Committee also retains the authority to make discretionary adjustments to further recognize overall Company performance and enhance alignment with stockholders and is committed to monitoring and adapting to evolving compensation standards. Specifically, our executive compensation program has the following objectives:

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Objectives	Details
Attract, retain and motivate executives and professionals of the highest quality and effectiveness	l	Provide compensation opportunities that are competitive with practices of ~~other~~ similar financial services organizations operating within the same marketplace for executive talent.
Align pay with performance	l	A substantial portion of each executive’s total compensation is variable and performance-based.
	l	The design of our incentive plans focus on rewarding performance aligned with our key business strategies.
Further align our executives’ long-term interests with those of our stockholders	l	Balance use of cash and equity based compensation, with a greater emphasis on the latter and short and long-term incentives that further align management's interests with those of our stakeholders and support retention.
Discourage excessive risk taking	l	Maintain policies that support good governance practices and mitigate against excessive risk taking.

Determining Executive Compensation

The Compensation Committee bases current pay levels on numerous factors, including competitive pay practices in the financial services industry, the scope and complexity of the functions of each NEO’s role, the contribution of those functions to our overall performance, individual experience and capabilities, and individual performance. Any variations in compensation among our NEOs reflect differences in these factors. The Compensation


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Committee monitors the effectiveness of our compensation programs throughout the year and performs an annual reassessment of the programs at the beginning of the year in connection with year-end compensation decisions and future goal settings.

Compensation Consultants

The Compensation Committee has authority to retain compensation consulting firms to assist it in the evaluation of executive officer and employee compensation and benefit programs. The Compensation Committee retained Meridian Compensation Partners, LLC (“Meridian”), as its independent compensation consultant to advise on the ~~2019~~2021 compensation cycle, which included year-end compensation decisions made in the first quarter of ~~2020.~~2022. Meridian provides an objective perspective as to the reasonableness of our executive compensation programs and practices and their effectiveness in supporting our business and compensation objectives. Specifically, Meridian advised the Compensation Committee with respect to compensation trends and best practices, incentive plan design, competitive pay levels, and individual pay decisions with respect to our NEOs. The Compensation Committee has assessed the independence of Meridian pursuant to applicable SEC rules and concluded that no conflict of interests exists that would prevent Meridian from independently advising the Compensation Committee.

Competitive Compensation Considerations

Because the competition to attract and retain high performing executives and professionals in the financial services industry is intense, the amount and composition of total compensation paid to our executives must be considered in light of competitive compensation levels. To help inform the Compensation Committee's compensation decisions for the NEOs for 2021, Meridian prepared a benchmarking analysis that compared the compensation levels for our NEOs to that of officers in comparable positions across a selected peer group of companies. However, we do not rely on this information to target any specific pay percentile for our NEOs. Instead, we use this information to provide a general review of market pay levels and practices and to ensure that we make informed decisions regarding our executive pay programs.

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~~To help~~At present, Ambac has no directly comparable business peers, and thus peer selection is a challenge. Each year the Compensation Committee ~~determine compensation levels~~reviews the Company's peer group and considers adjustments if appropriate. Key criteria used to assess current and potential peer companies include financial services industry sector focus (i.e., specialty insurance, specialty finance, property and casualty insurance, financial guaranty and run-off insurance), organizations that manage distressed assets, and organizations of similar size and scope (market capitalization, assets and enterprise value). Based on a review conducted in 2021 in preparation for the ~~NEOs, Meridian prepared an analysis that compared the level of compensation for our NEOs and compensation paid to officers at comparable positions across an industry comparator group. In the 2019~~2021 compensation cycle, we revised the list of peer companies toto: (i) be more reflective of Ambac's size, (ii) add more property and casualty insurance companies, (iii) reflect the event driven nature of our business and the risks we face, ~~and~~(iv) capture the markets and businesses in which we ~~operate. The companies that comprise~~operate and (v) reflect the ~~comparator~~market for executive talent. We expect our peer group ~~were selected because we compete~~comparability will materially change in the ~~same marketplace with these companies for highly qualified~~coming years as we transition from our legacy financial guaranty business to our new specialty property and ~~talented financial service professionals.~~casualty insurance business.


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The table below provides summary financial information regarding Ambac and the comparator group used for the ~~2019~~2021 compensation cycles.


Comparator Group used for 2021 Compensation Cycle	Primary Industry	Market Capitalization ($ in millions)		Assets ($ in millions)		Enterprise Value ($ in millions)
Argo Group International Holdings, Ltd.	Property & Casualty Insurance	$1,897		$10,316		$2,406
Assured Guaranty Ltd.	Property & Casualty Insurance	3,593		18,208		5,170
Mr. Cooper Group Inc.	Thrifts and Mortgage Finance	3,271		14,204		16,582
ECN Capital Corp.(1)	Specialized Finance	2,010		1,146		2,325
HCI Group, Inc.	Property & Casualty Insurance	990		1,177		623
MBIA Inc.	Property & Casualty Insurance	673		4,695		4,199
MGIC Investment Corporation	Thrifts and Mortgage Finance	4,961		7,325		6,029
Navient Corporation(1)	Consumer Finance	3,479		80,605		79,817
Radian Group Inc.	Thrifts and Mortgage Finance	4,143		7,839		5,624
Randall & Quilter Investment Holdings Ltd.	Insurance Brokers	643		4,034		722
PRA Group, Inc.	Consumer Finance	1,901		4,366		4,394
White Mountains Insurance Group, Ltd.	Property & Casualty Insurance	3,309		7,001		3,738
Ambac Financial Group, Inc. (2)		$694		$12,303		$9,565
Percentile Rank vs. Peer Group		10	%	77	%	85	%
Note: Financial data reflects information available as of December 31, 2021
Source: S&P Capital IQ

Comparator Group used for 2019 Compensation Cycle Market
Capitalization
($ in millions) Assets
($ in millions) Book Value
($ in millions)
Assured Guaranty Ltd. $3,376 $14,326 $6,639
ECN Capital Corp. 983 1,724 734
Element Fleet Management Corp. 4,097 13,438 2,415
Enstar Group Limited 3,839 19,363 4,753
MBIA Inc. 596 7,284 826
MGIC Investment Corporation 4,161 6,230 4,309
Navient Corporation 2,171 94,903 3,336
Syncora Holdings Ltd. 36 1,311 481
Radian Group Inc. 4,219 6,808 4,049
Mr. Cooper Group Inc. (fka WMIH Corp.) 1,169 18,305 2,232
Ambac Financial Group, Inc. ⁽¹⁾
$876 $13,451 $1,569
Percentile Rank vs. Peer Group 19% 56% 28%
Note: Financial data reflects information available as of February 29, 2020
Source: S&P Capital IQ
(1) Enterprise value for ECN Capital Corp. and Navient Corporation are not available on S&P Capital IQ. These values have been calculated using a 6-month average market capitalization less cash and cash equivalents, plus total debt, preferred equity and total minority interest.


⁽¹⁾ (2) Ambac's Enterprise Value includes the obligations of Variable Interest Entities for which Ambac or its subsidiaries are required to consolidate as a result of its financial guarantee insurance policies, plus its market capitalization, the value of all outstanding debt, preferred equity and total noncontrolling interests, less cash and cash and cash equivalents.	~~Assets include $6,199 of assets relating to Variable Interest Entities for which Ambac or its subsidiaries are required to consolidate as a result of its financial guarantee insurance policies.~~

The Role of Management in Determining Pay

Generally, our Chief Executive Officer reviews the competitive compensation data for each of the other NEOs, considers both individual, departmental and Company performance, measured against financial performance metrics and strategic performance goals established at the beginning of the year, and makes a recommendation to the Compensation Committee for base salary and annual short- and long-term incentive awards. The Chief Executive Officer typically participates in Compensation Committee meetings at the Compensation Committee’s request to provide background information regarding the Company’s strategic objectives and to evaluate the performance of, and compensation recommendations for, each of the other NEOs.

The Committee utilizes the information provided along with input from the compensation consultant and the knowledge and experience of the Committee’s members in making compensation decisions. Our NEOs do not propose or seek approval for their own compensation. The Chairman of the Compensation Committee, with input from the Chairman of the Board of Directors, recommends the Chief Executive Officer’s compensation to the Compensation Committee. See "Directors, Executive Officers, and Corporate ~~Governance"~~Governance."



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Elements of Pay

Compensation for each of our NEOs is viewed on a total compensation basis and comprised of the following elements of pay:



Compensation Element	Purpose
Base Salary	l	Provides a minimum, fixed level of cash compensation to compensate executive officers for services rendered during the fiscal year that is competitive with organizations operating within the same marketplace for executive talent.
Short Term Incentive Awards	l	Drive achievement of annual corporate goals, including key financial and operating results by setting pre-established financial performance targets at the Company. Annual STIP awards ~~for 2019 were~~are paid in cash.
Long-Term Incentives	l	Further align executive officers’ interests with the interests of stockholders by rewarding increases in the value of our share price, and tying long-term incentive compensation to performance metrics that we believe to be important value-drivers for our stockholders. LTIP awards are strictly equity based and denominated in PSUs and RSUs.
Post-Employment Benefits	l	lProvide certain severance benefits to our executive officers. See “--Post-Employment Benefits” and for a description of post-employment benefits payable to Messrs. LeBlanc, Trick and Ksenak, see “Agreement with Claude LeBlanc,” and “Agreements with Other Executive Officers."
Perquisites	l	Provide a limited number of perquisites to all our employees, including our executive officers.

Before year-end compensation decisions are made, the Compensation Committee undertakes a comprehensive review of all elements of each executive officer’s compensation. This review includes information on cash and non-cash compensation for the past ~~four~~three fiscal years (including current and prior year base salaries, short-term and long-term incentive awards and other awards), and the value of benefits and other perquisites paid to our executive officers, as well as potential amounts to be delivered under all post-employment scenarios. This comprehensive review is designed to ensure that each member of the Compensation Committee has a complete picture of the compensation and benefits paid to each of our executive officers.

The following table shows the base salary and incentive compensation paid to our NEOs for their performance in ~~2019~~2021 in the manner it was considered by the Compensation Committee. This presentation differs from that contained in the Summary Compensation Table by showing the value of the LTIP stock unit awards granted in 2022 for 2021 performance. The actual number of PSUs and RSUs granted was calculated based on ~~the~~an average closing price of Ambac common stock on ~~March 4, 2020~~the NYSE for the immediately preceding twenty trading days prior to the grant date, February 28, 2022 ($~~19.50)~~14.85), which were awarded based on ~~2019~~2021 performance, but are not reflected in the Summary Compensation Table because of SEC rules on proxy statement disclosure.


				Long Term Incentive Plan							Long Term Incentive Plan
Name	Year	Salary ($)	Short Term Incentive Plan ($)	PSU Awards ($)	RSU Awards ($)	Total ($)	Name	Year	Salary ($)	Short Term Incentive Plan ($)	PSU Awards ($)	RSU Awards ($)	Total ($)
Claude LeBlanc	2019	900,000	1,657,000	2,418,750	806,250	5,782,000	Claude LeBlanc	2021	900,000	1,699,000	2,677,512	1,147,488	6,424,000
David Trick	2019	750,000	580,000	637,500	212,500	2,180,000	David Trick	2021	750,000	659,000	647,500	277,500	2,334,000
David Barranco	2019	500,000	400,000	562,500	187,500	1,650,000	David Barranco	2021	500,000	688,000	595,000	255,000	2,038,000
Stephen M. Ksenak	2019	600,000	425,000	487,500	162,500	1,675,000	Stephen M. Ksenak	2021	600,000	596,000	525,000	225,000	1,946,000
R. Sharon Smith	2019	500,000	350,000	450,000	150,000	1,450,000	R. Sharon Smith	2021	500,000	612,000	577,500	247,500	1,937,000



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Pay Mix

A substantial portion of target total compensation is delivered through variable performance or equity based incentives that are at risk. As reflected in the table above and the graphs below, variable performance or equity based incentives constitute ~~84%~~86% of our CEO compensation mix and ~~66%~~72% of our NEO compensation mix.



CEO Total Direct Compensation						CEO Performance/Equity Based Incentive Compensation



Other NEOs Total Direct Compensation						Other NEOs Performance/Equity Based Incentive Compensation

Base Salary. Base salaries are intended to reflect the experience, skill and knowledge of our executive officers and other senior professionals in their particular roles and responsibilities, while retaining the flexibility to appropriately compensate for fluctuations in performance, both of the Company and the individual. Base salaries for our executive officers and any subsequent adjustments thereto are reviewed and approved by the Compensation Committee annually, based on a review of relevant market data and each executive’s performance for the prior year, as well as each executive’s experience, expertise and position. The base salaries paid in ~~2019~~2021 to each of our NEOs ~~was: $900,000~~was unchanged from prior years. Mr. LeBlanc received a base salary of $900,000; Mr. Trick, $750,000; Mr. Barranco, $500,000; Mr. Ksenak, $600,000; and Ms. Smith, $500,000. Each of Messrs. LeBlanc, Trick and Ksenak is a party to ~~Mr. LeBlanc; $750,000 to Mr. Trick; $500,000 to Mr. Barranco; $600,000 to Mr. Ksenak; and $500,000 to Ms. Smith.~~an employment agreement with the Company that provides for a minimum annual



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~~Table~~

base salary during the term of ~~Contents~~

the respective agreement. See "Agreement with Claude LeBlanc," and “Agreements with Other Executive Officers.”

Incentive Compensation. Incentive compensation is a key component of our executive compensation strategy. Our incentive compensation awards generally have two components: ~~short term incentive compensation~~Short Term Incentive Plan awards (consisting of an annual cash incentive award) and Long Term Incentive Plan awards. Annual decisions with regard to incentive compensation are generally made in February of each ~~year, following Compensation Committee meetings in December and January.~~year. Incentive compensation payouts can be highly variable from year to year.

Short Term Incentive Compensation. Annual incentives for our NEOs are meant to reward performance. ~~Sixty~~Fifty percent of NEO ~~2019~~2021 short term incentive compensation awards were measured against pre-established financial performance targets at the Company related ~~to:~~to reductions in: (i) ~~reductions~~Net Par Outstanding in ~~Watch List~~the insured portfolio and ~~Adversely Classified Credits,~~ (ii) ~~reductions in~~ Gross Operating Run Rate ~~Expenses, and (iii) increases in Net Asset Value.~~Expenses. These metrics were chosen because the Compensation Committee believed that they would be ~~the~~ key drivers of stockholder value in ~~2019.~~ 2021.

The remaining ~~forty~~fifty percent of the short term incentive compensation award is based on ~~other~~strategic performance ~~considerations,~~goals, more than 50% of which can be reviewed against objective, quantifiable or financial outcomes. These goals include formula driven financial performance targets as well as strategic goals related to:

•Active de-risking and ongoing rationalization of Ambac's capital and liability structures;

•Increasing organizational effectiveness and efficiency of the operating platform;

•Effective management of loss recovery through active litigation and exercise of contractual and legal rights; and

•Identification of potential actionablenew business opportunities to engage and pursue that meet Board approved criteria, including ~~business unit results~~performance and ~~individual performance.~~ growth expectations for the new specialty P&C insurance business. See "Compensation for Each of Our Named Executive Officers in 2021 - Strategic Performance Goals."


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The Compensation Committee believes that it is important to ~~retain a substantial level of discretion with respect to other~~establish strategic performance ~~considerations~~goals because of the uncertainties associated with our ~~main~~legacy operating subsidiaries, AAC and Ambac ~~U.K.,~~UK, which are not writing new business and are in ~~runoff. Our inability to pay discretionary annual incentive awards could have a material adverse impact on~~runoff, and Ambac’s strategic shift towards growing our ~~ability to attract, motivate and retain high-quality and talented executives.~~specialty P&C insurance platform. The Compensation Committee assigns to each NEO an annual target incentive opportunity, expressed as a percentage of eligible earnings (base salary amount paid during the year), which is based on the executive’s position and the scope of responsibilities.

Target annual incentives (as a percent of base salary) for the NEOs for ~~2019~~2021 were set as follows: ~~100%~~125% for the Chief Executive Officer; and between 55% ~~for the Chief Financial Officer;~~ and ~~50%~~85% for each of the other NEOs. Actual incentive payouts can range from 0% to 200% of target for ~~the Chief Executive Officer, and from 0% to 150%~~each of ~~target for~~ the ~~other~~ NEOs based on the Compensation Committee’s review of overall corporate performance and individual and business unit achievement relative to the pre-established goals and ~~objectives set forth above.~~

objectives.



Key Changes in ~~2020~~2022 to Short Term Incentive Program: For the ~~2020~~2022 performance year, ~~in order to address certain shareholder concerns about overlapping metrics between the STIP and LTIP programs,~~ the Compensation Committee ~~replaced~~amended the financial performance metrics of the STIP to include Everspan performance, weighed at 20%, along with reductions in Net Par outstanding in the insured portfolio, weighed at 60%, and Gross Operating Run Rate Expenses, weighed at 20%. In addition, the Committee also increased the weighting of the STIP financial performance metrics ~~related~~from 50% to ~~Watch List and Adversely Classified Credits, and Net Asset Value, with a new metric focused on reductions to the Net Par Outstanding of insured exposures.~~60%.

Long Term Incentive Compensation. Our LTIP awards focus on the attainment of long term performance goals and objectives, which are deemed instrumental in creating long term value for stockholders and long term retention incentives for our executives. The Compensation Committee reviews the LTIP targets each year for competitive alignment. The Compensation Committee also reviews market trends related to the award mix and determines the appropriate mix of equity instruments considering market benchmark data.


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In the first quarter of each year, LTIP compensation awards ~~(which related~~(the size of which relates to the prior year's performance) are granted to our NEOs. ~~Beginning in 2018, we eliminated~~In 2021, the ~~"retesting" feature in~~Compensation Committee revised the ~~Long-Term Incentive Compensation Program that allowed~~LTIP performance ~~at AAC~~metrics to ~~be measured by~~better align management's goals with certain key drivers of stockholder value: risk reduction and managing the ~~greater~~event driven nature of ~~two metrics: an improved asset liability ratio ("ALR") or improved Net Asset Value over a three year performance period.~~Ambac's business. LTIP awards granted in ~~2019 that relate to AAC performance~~2021 will be measured based on (i) reductions in Watch List and Adversely Classified Credits at AAC weighted at ~~45%~~75% and (ii) ~~improvements in Net Asset Value~~the achievement of certain cumulative EBITDA targets at Xchange weighted at 25%. ~~The portion of the 2019 LTIP award that relates to Ambac performance will be measured based on the achievement of a certain level of Cumulative EBITDA and weighted at 30%.~~ In addition, b~~eginning in 2019,~~ ~~we added a relative~~the 2021 LTIP awards continued to incorporate the Total Shareholder Return ("rTSR") modifier as an additional metric with respect to ~~our~~performance based LTIP award payouts. The rTSR modifier for 2021 LTIP awards will cause any final PSU award payout at the end of a three year ~~performance~~settlement period to be increased or decreased by 10% if the Company's stock performance compared to a peer group is at or above the 75th percentile or at or below the 25th percentile, respectively. ~~LTIP awards in 2019 were denominated 67% in~~While the payout of performance stock units (“PSUs") granted pursuant to the 2021 LTIP awards will not settle or be subject to the rTSR modifier until the end of a three year period, the measurement period for determining the achievement of goals against the pre-set metrics was shortened to two years, consistent with the prior year awards, to create a better alignment between Company performance and ~~33%~~management compensation.

LTIP awards in 2021 were denominated 60% in PSUs and 40% in restricted stock units ("RSUs"). PSUs represent a promise

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to deliver, within 75 days after the end of a three-year performance period, a number of shares of Ambac’s common stock ranging from 0% to 200% (not including any adjustment that may be applied pursuant to the rTSR modifier) of the amount of the initial grant, depending on the achievement ~~by either Ambac or its principal operating subsidiary, AAC,~~ of financial performance objectives determined by the Compensation Committee at the time of the grant. The RSUs are ~~time based~~time-based awards and were granted in order to encourage the retention of our most valued employees. The RSUs granted as part of the ~~2019~~2021 LTIP awards represent the right to receive an equivalent number of shares of Ambac’s common stock and will vest and settle in three equal annual installments in ~~January~~March of ~~2020, 2021,~~2022, 2023 and ~~2022.~~2024.

The Compensation Committee determined the target value of the ~~2019~~2021 LTIP awards granted to each of our NEOs based on the Company’s overall results, the individual executive’s contribution to overall performance, external market benchmark data and the proportion of total compensation comprised of LTIP awards. In addition, in setting target value of the ~~2019~~2021 LTIP awards granted to Messrs. LeBlanc, Trick and Ksenak, the Committee considered the terms and conditions set forth in their respective employment agreements. See "Agreement with Claude LeBlanc," and "Agreements with Other Executive Officers.”

For each of our NEOs, the Compensation Committee determined to weight the LTIP awards granted in March 2019 as follows: 70% of the award based on performance at AAC (an “AAC LTIP Target Award”) and 30% of the award based on performance at Ambac (an “Ambac LTIP Target Award”).



Key Changes to Long Term Incentive Program for ~~2020~~2022 LTIP ~~Grants: In 2020, the~~Grants: The Compensation Committee revised the ~~LTIP~~PSU performance metrics to ~~better align management's goals with certain key drivers of shareholder value: risk reduction, and managing the event driven nature of Ambac's business. LTIP~~add Everspan EBITDA goals. PSU awards granted in ~~2020~~2022 will be measured based on ~~AAC~~ performance, ~~only~~ with ~~(i)~~ reductions in Watch List and Adversely Classified Credits at AAC weighted at ~~70%~~60% and ~~(ii) improvements in Net Asset Value~~the achievement of certain EBITDA goals at Xchange and Everspan each weighted at ~~30%~~20%. ~~Cumulative EBITDA at Ambac was eliminated as a performance metric. While the payout of PSUs granted pursuant to the 2020~~ LTIP awards ~~will not settle for~~in 2022 were denominated 70% in PSUs and 30% in RSUs.
In addition, the Compensation committee re-instituted a ~~three year period~~three-year performance and ~~be subject to the rTSR modifier, the~~ measurement period for determining the achievement of goals against ~~the~~ pre-set metrics ~~was shortened to two years to create a better alignment between Company performance and management compensation. In addition,~~for 2022 LTIP awards given the shift in ~~2020 were denominated 75% in PSUs and 25% in RSUs.~~metrics towards our new businesses, as well as certain shareholder feedback.

~~AAC~~ LTIP ~~Metric~~. Metrics. The metrics used to judge performance ~~at AAC~~ for ~~LTIP~~PSU awards granted in March ~~2019~~2021 are reductions in Watch List and Adversely Classified Credits2 at AAC and ~~an improved Net Asset Value~~the achievement of certain EBITDA goals at Xchange, each measured over a ~~three-year performance~~two-year period which runs from January 1, ~~2019~~2021 until December 31, ~~2021~~2022 (the ~~“Performance~~“Measurement Period”). ~~Within the AAC performance metrics, reductions~~Reductions in AAC's Watch List and Adversely Classified Credits are weighted at ~~45%~~75% and ~~increases in AAC's Net Asset Value~~the achievement of certain EBITDA goals at Xchange is weighted at 25%.

________________________

2 Adversely Classified Credits represent credits that are either in default or have developed problems that eventually may lead to a default. Watch List credits represent credits that demonstrate heightened potential for future adverse development based on qualitative and quantitative stress assumptions.

~~The Net Asset Value is calculated by reducing Assets by Liabilities, determined as of the last day of the performance period.~~

For purposes of the Net Asset Value calculation, “Assets” shall mean the sum of the following: (i) cash and cash equivalents, (ii) invested assets at fair value (except for Ambac-insured investments which will be measured at amortized cost and excluding the Secured Note issued in 2018 in connection with AAC's restructuring as it is included in liabilities), (iii) loans, (iv) investment income due and accrued, (v) net receivables (payables) for security sales (purchases), (vi) tax tolling payments or dividends made by AAC to Ambac during the Performance Period, (vii) cash, cash equivalents and securities pledged as collateral to counterparties, and (viii) other receivables.



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“Liabilities” shall mean the sum of the following: (i) the present value of future probability weighted financial guarantee claims and CDS payments reduced by recoveries, including probability weighted estimated subrogation recoveries and reinsurance recoverables, using discount rates in accordance with GAAP ("Gross Claim Liability" or "GCL"), (ii) fair value of interest rate derivatives (prior to any AAC credit valuation adjustments), (iii) par value and accrued interest of all outstanding surplus notes of AAC (including junior surplus notes), (iv) par value and accrued interest on the Ambac Note and Tier 2 debt issued in 2018 in connection with AAC's restructuring (net of par value and accrued interest on AAC's holdings of the Secured Note), (v) accreted value of Ambac Assurance UK Limited debt, (vi) the liquidation value of outstanding preferred stock, and (vii) any other debt. Liabilities will also include the par and accrued interest on any new debt obligations issued in the future.

Additionally, the Net Asset Value will: (i) neutralize the effects of claim payments, ART Transaction payments, loss expense payments, advisor payments and the establishment of loss and loss expense reserves for credits that do not have a GCL at the beginning of the performance period, (ii) measure AAC's foreign subsidiaries utilizing the foreign exchange rate at the beginning of the performance period, (iii) add back capital restructuring and ongoing oversight costs of the Office of the Commissioner of Insurance of Wisconsin ("OCI") during performance period, and (iv) add back direct costs of risk remediation activities (including ART Transactions, and any sale of AUK or other disposition which has been structured as an ART Transaction) with respect to credits within Watch List or Adversely Classified Credits.

The following table sets forth the percentage of the ~~AAC~~2021 LTIP Target Award that each of our named executive officers could earn under the ~~2019~~2021 LTIP awards based ~~on improvements in NAV and~~ on reductions in Watch List and Adversely Classified Credits ~~determined~~and Cumulative Xchange EBITDA3 as of the last day of the ~~Performance~~Measurement Period.


Percentage of AAC LTIP Target Award Earned	Net Asset Value ($ in millions) ⁽¹⁾	Watch List and Adversely Classified Credits ($ in billions) ⁽¹⁾	Percentage of AAC LTIP Target Award Earned	Cumulative Xchange EBITDA ($ in millions) (1)	Watch List and Adversely Classified Credits ($ in billions) (1)
200%	$(180)	$11.50	200%	$17.1	$9.135
100%	$(380)	$13.50	100%	$13.7	$9,735
0	$(580)	$15.00	0	$10.3	$10.635
⁽¹⁾ Linear interpolation between levels of Net Asset Value and Watch List and Adversely Classified Credits will result in a proportionate amount of the AAC LTIP Target Award becoming earned and vested.

~~Ambac LTIP Metric.~~(1) ~~The metric used to judge performance at Ambac for LTIP awards granted~~Linear interpolation between levels of Cumulative Xchange EBITDA and Watch List and Adversely Classified Credits will result in March 2019 is Cumulative EBITDA over the Performance Period. Ambac’s "Cumulative EBITDA" means Ambac’s earnings before interest, taxes, depreciation, amortization, and non-controlling interests (as determined under GAAP) for the Performance Period. The choicea proportionate amount of the Cumulative EBITDA metric is intended to reward participants on generating income from all of Ambac's subsidiaries excluding AAC and its subsidiaries.*

Cumulative EBITDA shall be adjusted for the effects of: (i) advisor and deal/transaction related costs related to capital and/or merger and acquisition transactions above budgeted amounts, (2) cost of post-employment guarantees, (iii) cost and impact of AAC and Ambac share repurchases, (iv) changes to Board fees and Board imposed expenses, (v) litigation and defense costs and any potential litigation gains in excess of damages incurred, (vi) (cost)/benefit of performance based compensation (above) or below target amounts, and (vii) any other costs as determined in the sole discretion of the Board.

~~____________~~


*	Upon the execution of a material transaction or acquisition by Ambac, revised Cumulative EBITDA metrics will be established by the Compensation Committee to incorporate performance goals for such material transaction or acquisition.

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~~The following table sets forth the percentage of the Ambac~~ LTIP Target Award ~~that each of our NEOs could earn under the 2019 LTIP awards based on the Cumulative EBITDA achieved over the Performance Period, determined as of the last day of the Performance Period.~~

Ambac’s Cumulative EBITDA ($ in millions) ⁽¹⁾
Percentage of Ambac LTIP
Target Award Earned
$35.0 200%
$20.0 100%
$0 0%
⁽¹⁾ Linear interpolation between levels of Cumulative EBITDA will result in a proportionate amount of the Ambac LTIP Target Award becoming earned and vested.
becoming earned and vested.

Following the end of the Performance Period, the Compensation Committee will determine the extent to which each participant’s LTIP award has been earned and the amount payable. The Compensation Committee may, in the exercise of its discretion, reduce the amount of any LTIP award that otherwise would have been earned based on the satisfaction of the performance metrics, but may not increase the size of any LTIP award.

The purpose of the LTIP awards is to further align the long-term interests of our NEOs with those of our stockholders. We believe we have achieved this objective by making the vesting of the LTIP awards conditional upon Ambac achieving certain milestones that the Company believes will have a positive effect on the future value of our common stock. In addition, the ultimate value of the PSUs and RSUs directly depends on the value of our common stock at the time of vesting. Each individual who receives a PSU or RSU becomes, economically, a long-term stockholder of the Company, with the same interests as our other stockholders. As a result, we believe our NEOs have a demonstrable and significant interest in increasing stockholder value over the long term.

________________________

3 Cumulative Xchange EBITDA is calculated by taking 80% of Xchange Group’s earnings before interest, taxes, depreciation and amortization (consistent with Xchange’s historical accounting framework) through the Measurement Period. Cumulative Xchange EBITDA shall be adjusted to exclude the impact of retention payments to Xchange employees in connection with the acquisition by Ambac; purchase accounting; without duplication, EBITDA or any costs related to any M&A transaction consummated during the Measurement Period; cost allocations; and any other adjustments as determined in the sole discretion of the Committee.



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Compensation for Each of Our Named Executive Officers in ~~2019~~2021

Our Chief Executive Officer

Mr. LeBlanc. Effective January 1, 2017, Claude LeBlanc was appointed President and Chief Executive Officer of Ambac and AAC. The Board believed that Mr. LeBlanc's significant experience and success over his career holding senior leadership functions overseeing strategy, corporate development, finance and risk, as well as his prior role actively leading the global remediation and asset recovery initiatives at Syncora Holdings Ltd., and evaluating strategic alternatives and overseeing all aspects of Syncora's finance function, made him uniquely qualified to lead Ambac. ~~Following extensive negotiations, the~~The Compensation Committee, which received input and advice from its nationally recognized independent compensation consultant, Meridian Compensation Partners, LLC, authorized the Company to enter into an employment agreement with Mr. LeBlanc on December 8, ~~2016.~~2016, and amended on February 26, 2020. Pursuant to the employment agreement, as amended, Mr. LeBlanc ~~has been~~is paid an annual base salary of $900,000. ~~On February 26, 2020, the Compensation Committee approved certain amendments to the~~The employment agreement ~~to provide~~also provides that Mr. LeBlanc ~~would be~~is eligible to receive (i) a target annual STIP award set at no less than 100% of his base salary and (ii) a target annual long-term incentive award set at no less than 150% of his base salary, as determined in the discretion of the Compensation Committee. ~~Sixty~~

The Short Term Incentive Plan is a blend of financial performance metrics and strategic performance goals, approximately 75% of which are, in the aggregate, objective and/or quantifiable. These goals include formula driven financial performance targets as well as strategic goals to de-risk the insured portfolio; effectively manage loss recovery through litigation; increase organizational effectiveness; and identify and pursue new business opportunities that meet Board approved criteria.

Fifty percent of the STIP award paid to Mr. LeBlanc for ~~2019~~2021 was based on the achievement of the financial performance metrics related to reductions in (i) Net Par Outstanding in the insured portfolio weighted at 80% and (ii) Gross Operating Run Rate Expenses weighted at 20%.

The remaining 50% of the STIP award paid to Mr. LeBlanc was based on the achievement of strategic performance goals ~~set forth below that were~~ established by the Compensation Committee atfor both the ~~beginning of 2019. The relative weighting for each~~legacy financial guaranty business and the new specialty P&C insurance business. A majority of these ~~financial~~strategic performance ~~metrics was as follows: improvements~~goals are objective and/or quantifiable.

Given Ambac’s strategic shift towards growing our specialty P&C insurance platform and the uncertainties associated with our legacy operating subsidiaries, AAC and Ambac UK, which are not writing new business and are in ~~Net Asset Value 15%; reductions~~runoff, the Compensation Committee decided to give equal prominence to these strategic performance goals in ~~Gross Operating Run Rate Expenses 15%; and reductions in Watch List and Adversely Classified Credits 30%.~~2021.

Performance Against STIP Metrics. Mr. LeBlanc’s target STIP was set at $1,125,000.On a blended basis, weighting the financial performance metrics at 50% and the strategic performance goals at 50%, Mr. LeBlanc's STIP award multiplier was set at 1.51x target, and he was granted a 2021 STIP award of $1,699,000, which was a decrease from his 2020 STIP award of $1,795,500, which was based on a multiplier of 1.6x target. Described below are the metrics, performance goals and final measured outcomes used in determining Mr. LeBlanc’s award.

For the ~~2019~~2021 fiscal year, we established the following ~~goals~~targets for each of our STIP financial performance metrics and assigned the following weighting factors:


($ in millions)	Weighting Factor	Threshold ($ in millions)	Target ($ in millions)	Maximum ($ in millions)	($ in millions)	Weighting Factor	Threshold ($ in millions)	Target ($ in millions)	Maximum ($ in millions)
Watch List and Adversely Classified Credits	30%	$17,945	$17,195	$16,672
Net Par Outstanding					Net Par Outstanding	80%	$30,250	$29,540	$28,940
Gross Operating Run Rate Expenses	15%	$17.8	$17.2	$16.6	Gross Operating Run Rate Expenses	20%	$17.2	$16.7	$16.4
Net Asset Value	15%	$(85)	$(43)	$-0-



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The following graph/charts shows the Company's ~~2019~~2021 actual performance compared to the threshold, target and maximum achievement levels as established for each of the financial performance metrics.



~~Watch List and Adversely~~ ~~Classified Credits Net Par~~	~~Gross Operating~~ ~~Run Rate Expenses~~	~~Net Asset Value~~



Net Par Outstanding						Gross Operating Run Rate Expenses

Target

Threshold

~~Target~~

Maximum

~~- - - -~~------

Actual

With respect to ~~the reductions in Watch List and Adversely Classified Credits and improvements in Net Asset Value,~~each of these metrics, under Mr. LeBlanc's leadership in ~~2019,~~2021, Ambac exceeded the ~~maximum~~target performance goal ~~set~~ for ~~each of these metrics. Credits that were on~~reducing Net Par Outstanding and achieved the ~~watch list or adversely classified~~target performance goal for reducing Gross Operating Run Rate Expenses during the relevant period. Ambac's Net Par Outstanding at the beginning of the performance period ~~were~~of $33.89 billion was reduced to ~~$14.27 billion net par outstanding, and Net Asset Value at year-end was $273.7 million.~~$27.87 billion. Gross Operating Run Rate Expenses for the fourth quarter of ~~2019~~2021 were reduced to ~~$16.8~~$16.6 million. Applying the appropriate weighting to each performance metric as set forth above and using the appropriate payout levels for STIP awards under Mr. LeBlanc's employment agreement, the Committee assigned a ~~1.92~~1.80 multiplier to the financial performance portion of Mr. LeBlanc's ~~2019~~target STIP ~~award.~~award for 2021.

~~Other~~Strategic Performance ~~Considerations.~~ Goals. In determining the other ~~forty~~fifty percent of Mr. LeBlanc's ~~2019~~2021 STIP award, the Compensation Committee gave consideration to the Company’s results against the ~~following~~strategic performance goals ~~and objectives,~~described below, which were communicated to Mr. LeBlanc in the first quarter of ~~2019:~~2021.

~~Active derisking~~For each of these performance goals the Compensation Committee assigned a relative weighting based on the current importance of such performance goals to the Company, with an aggregate total weighting of 100%. To assess results against these performance goals, the Committee utilized a definitive score card methodology to achieve a consistent, formula driven ratings process. Score results were determined by the Committee for each category and could range from 0-5, with 0 to 1 indicating results that were below the anticipated outcomes; a score between 2 and 3 indicating results were slightly below to slightly above the anticipated outcomes; and a score between 4 and 5 indicating results that exceeded or far exceeded the anticipated outcomes.

The strategic performance goals for each category can be further bifurcated between (i) objective, quantifiable or financial performance goals to which the defined scorecard methodology is applied and (ii) well defined strategic goals relating to key components of the Company’s reported strategic priorities, to which the defined scorecard methodology is also applied.

Strategic goals related to “active de-risking and ongoing rationalization of Ambac's ~~and its subsidiaries'~~ capital and liability ~~structures;~~

~~Effective~~structures” as well as “increasing organizational effectiveness and efficiency of the operating platform” were given a combined 25% weighting, of which approximately 44% were reviewed against objective, quantifiable or financial outcomes. The remaining 75% weighting was attributable to strategic goals related to “effective management of loss recovery through active litigation and exercise of contractual and legal ~~rights;~~

~~Continue to increase organizational effectiveness, efficiency of the operating platform~~rights" and ~~simplification of business controls, policies and procedures without increasing operational risk; and~~

~~Develop structured process to pursue opportunities in certain business sectors; source and evaluate potential new business opportunities for Ambac.~~

For each of these performance goals and objectives the Compensation Committee assigned a relative weighting based on its current importance to the Company and utilized a qualitative score card approach in its evaluation to achieve a consistent and informed ratings process. In reviewing each of these performance goals and objectives the Committee considered the following achievements, under Mr. LeBlanc’s leadership, in determining the amount of Mr. LeBlanc's 2019 STIP Award:

~~Successful runoff of AAC and its subsidiaries through active and material transaction terminations, policy commutations, execution of reinsurance transactions, settlements and restructurings;~~



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“identification of potential actionable new business opportunities to engage and pursue that meet Board approved criteria,” including performance and growth expectations for the new specialty P&C insurance business. More than 50% of the strategic goals in these categories were reviewed against objective, quantifiable or financial outcomes.

After measuring and calculating the actual results against the strategic goals outlined herein, some of which are set forth below, the Committee utilized the pre-defined scorecard methodology to arrive at a performance rating for each category. The performance ratings were then applied against the pre-determined weightings outlined herein to arrive at a formulaic outcome for each executive that was not subject to any override or adjustments.


Strategic goals related to active de-risking and ongoing rationalization of Ambac's capital and liability structures, as well as organizational effectiveness were weighted at 25%, and included among other things
Goals			Results
✓ Active runoff of AAC and its subsidiaries through transaction terminations, policy commutations, settlements and restructurings, with a focus on watch list credits and adversely classified credits.			◦Total net par down $5.9 billion or 17% through December 31, 2021 (compared with an 11% reduction in full year 2020); ◦Watch List and Adversely Classified Credits’ down $3.0 billion or 23% through December (compared with an 8% reduction in full year 2020); and ◦Settlements reached (via Plan Support Agreements) on all remaining Puerto Rico exposures ($980 million in net par).
✓ Ongoing monitoring, evaluation and, to the extent possible, active remediation of credits impacted by the COVID-19 pandemic.			◦Rigorous oversight of COVID-19 affected credits with active management to eliminate several more significantly impacted credits, including the Mets Queens Ballpark transaction ($531 million in net par) and a public finance hotel occupancy tax transaction ($94 million in net par); and ◦No policy claims paid related to COVID-19.
✓ Evaluate and, as appropriate, execute Alternative Risk Transfer and reinsurance options to manage risk in the insured portfolio.			◦Significant and material de-risking reinsurance and refinancing transactions completed in 2021, including two public finance reinsurance transactions (ceded an aggregate of $1.376 billion in net par), and reinsurance for a structure finance transaction (ceded $263 million in net par).
✓ Evaluate and develop plan for refinancing of Ambac Secured Notes (LSNI).			◦Successfully refinanced the LSNI secured debt with the Sitka secured debt with lower coupon and extended maturity.
✓ Complete exchange of Corolla notes and junior surplus notes for senior surplus notes.			◦Successfully executed the Corolla note and certificate exchange capturing nominal discount/debt reduction of approximately $73 million; and ◦Successfully executed the landlord junior surplus note exchange capturing nominal discount/debt reduction of approximately $4 million.
✓ Increasing organizational effectiveness and efficiency of Ambac’s operating platform.			◦Successful integration of Xchange and Everspan; ◦Bolstering of Ambac's existing infrastructure framework to improve overall resilience to cyberattacks; and ◦Strengthening of disaster recovery protocols.


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~~Shepherded through the COFINA Plan of Adjustment, including certain~~Strategic goals related ~~commutation transactions,~~to new business activities, and ~~subsequent distributions, which became effective on February 12, 2019, and subsequent redemptions of obligations~~litigation strategy were weighted at 75%. Some of the ~~COFINA~~key criteria used to evaluate performance for new business activities included the following: the successful launch of Ambac’s specialty P&C insurance platform following Everspan Group’s receipt of an A- rating and Class ~~2 Trust materially reducing Ambac’s Puerto Rico exposure;~~

~~Completed~~VIII designation from AM Best in February 2021; and the ~~Ballantyne restructuring~~successful build out of Everspan Group via (i) license expansions (currently authorized with full admitted P&C authority, in 50 domestic states and ~~commutation, one our largest credit exposures~~territories) and (ii) successful acquisition of an admitted “shell” carrier in ~~Ambac UK, significantly reducing our Adversely Classified Credit exposure and strengthening Ambac UK’s Solvency II capital position to near required levels;~~

~~Materially decreased our insured portfolio by 19% to $38.0 billion at December 31, 2019;~~

~~Watch List and Adversely Classified Credit reduction of 28% in 2019 to $14.3 billion as of December 31, 2019; and~~

~~Executed additional headcount and other cost reductions including the consolidation of space for the New York headquarters.~~2021.

The Committee considered each of the strategic performance goals ~~and objectives~~outlined above in evaluating Mr. LeBlanc's overall performance, ~~and concluded that on an aggregate basis he had exceeded target expectations and~~ assigned a ~~1.72~~score from 0-5 for each goal and then applied the scores to the relative weightings assigned to the performance goals at the beginning of 2021 to arrive a 1.22 multiplier to the ~~discretionary~~strategic performance goals for Mr. LeBlanc's target 2021 STIP award. Weighting this multiplier equally with the 1.80 multiplier applicable to the financial performance portion of Mr. LeBlanc's ~~2019~~target STIP ~~award. On a blended basis weighting the discretionary performance metrics at 40% and financial performance metrics at 60%,~~award for 2021 produced an overall multiplier of 1.51 times target for Mr. LeBlanc's 2021 STIP award.

LTIP Award. In addition to his STIP award, ~~multiplier was set at 1.84 x target, and he was granted a 2019 STIP award of $1,657,000. In addition,~~ Mr. LeBlanc received an LTIP award denominated 100% in stock units with an aggregate target value of ~~$3,225,000~~$3,825,000, primarily reflecting Mr. LeBlanc's outstanding leadership and ~~performance in,~~focus on executing the Company's strategic priorities through the challenges and uncertainties of 2021, including, among other ~~things, shepherding through~~things:

•Material advancement and growth of the Company' specialty P&C insurance business with the establishment of the Everspan Group of companies

◦Financial strength rating of 'A-' (Excellent) from AM Best,

◦Expanded to ~~conclusion~~include an E&S carrier and five admitted carriers, one of which was added in 2021, and

◦Fully licensed with certificates of authority in 50 domestic states and territories;

•The effective support and integration of Xchange Benefits, LLC, acquired at the ~~COFINA Plan~~end of ~~Adjustment, the restructuring of Ballantyne~~2020; and ~~leading~~

•Leading the Ambac management team in significantly de-risking the insured ~~portfolio.~~portfolio and rationalizing the Company’s capital structure, resulting in material expense savings to the Company.

Any payout under the 2022 LTIP awards is completely formula driven based on the achievement of objective and quantifiable financial performance metrics against pre-set targets at the end of a three-year performance period. The Compensation Committee believes it struck the right balance between paying for current performance, on the one hand, and the desire to keep Mr. LeBlanc focused on the Company’s long-term performance and continued growth, on the other hand.

Other Named Executive Officers

Performance Against STIP Performance Metrics and ~~Other~~Strategic Performance ~~Considerations.~~Goals.

The Committee reviewed the Company's actual performance against each of the financial performance metrics set forth above, and after applying the appropriate weighting to each metric, the Committee assigned ~~a 1.46~~the same multiplier as that of Mr. LeBlanc to the financial performance portion of each ~~NEOs 2019~~NEO's 2021 STIP award ~~(other than Mr. LeBlanc)~~. In determining the other ~~forty~~fifty percent of the ~~2019~~2021 STIP award for each of the NEOs (other than Mr. LeBlanc), Mr. LeBlanc reviewed with the Compensation Committee the performance of each NEO individually and their overall contribution to the Company in ~~2019.~~ 2021.In this process, Mr. LeBlanc assigned the same strategic performance goals and objectives to each of the NEOs that were assigned to him by the Compensation Committee, but individually adjusted the relative weighting based on each executive officer's ~~line~~areas of ~~sight~~responsibility and ~~responsibility.~~influence. In addition, Mr. LeBlanc utilized the same score card approach as the Committee in his evaluation of each NEO in an effort to achieve a consistent ratings process. Based on the recommendation of Mr. LeBlanc, the Committee approved the ~~2019~~2021 STIP awards and ~~2020~~2022 LTIP awards granted to each of Messrs. Trick, Barranco and Ksenak, and Ms. ~~Smith.~~Smith, as shown in the table in the section entitled

"Elements of Pay."



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~~Table of Contents~~

Performance against ~~2016~~2018 LTIP metrics.

In ~~2016,~~2018, we established the following three year goals for each of our LTIP performance metrics and assigned weighting factors based on each NEOs areas of responsibility.


At AAC		At Ambac	Percentage of Target Award Earned
Net Asset Value (1) ($ in millions)	Watch List and Adversely Classified Credits Outstanding(1) ($ in billions)	Cumulative EBITDA (1) ($ in millions)

$(300)	$15.5	$30	200%
$(500)	$16.6	$17	100%
$(650)	$18.8	$—	—%

At AAC
the Greater of At Ambac
Asset to
Liability Ratio ⁽¹⁾
Net Asset Value ⁽¹⁾
($ in millions)
Cumulative EBITDA ⁽¹⁾
($ in millions)
Percentage of Target
Award Earned
100% $0 $19 200%
94% $(349) $16 175%
89% $(655) $13 150%
84% $(979) $6 100%
79% $(1,337) $— 0%
⁽¹⁾ Linear interpolation between levels results in a proportionate amount of the Ambac LTIP Target Award becoming earned and vested.
(1) Linear interpolation between levels results in a proportionate amount of the Ambac LTIP Target Award becoming earned and vested.

At AAC performance is judged based on ~~the higher of the Asset to Liability Ratio or the~~(i) increases Net Asset Value ~~(this dual testing feature was eliminated~~weighted at 42.5% and (ii) reductions in ~~2018)~~Watch List and Adversely Classified Credit net par outstanding weighted 42.5%. ~~For~~At Ambac performance is judged based on cumulative EBITDA over the ~~three years ended December 31, 2018, the measure of the Net Asset Value exceeded the measure of Asset to Liability Ratio.~~performance period. The following graph/charts shows the Company's actual performance over the three year performance period running from January 1, ~~2016~~2018 through December 31, ~~2018,~~2020, compared to the achievement levels set forth in the chart above.

AAC

Adjusted
Net Asset Value

~~($ in millions)~~

Watch List & Adversely Classified Credits Outstanding

Ambac

Cumulative EBITDA

~~($ in millions)~~

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~~Table of Contents~~

The following table shows the grant date value of the ~~2016~~2018 LTIP awards granted to each of our NEOs ~~(other than Mr. LeBlanc and Ms. Smith, who were not employees of Ambac at the time that the 2016 LTIP awards were granted)~~ and the amounts realized upon vesting and settlement.


Named Executive Officer	Grant Date PSU Award at Target #	Weighting between AAC/ Ambac	Payout Percentage	Shares Acquired on Vesting and Settlement #
Claude LeBlanc	119,284	85% / 15%	200%	238,568
David Trick	17,672	85% / 15%	200%	35,344
David Barranco	13,254	85% / 15%	200%	26,508
Stephen M. Ksenak	14,358	85% / 15%	200%	28,716
R. Sharon Smith	13,254	85% / 15%	200%	26,508


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Grant Date
Award at Target
Vesting and Settlement
Named Executive Officer
PSU
Award
#
Cash
Incentive
Award
Weighting
between AAC/
Ambac
Payout
Percentage
Shares Acquired
#
Cash Incentive Payout
David Trick 8,054 $ 125,000
80% / 20% 187.2% 15,076 $ 233,988
David Barranco 5,638 $ 87,500
50% / 50% 192.0% 10,824 $ 167,992
Stephen M. Ksenak 7,249 $ 112,500
80% / 20% 187.2% 13,569 $ 210,589

The Committee considered the Company's actual performance against each of the LTIP metrics for AAC and Ambac for each of Messrs. LeBlanc, Trick, Barranco, Ksenak and ~~Ksenak~~Ms. Smith, and determined that the Net Asset Value ~~had exceeded target expectations~~was projected to decrease over the performance period but certain successful favorable achievements by management, such as (i) COFINA restructuring, (ii) Ballantyne Re PLC settlement, (iii) AMPS exchange and (iv) receipt of proceeds from a Citigroup - SEC settlement all contributed to the Net Asset Value increasing during the performance period. Reductions of Watchlist & Adversely Classified Credit net par outstanding at ~~a payout percentage of 184% for~~AAC during the ~~AAC portion of the 2016 LTIP award. With respect to Ambac, the Company achieved a~~performance period were positively impacted by active de-risking strategies including credit exposure reductions at Ballantyne Re PLC, NJ Transportation Trust Fund, COFINA and other risk remediation and reinsurance transactions. Cumulative EBITDA of $29.9 million exceeding target expectations at a payout percentage of 200% for the Ambac portion of the 2016 LTIP award. Weighting the AAC performance metric at 80% and Ambac performance metric at 20%, for each of Messrs. Trick and Ksenak, the 2016 LTIP percentage payout on a blended basis was set at 187.19% of the target award. Due to Mr. Barranco's focus on business development at Ambac atduring the ~~date~~performance period benefited from higher investment returns related to holdings of ~~grant, the weighting of his performance metrics were set at 50% each for Ambac and~~ AAC issued securities and the ~~2016 LTIP percentage payout was therefore higher on a blended basis at 191.99%.~~receipt of annual expense reimbursements from AAC over the performance period.

Perquisites. The Company provided a limited number of perquisites to all our employees, including our executive officers. For Mr. LeBlanc and Ms. Smith, perquisites included reimbursement from Ambac for certain commuting expenses, and for Messrs. Trick and Barranco, ~~perquisites~~ included payments for tax preparation services as a result of their roles as executive directors of Ambac UK. InConsistent with past practice, in order to s~~upport~~support the long-term wellness and productivity of our executive ~~management team, Ambac arranged for each of our executive~~ officers, the Company also provided access to ~~undergo~~ an extensive physical examination for all executive officers, at the Company's expense. Messrs. Barranco and Eisman and Ms. Smith accepted this offering in 2021.

Employment Agreements. Certain of our active NEOs have entered into employment agreements with the Company which provide for certain compensation and benefits, including, severance benefits in certain circumstances. In December 2016, we entered into an employment agreement with our CEO, Claude LeBlanc, in connection with his appointment, which took effect on January 1, 2017. This agreement was subsequently amended on February 27, 2020. We also entered into an employment agreement with Mr. Trick in November of 2016, and Mr. Ksenak in January 2017. While the Compensation Committee considers employment agreements customary for the chief executive officer, the Committee believed it was important to execute an employment agreement with each of Messrs. Trick and Ksenak to retain their services to Ambac for the foreseeable future. (See “Agreement with Claude LeBlanc”, and “Agreements with Other Executive Officers” below). Severance Agreements have been entered into with various executive officers when the Compensation Committee believes it is in the best interest of the Company to secure an orderly separation between such officers and the Company, which typically include certain continuing obligations from the departing executive.

Post-Employment Benefits. Pursuant to Ambac's Severance Pay Plan, to provide protection in the event of an involuntary termination, each of our current executive officers (other than Messrs. LeBlanc, Trick and Ksenak) is entitled to receive a severance payment equal to 52 weeks of such executive officer's weekly base salary at the time of termination of his or her employment by Ambac as the result of (i) a job elimination, job discontinuation, office closing, reduction in force, business restructuring, redundancy, or such other circumstances as the Company deems appropriate for the payment of severance or (ii) a “termination by mutual agreement” (as defined in the Severance Pay Plan). In addition to this severance payment, each of our current NEOs (other than Messrs. LeBlanc, Trick and Ksenak) would be entitled to receive reimbursement for a portion of the premiums paid for COBRA continuation coverage under the Company's group health plan for the first twelve months following his or her termination of employment. The portion of the premiums to be paid by the Company will be the same as

~~Ambac Financial Group, Inc. |~~52 | ~~2020 Proxy Statement~~

~~Table of Contents~~

the amount paid by the Company for the same group health insurance coverage for active employees. For a description of post-employment benefits payable to Messrs. LeBlanc, Trick and Ksenak, see “Agreement with Claude LeBlanc,” and “Agreements with Other Executive Officers."

The ~~2019~~2021 LTIP awards consisted of both PSUs and RSUs. The PSU award agreements for our NEOs provide that if a termination occurs prior to the last day of the performance period by reason of disability, an involuntary termination other than for “cause,” or retirement, the recipient would be entitled to receive the number of earned PSUs which would only be payable at the end of the performance period provided that the performance conditions


Ambac Financial Group, Inc. \| 56 \| 2022 Proxy Statement

related to the award were satisfied. If a termination occurs by reason of death, the recipient would be entitled to receive the number of earned PSUs that the Participant would have been entitled to receive had the termination date not occurred prior to the end of the performance period at a 100% overall payout multiple regardless of the outcome of the performance goals or rTSR. Comparable provisions ~~are~~were included in the ~~2017~~2019 and ~~2018~~2020 PSU award agreements, except each of those award agreements provide that the recipient would only be entitled to receive a prorated portion of the LTIP award which would only be payable at the end of the performance period provided that the performance conditions related to the award were satisfied, and with respect to the 2018 PSU award, each NEOs LTIP award would be pro-rated to reflect their actual service plus twelve months during the performance period.agreements. The ~~2019~~2021 RSU award agreements for our NEOs generally provide that if a termination occurs, other than for “cause” or voluntary resignation, the entire grant of RSUs shall vest on the termination date.

~~Impact~~Compensation Committee

The Compensation Committee is currently comprised of ~~Regulatory Requirements on~~Messrs. Prieur (Chairman) and Haft and Ms. Lamm-Tennant. The purpose of our Compensation Committee is to assist the Board in overseeing our compensation programs. The Compensation Committee’s responsibilities include:

~~Effective for tax years beginning on January 1, 2018 or later, The Tax Cut and Jobs Act repealed~~• Reviewing the ~~performance-based~~overall compensation principles governing the compensation and ~~commission exceptions~~benefits of our executive officers and other employees.

• Evaluating the performance of our Chief Executive Officer.

• Reviewing the procedures for the evaluation of our executive officers, other than our Chief Executive Officer.

• Reviewing and approving the selection of our peer companies to use as a reference in determining competitive compensation packages.

• Determining all executive officer compensation (including but not limited to salary, bonus, incentive compensation, equity awards, benefits and perquisites).

• Reviewing and approving the ~~Section 162(m) $1 million deduction limitation paid~~terms of any employment agreements and severance arrangements, change-in-control agreements, and any special or supplemental compensation and benefits for our executive officers and individuals who formerly served as executive officers.

• Acting as the administering committee for our stock and bonus plans and for any equity compensation arrangements that may be adopted by Ambac from time to ~~covered employees. The definition of covered employees was modified~~time.

• Preparing the annual Compensation Committee Report for inclusion in our annual proxy statement.

In 2021, the Compensation Committee directly engaged Meridian Compensation Partners, LLC, a nationally recognized independent compensation consulting firm, to assist it with benchmarking and compensation analyses, as well as to provide information and advice on executive compensation practices and determinations, including


Ambac Financial Group, Inc. \| 26 \| 2022 Proxy Statement

information on award design for both our Short Term Incentive Plan (“STIP”) and Long Term Incentive Plan (“LTIP”).

Governance and Nominating Committee

The Governance and Nominating Committee is currently comprised of Ms. Lamm-Tennant (Chair), and Messrs. Prieur and Stein. Our Governance and Nominating Committee’s purpose is to assist our Board of Directors in identifying individuals qualified to become members of our Board of Directors based on criteria set by our Board of Directors, to oversee the evaluation of the Board of Directors and management, and to develop and update our corporate governance principles. The Governance and Nominating Committee’s responsibilities include:

• Periodically reviewing the standards for director independence and providing the Board with an assessment of which directors should be deemed independent.

• Determining the criteria for Board membership, including the need for both gender and ethnic diversity.

• Overseeing policies and practices relating to environmental, social, and governance (“ESG”) matters relevant to the Company.

• Overseeing the process for the self-evaluation of the Board and its committees.

• Reviewing and recommending to our Board of Directors the compensation of our non-employee directors.

• Reviewing plans for the succession of our executive officers.

• Reviewing and approving related party transactions according to our Related Party Transaction Policy.

• Administering a procedure to consider stockholder recommendations for director nominees.

• Evaluating and recommending candidates for election or re-election to our Board of Directors, including nominees recommended by stockholders.

• Reviewing periodically Ambac’s Code of Business Conduct and compliance therewith.


Ambac Financial Group, Inc. \| 27 \| 2022 Proxy Statement

Strategy Committee

The Strategy Committee is currently comprised of Messrs. Haft (Chairman), Herzog and Ms. Lamm-Tennant,and its responsibilities include:

•Reviewing, evaluating and making recommendations to the Board regarding solicited or unsolicited strategic transactions, opportunities and alternatives involving the Company or the interest of the Company in any direct or indirect subsidiary.

The Strategy Committee met five times in 2021.

Board’s Role in Risk Oversight

Our management team is responsible for managing the risks to which Ambac is exposed and reports on such matters to the Board and to the relevant committees of the Board depending on the nature of the risk, as described below.

The Strategy Committee oversees the management of risk and risk appetite primarily with respect to strategic plans and initiatives.

The full Board also receives quarterly updates from Board committees and the Board provides guidance to individual committee activities as appropriate.

Director Independence


Ambac Financial Group, Inc. \| 28 \| 2022 Proxy Statement

Based on the review and recommendation of the Governance and Nominating Committee, the Board has determined that none of Messrs. Haft, Herzog, Prieur or Stein, or Messes. Iglesias or Lamm-Tennant has a relationship that, in the opinion of the Board of Directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director, and each of them is an independent director as defined in the Listing Rules of NYSE. In determining the independence of our directors, the Board of Directors has adopted the independence standards specified by applicable laws and regulations of the SEC and the Listing Rules of NYSE.

Compensation Committee Interlocks and Insider Participation

None of the current members of the Compensation Committee has been an officer or employee of Ambac. In 2021, each of Messrs. Haft, Prieur, and Ms. Lamm-Tennant served as members of the Compensation Committee. None of our executive officers serves on the board of directors or compensation committee of a company that has an executive officer that serves on our Board of Directors or the Compensation Committee.

Consideration of Director Nominees

Stockholder Recommendations and Nominees

The Governance and Nominating Committee considers properly submitted recommendations for candidates to the Board of Directors from stockholders. In evaluating such recommendations, the Governance and Nominating Committee seeks to achieve a balance of experience, knowledge, expertise, and capability on the Board of Directors and to address the membership criteria set forth under “Director Selection Process and Qualifications” below. There are no differences in the manner in which the Governance and Nominating Committee evaluates nominees for director based on whether the nominee is recommended by a stockholder or otherwise. Any stockholder recommendations for consideration by the Governance and Nominating Committee should be sent, together with the information required by Article II of our by-laws, c/o: Ambac Financial ~~Officer~~Group, Inc., Attn: Corporate Secretary, One World Trade Center, New York, New York 10007. Stockholder nominations for directors that a stockholder wishes to have considered at a meeting of stockholders should be made in accordance with the provisions of our by-laws, as described under “Other Questions related to the Meeting or Ambac-What is the deadline to propose actions for consideration at next year’s Annual Meeting of Stockholders or to nominate individuals to serve as directors?” above.

Director Selection Process and Qualifications

Our Governance and Nominating Committee will evaluate and recommend candidates for membership on the Board of Directors consistent with our Corporate Governance Guidelines regarding the selection of director nominees. Pursuant to these guidelines, the Governance and Nominating Committee screens candidates and evaluates the qualifications of the persons nominated by or recommended by our stockholders for membership to our Board. Board diversity, both ethnic and gender, is an important consideration in evaluating Board composition. Thus, in assessing potential director candidates for the Board, the Governance and Nominating Committee endeavors to select the best directors from a pool of diverse candidates considering individuals with differing perspectives, backgrounds, genders and ethnicities, in addition to character, judgment, business experience and acumen.


Ambac Financial Group, Inc. \| 29 \| 2022 Proxy Statement

contains at least the minimum number of independent directors required by applicable law and stock exchange listing requirements. Candidates also are evaluated in light of other factors, such as those relating to service on other boards of directors and other professional commitments. We believe that it is important to have a Board that is reflective of the core values and diversity of our key constituents including our employees, clients and partners and stockholder base.

The Governance and Nominating Committee uses a variety of methods for identifying and evaluating nominees for directors. The Committee considers the current directors who have expressed an interest in and that continue to satisfy the criteria for serving on the Board as set forth in our Corporate Governance Guidelines. Other nominees who may be proposed by current directors, members of management or by stockholders are also considered. The Committee may, at Ambac’s expense, engage search firms, consultants and other advisors to identify, screen and/or evaluate candidates in order to ensure that the Committee has a diverse pool of qualified candidates that includes both gender diversity and candidates from under represented minority groups.

The Governance and Nominating Committee recommends director nominees who are ultimately approved by the full Board of Directors.

Executive Sessions

Outside Advisors

Board Effectiveness

The Governance and Nominating Committee retained a third party advisor to facilitate the Board's annual self-evaluation process in 2021. The effectiveness of the Board as a whole, and each of its individual committees, was assessed against the roles and responsibilities set forth in Ambac's Corporate Governance Guidelines, the relevant committee charters, and best practices. Matters considered as part of the evaluation included:

•the effectiveness of discussion and debate at Board and committee meetings;

•the effectiveness of Board and committee processes and in interacting with management;

•the quality and timeliness of Board and committee agendas, and preparation of reference materials to inform the Board and committees and support effective decision making; and

•the composition of the Board and each committee, focusing on the blend of skills, experience, independence and knowledge of the group and its diversity, both ethnic and gender.

This self-evaluation process is managed by the Chair of the Governance and Nominating Committee.


Ambac Financial Group, Inc. \| 30 \| 2022 Proxy Statement

Corporate Governance Guidelines

The Corporate Governance Guidelines reflect the Board's commitment to monitor the effectiveness of policy and decision making at both the Board and management levels, with a view to enhancing long term stockholder value. The Corporate Governance Guidelines address, among other things, such topics as the role of directors; goals and development of long term strategy; size of the Board, communication protocols for directors prior to accepting an appointment to another public company’s board of directors; Board membership criteria; term limits; Board meeting procedures; and retirement policy. Ambac’s Corporate Governance Guidelines can be found in the Corporate Governance section of Ambac’s Investor Relations website at https://ambac.com/investor-relations/governance/governance-documents/default.aspx.

Code of Business Conduct

Ambac has a Code of Business Conduct which reflects the Board's commitment to maintaining strong standards of integrity for handling business situations appropriately and effectively. The Code of Business Conduct can be found in the Corporate Governance section of Ambac’s Investor Relations website at https://ambac.com/investor-relations/governance/governance-documents/default.aspx. Ambac will disclose on its website any amendment to, or waiver from, a provision of its Code of Business Conduct that applies to its Chief Executive Officer, Chief Financial Officer or Chief Accounting Officer. Charters for Ambac's Audit Committee, Governance and ~~officers whose total compensation is required to be disclosed to shareholders by reason~~Nominating Committee, Strategy Committee and Compensation Committee are also available in the Corporate Governance section of them being amongst the three highest paid officers. Additionally, any individual who is a covered employee for any taxable year beginning after December 31, 2016 will continue to be a covered employee for all subsequent taxable years, including years after the death of the individual.

Our compensation programs are structured to support organizational goals and priorities and stockholder interests. We do not make compensation determinations based on the income tax treatment of any particular type of award.

~~Compensation Risk Management~~

~~Risks Related to Compensation Policies~~Ambac’s Investor Relations website at https://ambac.com/investor-relations/governance/governance-documents/default.aspx. In keeping with our risk management framework, we consider risks not only in the abstract, but also risks that might hinder the achievement of a particular objective. We have identified two primary risks relating to compensation: the risk that compensation will be insufficient to retain talent and the risk that compensation strategies might result in unintended incentives. To combat the first risk, as noted above, the compensation of employees throughout the Company is benchmarked against comparative compensation data, permitting us to set compensation levels that we believe contribute to low rates of employee attrition. Further, LTIP awards granted to our NEOs and other senior professionals are subject to vesting over a three-year period. We believe both the levels of compensation and the structure of the LTIP awards have had the effect of retaining key personnel.

~~With respect to the second risk, our Company-wide year-end~~

Board Compensation Arrangements for Non-Employee Directors

Ambac's director compensation program is designed to ~~reflect the performance~~enable continued attraction and retention of highly qualified non-employee directors by ensuring that director compensation is reflective of the time, effort, expertise, and accountability required of board membership. The program is structured to recognize the unique nature of our business and the level of experience and oversight needed at the Board level, particularly with respect to the ongoing runoff of AAC, as well as overseeing Ambac's expansion into new businesses in specialty property and casualty insurance, managing general agency/underwriting and potentially other insurance related businesses. It is essential that our Board members not only understand the risks that the Company faces and the ~~performance~~steps that management is taking to manage those risks, but to also have a deep understanding of the appropriate level of risk for the Company as it actively prioritizes the runoff of AAC and pursues new business ~~unit in which the employee works and the performance of the individual employee, and~~opportunities. Additionally, it is critical that our non-employee director compensation program is appropriately designed to ~~not encourage excessive risk taking. For example,~~attract and retain Board members that are highly capable and well-suited to help us effectively achieve our goals.

The amount and composition of total compensation paid to our non-employee directors is considered in light of competitive compensation levels for directors in the ~~performance metrics used in~~financial services industry. The Governance and Nominating Committee uses this information to provide a general review of market pay levels and practices and to ensure that it makes informed decisions regarding our ~~2019 Short Term Incentive Plan (Net Asset Value, Gross Operating Run Rate Expenses~~non-employee director compensation program. The amount and ~~Watch List and Adversely Classified Credits), are designed to encourage prudent management of the business. In addition, we pay a significant portion~~composition of our ~~incentive~~non-employee director compensation in the form of LTIP awards that vest over a three-year period, which makes each of our NEOs and other senior professionals sensitive to long-term risk outcomes, as the value of their awards increase or decrease with the price of our common stock. Further, performance criteria for the PSUs granted as part of the LTIP awards include reductions in Watch List and

~~Ambac Financial Group, Inc. |~~53 | ~~2020 Proxy Statement~~

~~Table of Contents~~

Adversely Classified Credits, an increase in Net Asset Value, and a relative Total Shareholder Return modifier, all of which we believe provide our employees additional incentives to prudently manage the wide range of risks inherent in the Company’s business. We areprogram had not ~~aware of any employee behavior motivated by our compensation policies and practices that creates increased risks for our stockholders or other constituents.~~

The Compensation Committee has performed a review of compensation policies and practices for all of our employees and has concluded that our compensation policies and practices are not reasonably likely to have a material adverse impact on the Company.

~~Risk Mitigating Policies~~

~~Stock Ownership Policy. Effective~~changed since January 1, 2017, ~~all~~when it was reduced by 33% from the prior level in place from 2013 through 2016, in response to stockholder feedback received during the 2016 proxy solicitation process. In 2020, the Governance and Nominating Committee reviewed the non-employee director compensation program that was put in place for the 2021 fiscal year, including comparisons to director compensation programs at other similarly-situated companies. The Governance and Nominating Committee concluded that no changes were appropriate for the 2021 fiscal year, other than a change to the timing of ~~our executive officers became subject~~grants for directors stock based compensation from one-time annual grants of restricted stock units with a grant date value of $200,000 per director to ~~our Executive Stock Ownership~~four quarterly grants of restricted stock units, each with a grant date value of $50,000 per director. This conclusion was based on the Committee’s views that the Company faces many of the same risks and ~~Retention Policy. The Chief Executive Officer~~issues as it has faced in recent years and is required to own Ambac common stock equal in value to at least six times his annual base salary, the Chief Financial Officer is required to own Ambac common stock equal in value to at least three times his annual base salary and each other executive officer is required to own Ambac common stock equal in value to at least two times their annual base salary.embarking on new



~~Stock Ownership Requirement~~Ambac Financial Group, Inc. \| 31 \| 2022 Proxy Statement

Director Compensation Program Components

The annual compensation for non-employee directors generally consists of both a cash and equity component. The compensation components are designed to compensate members for their service on the Board of Directors and its committees, to create an incentive for continued service on the Board, and to align the interests of directors and stockholders. In furtherance of such alignment, a significant portion of each non-employee director’s annual compensation is at-risk and granted in the form of restricted stock units on or about the second business day following the issuance of the Company quarterly earnings release. These quarterly grants vest on the one year anniversary of the grant date. Restricted stock units granted in prior years that have vested will not settle and convert into shares of common stock until the director resigns from, or otherwise ceases to be a member of, the Board of Directors of Ambac. In 2022 the Governance and Nominating Committee recommended, and the Board of Directors approved, a change to fix the quarterly grant dates to be the first business day of each calendar quarter. This change in timing took effect on April 1, 2022. Restricted stock units granted during the course of the year would all vest on the one-year anniversary of the grant date, subject to accelerated vesting under certain circumstances.

Mandatory Director Shareholding Requirements

Compensation for Non-Employee Directors

Our non-employee director compensation is paid as follows:

•An annual cash retainer of $100,000, paid in monthly installments, and four quarterly grants of $50,000 of stock-based compensation, comprised of restricted stock units of Ambac (rounded up to the nearest whole unit), as permitted under Ambac’s 2020 Incentive Compensation Plan; and

•The Chairman of the Board received an additional fee of $125,000; the Audit Committee Chair received an additional fee of $35,000; the Compensation Committee Chair received an additional fee of $25,000; and the chairs of each of the Governance and Nominating Committee and the Strategy Committee received an additional fee of $15,000.

In addition Ambac reimburses its directors for reasonable out-of-pocket expenses in connection with their Board service, including attendance at Board of Directors and committee meetings. The restricted stock units that were granted to our non-employee directors on May 12, 2021, August 9, 2021, and November 10, 2021 and will vest on the one year anniversary of each quarterly grant date. Due to the timing of the change from an annual grant cycle to quarterly grant cycle beginning in May 2, the directors only received three RSU grants in 2021.


Ambac Financial Group, Inc. \| 32 \| 2022 Proxy Statement

The following table summarizes compensation paid to non-employee directors during 2021.


Name(1)	Year	Fees Earned or Paid in Cash(2) ($)	Stock Awards (3) ($)	All Other Compensation ($)	Total ($)
Alexander D. Greene	2021	$—	$42,425	—	$42,425
Ian D. Haft	2021	$115,000	$140,459	—	$255,459
David L. Herzog	2021	$135,000	$140,459	—	$275,459
Lisa G. Iglesias	2021	$40,860	$98,034	—	$138,894
Joan Lamm-Tennant	2021	$106,129	$140,459	—	$246,588
C. James Prieur	2021	$119,086	$140,459	—	$259,545
Jeffrey S. Stein	2021	$225,000	$140,459	—	$365,459

(1) On August 4, 2021, Mr. Greene retired from our Board of Directors and Ms. Iglesias joined the Board.

(2) Fees earned or paid in cash include an annual cash retainer and chairman or committee chair fees.


	Number of RSUs Granted on
Name	May 12, 2021	August 9, 2021	November 10, 2021
Alexander D. Greene	2,936	—	—
Ian D. Haft	2,936	3,437	3,051
David L. Herzog	2,936	3,437	3,051
Lisa G. Iglesias	—	3,437	3,051
Joan Lamm-Tennant	2,936	3,437	3,051
C. James Prieur	2,936	3,437	3,051
Jeffrey S. Stein	2,936	3,437	3,051

Compensation for Non-Employee Directors in 2022

In 2021, the Governance and Nominating Committee directly engaged Meridian Compensation Partners, LLC, a nationally recognized independent compensation consulting firm, to assist it with benchmarking and compensation analyses for non-employee director compensation. The Governance and Nominating Committee reviewed the non-employee director compensation program that was put in place for the 2021 fiscal year, including a benchmarking report and analysis prepared by Meridian Compensation Partners, LLC, comparing Ambac's director compensation programs with other similarly-situated companies, and concluded that no changes were appropriate for the 2022 fiscal year, other than a change to fix the quarterly grant dates to be the first business day of each calendar quarter. The conclusion that the amount of non-employee director compensation should remain unchanged from the 2021 fiscal year was based on the Committee’s views that the Company continues to face many of the same risks and issues as it has faced in recent years, notably risks posed by legacy financial guaranty exposures such as Puerto Rico and military housing, and the risks associated with large-scale litigation to recover losses on insured RMBS. The Committee members also noted the need to oversee the transformation of the business to a specialty P&C insurance platform, and that Board members serve on the Boards of both Ambac and AAC, which involve different work streams and considerations that diverge increasingly over time. The workload and time commitment of the directors related to both of these entities has remained steady. It was further noted that the overall size of the Board (six independent directors) has contributed to a total Board cost that compares favorably to peer companies.

Accordingly, except for the change fixing the grant date for each quarterly award on the first business day of each calendar quarter beginning on April 1, 2022, the non-employee director compensation program described above for the 2021 fiscal year will continue to apply to our non-employee directors in 2022.


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COMMON STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table shows the amount of our common stock beneficially owned as of March 28, 2022, by those known to us to beneficially own more than 5% of our common stock, by our directors, director nominees and named executive officers individually and by our directors, director nominees and executive officers as a group.

The percentage of shares outstanding provided in the table is based on 46,545,232shares of our common stock, par value $0.01 per share, outstanding as of March 28, 2022. Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. The SEC’s rules generally attribute beneficial ownership of securities to each person who possesses, either solely or shared with others, the voting power or investment power, which includes the power to dispose of those securities. The rules also treat as outstanding all shares of capital stock that a person would receive upon exercise of stock options held by that person that are immediately exercisable or exercisable within 60 days. Under these rules, one or more persons may be a deemed beneficial owner of the same securities and a person may be deemed a beneficial owner of securities to which such person has no economic interest.


	Amount and Nature of Shares Beneficially Owned
Name	Number (1)	Percent of Class (2)
5% or Greater Stockholders
BlackRock Inc.(3)(5)	6,453,584	13.9%
The Vanguard Group(4)(5)	4,981,390	10.7%
Executive Officers and Directors
David Barranco	71,376	*
Stephen M. Ksenak	92,665	*
Claude LeBlanc	403,600	*
R. Sharon Smith	55,183	*
David Trick	127,532	*
Ian D. Haft	74,000	*
David L. Herzog	86,820	*
Lisa G. Iglesias	18,156	*
Joan Lamm-Tennant	49,069	*
C. James Prieur	103,610	*
Jeffrey S. Stein	119,886	*
All executive officers and directors as a group (11 persons)	1,091,165	2.7%

* Beneficial ownership representing less than 1% is denoted with an asterisk (*).

(1)The share ownership listed in the table includes shares of our common stock that are subject to issuance in the future with respect to RSUs, in the following aggregate amounts: Mr. Haft, 74,000 shares; Mr. Herzog, 74,000 shares; Ms. Iglesias, 9,856 shares; Ms. Lamm-Tennant, 49,069 shares; Mr. Prieur, 78,610 shares; and Mr. Stein, 109,886 shares. The RSUs granted to each of our non-executive directors shall not settle and convert into shares of common stock until such director resigns from, or otherwise ceases to be a member of, the Board of Directors of the Company. Each RSU represents a contingent right to receive one share of the Company’s common stock. RSUs granted to our directors and named executive officers that vest more than 60 days after the Record Date for voting at the Annual Meeting have not been included in the table above in accordance with SEC rules.


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EXECUTIVE COMPENSATION

Executive Officers

The names of our executive officers and their ages, positions, and biographies as of March 30, 2022 are set forth below. Our executive officers are appointed by, and serve at the discretion of, our Board.


Name	Age	Position with Ambac	~~Shares Valued at $~~
Claude LeBlanc	56	President and Chief Executive Officer and Director
~~$5.4 million~~David Barranco	51	Senior Managing Director
Robert B. Eisman	54	Senior Managing Director, Chief Accounting Officer and Controller
Stephen M. Ksenak	56	Senior Managing Director and General Counsel
Daniel McGinnis	50	Senior Managing Director, Chief Operating Officer
R. Sharon Smith	51	Senior Managing Director, Chief of Staff
David Trick	50	Executive Vice President, Chief Financial Officer and Treasurer

Robert B. Eismanhas served as the Chief Accounting Officer, Controller, and a Senior Managing Director of Ambac since January 2010. Mr. Eisman is responsible for establishing Ambac’s U.S. GAAP and Ambac Assurance Corporation's U.S. statutory accounting policies and managing their respective financial reporting in compliance with SEC and U.S. insurance regulatory requirements. He is also responsible for enterprise-wide budgeting and forecasting and providing accounting services to Ambac’s subsidiaries, including Ambac Assurance UK Limited. Mr. Eisman joined Ambac in 1995 from KPMG LLP where he was an Audit Manager in the Financial Services group with a specialization in insurance companies.

Daniel McGinnis has served as Chief Operating Officer and Senior Managing Director of Ambac since December 2021. He oversees key business areas for both Ambac’s legacy Financial Guarantee and new specialty Property and Casualty insurance businesses, including Operations, Technology and Human Resources. Mr. McGinnis brings over 25 years of experience as a senior insurance industry professional, having previously worked as Chief Underwriting Officer and Chief Operating Officer of CapSpecialty, Inc. Previous to CapSpecialty, Mr. McGinnis was Division Executive of the Small Business Division at American International Group (AIG). Previous to AIG, he was with American Reinsurance Company and Marsh USA, where he was Vice President of Finite Risk Underwriting and Vice President of Marsh Risk Finance, respectively.

~~$2.25 million~~
~~David Barranco~~Ambac Financial Group, Inc. \| 36 \| 2022 Proxy Statement

R. Sharon Smith has served as Chief of Staff and Senior Managing Director of Ambac since May 2017. Ms. Smith has executive responsibility for Ambac's Corporate Services Group which encompasses certain key functions within the Company including, Strategy, Corporate Communications and Model Governance and Analytics, as well as oversight of Internal Audit. Ms. Smith joined Ambac from Syncora Guarantee Inc., ("Syncora"), where she served in numerous capacities during her tenure, including as Associate General Counsel and Head of Investor Relations. Ms. Smith was also General Counsel and Chief Compliance Officer for Camberlink LLC (a wholly owned subsidiary of Syncora). Earlier in her career, Ms. Smith was Vice President and Assistant General Counsel of the Corporate Securities Department of New York Life Investment Management LLC, and an attorney for Clifford Chance; Skadden, Arps, Slate, Meagher & Flom LLP and Weil, Gotshal & Manges LLP.

David Trick was named Executive Vice President of Ambac in November 2016. He has served as Chief Financial Officer of Ambac since January 2010 and as a Senior Managing Director from January 2010 until his appointment as Executive Vice President. Mr. Trick was interim President and Chief Executive Officer of AAC from January 2015 until March 2016. As Chief Financial Officer, Mr. Trick has executive responsibility for managing Ambac’s financial affairs, including financial reporting, asset and liability management, investment management, financial planning, tax strategy, capital resources, operations, capital markets and liquidity and Investor Relations function. In addition, since May 2006, he has served as Treasurer of Ambac. Since September 2015, Mr. Trick has served as an Executive Director of Ambac Assurance UK Limited. Mr. Trick joined Ambac in 2005 from The Bank of New York Mellon, where he was a senior banker responsible for delivering strategic solutions to insurance industry clients with regard to a broad range of treasury, credit, and capital markets products.

	~~Senior Managing Director~~	~~$1.0 million~~
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Compensation Discussion and Analysis


WE ASK THAT YOU VOTE TO APPROVE OUR 2022 SAY ON PAY PROPOSAL
At our 2021 Annual Meeting, our stockholders will again have an opportunity to cast an advisory say on pay vote on the compensation paid to our named executive officers. We ask that our stockholders vote to approve executive officer compensation. Please see “Proposal No. 2—Advisory Vote to Approve Named Executive Officer Compensation.”

This Compensation Discussion and Analysis (“CD&A”) describes our executive compensation program, including important changes the Committee has made since our 2021 annual meeting of stockholders, and decisions relating to the fiscal year 2021 compensation of our named executive officers (“NEOs”), identified in the table below.

Our Named Executive Officers


Claude LeBlanc	Stephen M. Ksenak
President and Chief Executive Officer and Director	Senior Managing Director and General Counsel	~~$1.2 million~~
David Trick	R. Sharon Smith
Executive Vice President, Chief Financial Officer and Treasurer	Senior Managing Director and Chief of Staff
~~$1.0 million~~David Barranco
Senior Managing Director

~~There is no required time period within which~~


Table of Contents

Executive Summary			39
Key Strategic Priorities and 2021 Company Performance			39
2021 Pay Decisions			40
2021 Say on Pay Vote and Stockholder Outreach			41
Our Compensation Philosophy and Objectives			42
Elements of Pay			45
Pay Mix			46
Compensation for Each of O ur Named Executive Officers in 2021			51
Impact of Regulatory Requirements on Compensation			57
Compensation Risk Management			57
Risk Mitigating Policies			57
Conclusion			59


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Executive Summary

Our compensation programs are designed to reward execution and value creation relating to the implementation of our strategies. To ensure that our compensation programs align with the expectations of our stockholders, in the Fall of each year, Ambac proactively seeks out opportunities to engage in a dialogue with our stockholders. As a result of these ~~executive officers must attain~~stockholder engagements, over the ~~applicable stock ownership level under~~years our Compensation Committee has made important enhancements to our compensation programs and processes. These enhancements include changes to the design of our annual and long-term incentive plans, and the implementation of important compensation-related policies, e.g., a Stock Ownership Policy and ~~nothing~~a Recoupment Policy, and the addition of a relative Total Shareholder Return ("rTSR") modifier as an additional metric with respect to our LTIP award payouts. The rTSR modifier was added to further align compensation to Ambac's stock performance. In 2021, we solicited feedback from stockholders representing approximately 63% of our outstanding common stock, which informed certain changes to our executive compensation program in 2022. See "2021 Say on Pay Vote and Stockholder Outreach."

Key features of our compensation program include:

•Competitive compensation levels and practices;

•Performance-based incentive plans (annual STIP awards and three year LTIP PSU awards) that are based on quantitative goals and objectives, and aligned with our key business strategies;

•Significant weighting on equity-based compensation as a component of total compensation, including the existence of a Stock Ownership Policy ~~requires~~applicable to our executives;

•rTSR modifier aligns compensation results with actual stock performance compared to peers; and

•Policies to manage compensation-related risk and support good governance, including a Recoupment Policy.

Key Strategic Priorities and 2021 Company Performance

Our primary business objective is to maximize stockholder value through the execution of our key strategic priorities, which were outlined in 2021 as follows:

•Active runoff of AAC and its subsidiaries through transaction terminations, commutations, restructurings, and reinsurance with a focus on our watch list credits and known and potential future adversely classified credits, that we believe will improve our risk profile, and maximizing the risk-adjusted return on invested assets;

•Ongoing rationalization of Ambac's capital and liability structures;

•Loss recovery through active litigation management and exercise of contractual and legal rights;

•Ongoing review of the effectiveness and efficiency of Ambac's operating platform; and

•Further expanding into specialty property and casualty program insurance, managing general agency/underwriting and potentially other insurance and insurance related businesses that will generate long-term shareholder value with attractive risk-adjusted returns and meet other preestablished criteria.


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In 2021, we took important steps to advance these strategic objectives. Key highlights and results include the following:



l			Decreased our insured portfolio net par outstanding at AAC by 17% to $28.0 billion from year-end 2020.
l			Decreased Adversely Classified Credits and Watch List Credits at AAC by 23%, to $10 billion.
l			Active de-risking transactions accounted for $3 billion of the $6 billion reduction in net par in 2021 and $2 billion of the $3 billion reduction in adversely classified and watch list net par exposure
l			Executed a plan support agreement with the Oversight Board for the Commonwealth of Puerto Rico to restructure AAC’s insured PRIFA Rum Tax exposure; Joined plan support agreements that the Oversight Board had previously entered into with other major creditors that addressed the restructuring of AAC’s GO, PBA, HTA and CCDA exposures
l			Trial date for the Bank of America/Countrywide case is scheduled for September 7, 2022
l			Executed an exchange transaction for junior surplus notes resulting in extinguishment of $76 million in debt and accrued interest.
l			Material advancement and growth of the Company' specialty P&C insurance platform, including: ◦The establishment of the Everspan Group of companies with an A.M. Best financial strength rating of 'A-' (Excellent), Class VIII designation; ◦Ten program partners signed to date; ◦Platform expansion with the acquisition of four additional admitted carriers; and ◦Admitted capabilities in all 50 states.
l			Xchange Benefits, LLC ("Xchange") was onboarded in early 2021 following its acquisition by Ambac in late December of 2020.
l			Xchange successfully expanded its distribution and carrier network and distributed approximately $6 million of earnings to Ambac, consistent with our current ownership stake.

2021 Pay Decisions

2021 compensation decisions reflect our compensation principles:

•Link short-term incentives to the Company's operational, strategic, and financial performance;

•Use long-term incentives to further align the interests of our executives with stockholders by providing that all LTIP awards are denominated in stock units, with payouts based on performance metrics that we believe drive long-term value for stockholders; and

•Support the retention and attraction of key executive talent.

Base salaries in 2021 for each of our NEOs were reviewed and approved by the Compensation Committee, based on a review of relevant market data and each executive’s performance for the prior year, as well as each executive’s experience, expertise and position.

In 2021, the Compensation Committee incorporated appropriate financial performance metrics related to our specialty P&C insurance business, in particular for the Everspan and Xchange platforms, into the incentive compensation plans for senior management. In 2022, the Committee increased the weightings assigned to financial performance metrics for the specialty P&C insurance business.


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STIP awards for 2021 were determined based on a structured and objective approach in which 50% of an executive officer's annual STIP award was based on the Company’s achievement of pre-established financial

performance targets at the Company related to reductions in: (i) Net Par Outstanding1 in the insured portfolio, and (ii) Gross Operating Run Rate Expense;1 and the remaining 50% of an executive officer's STIP award for 2021 was based on strategic performance goals, including business unit results and individual performance.

Long-term incentive awards granted in early 2021 were also reviewed and approved by the Compensation Committee, based on a review of relevant market data and each executive’s performance for the prior year. The 2021 long term incentive awards include restricted stock units (40% of total long term incentive award) which vest annually over a three year period and performance stock units (60% of total long term incentive award), tied to metrics that reflect the long term goals that the Compensation Committee believes will drive stockholder value. Vesting of performance stock units is subject to the satisfaction of certain performance goals, which will be determined at the end of a two year performance period, and application of the rTSR modifier at the end of three years (described below).

2021 Say on Pay Vote and Stockholder Outreach

At our 2021 annual meeting of stockholders, our Say on Pay proposal received support from stockholders representing approximately 75% of our common stock present, in person or by proxy at the meeting. While we greatly appreciate the support of a significant majority of our stockholders with regard to our executive compensation program, our Compensation Committee also endeavors to understand the concerns of the minority of our stockholders who did not support our executive compensation program. We are committed to a corporate governance approach that aligns the interests of management, the Board of Directors and our stockholders.

Over the course of 2021, the Chairman of the Board, along with the Chairs of the Compensation Committee and the Governance and Nominating Committee solicited feedback from stockholders representing approximately 63% of our outstanding common stock and from certain proxy advisory firms. These stockholders and proxy advisory firms provided important feedback concerning our executive compensation program.

While the feedback on our executive compensation program was generally favorable, a number of stockholders provided input on certain changes they would like the Company to adopt. As a result of the feedback received from stockholders, the Compensation Committee made the following changes to the 2022 compensation program.


WHAT WE HEARD	WHAT WE DID
Place a greater emphasis on total stockholder return as part on of the compensation program	l	Increased the impact of the rTSR modifier from +/- 10% to +/- 20% with respect to our LTIP Awards beginning in 2022 so that any final performance stock unit ("PSU") award payout at the end of the three year performance period may be increased or decreased by 20% if the Company's stock performance compared to a peer group is at or above the 75th percentile or at or below the 25th percentile, respectively.
Provide for a three year measurement period in judging performance under the LTIP.	l	Changed the performance measurement period from two years to three years for determining the achievement of goals against pre-set metrics for 2022 LTIP awards.
Provide enhanced disclosure around the performance considerations utilized to judge performance results under the STIP’s strategic performance goals.	l	Materially enhanced the disclosure included in the CD&A related to the performance considerations underlying the strategic performance goals and the rigor in the process utilized to judge performance pursuant the STIP.


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The Compensation Committee also made the following additional changes to the design of the 2022 compensation program, with an increased emphasis on the specialty P&C insurance business.

Changes to the 2022 Short Term Incentive Plan Design, include:

•Increase in the weighting of the financial performance metrics from 50% to 60%; and

•Inclusion of an additional financial performance metric for the specialty P&C insurance business with aggregate increased weighting.

Changes to the 2022 Long Term Incentive Plan Design, include:

•Increase in the proportion of PSUs to restricted stock units ("RSUs") granted from 60%/40% to 70%/30%, respectively; and

It is the intention of the Compensation Committee that as Ambac's specialty P&C insurance business continues to grow, and the legacy financial guarantee business shrinks, the Company's performance metrics will accordingly shift to be more heavily weighted to the achievement of results in the specialty P&C insurance business.

Our Compensation Philosophy and Objectives


Objectives	Details
Attract, retain and motivate executives and professionals of the highest quality and effectiveness	l	Provide compensation opportunities that are competitive with practices of similar financial services organizations operating within the same marketplace for executive talent.
Align pay with performance	l	A substantial portion of each executive’s total compensation is variable and performance-based.
	l	The design of our incentive plans focus on rewarding performance aligned with our key business strategies.
Further align our executives’ long-term interests with those of our stockholders	l	Balance use of cash and equity based compensation, with a greater emphasis on the latter and short and long-term incentives that further align management's interests with those of our stakeholders and support retention.
Discourage excessive risk taking	l	Maintain policies that support good governance practices and mitigate against excessive risk taking.

Determining Executive Compensation


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Compensation Consultants

The Compensation Committee has authority to retain compensation consulting firms to assist it in the evaluation of executive officer and employee compensation and benefit programs. The Compensation Committee retained Meridian Compensation Partners, LLC (“Meridian”) as its independent compensation consultant to advise on the 2021 compensation cycle, which included year-end compensation decisions made in the first quarter of 2022. Meridian provides an objective perspective as to the reasonableness of our executive compensation programs and practices and their effectiveness in supporting our business and compensation objectives. Specifically, Meridian advised the Compensation Committee with respect to compensation trends and best practices, incentive plan design, competitive pay levels, and individual pay decisions with respect to our NEOs. The Compensation Committee has assessed the independence of Meridian pursuant to applicable SEC rules and concluded that no conflict of interests exists that would prevent Meridian from independently advising the Compensation Committee.

Competitive Compensation Considerations

At present, Ambac has no directly comparable business peers, and thus peer selection is a challenge. Each year the Compensation Committee reviews the Company's peer group and considers adjustments if appropriate. Key criteria used to assess current and potential peer companies include financial services industry sector focus (i.e., specialty insurance, specialty finance, property and casualty insurance, financial guaranty and run-off insurance), organizations that manage distressed assets, and organizations of similar size and scope (market capitalization, assets and enterprise value). Based on a review conducted in 2021 in preparation for the 2021 compensation cycle, we revised the list of peer companies to: (i) be more reflective of Ambac's size, (ii) add more property and casualty insurance companies, (iii) reflect the event driven nature of our business and the risks we face, (iv) capture the markets and businesses in which we operate and (v) reflect the market for executive talent. We expect our peer group comparability will materially change in the coming years as we transition from our legacy financial guaranty business to our new specialty property and casualty insurance business.


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The table below provides summary financial information regarding Ambac and the comparator group used for the 2021 compensation cycles.


Comparator Group used for 2021 Compensation Cycle	Primary Industry	Market Capitalization ($ in millions)		Assets ($ in millions)		Enterprise Value ($ in millions)
Argo Group International Holdings, Ltd.	Property & Casualty Insurance	$1,897		$10,316		$2,406
Assured Guaranty Ltd.	Property & Casualty Insurance	3,593		18,208		5,170
Mr. Cooper Group Inc.	Thrifts and Mortgage Finance	3,271		14,204		16,582
ECN Capital Corp.(1)	Specialized Finance	2,010		1,146		2,325
HCI Group, Inc.	Property & Casualty Insurance	990		1,177		623
MBIA Inc.	Property & Casualty Insurance	673		4,695		4,199
MGIC Investment Corporation	Thrifts and Mortgage Finance	4,961		7,325		6,029
Navient Corporation(1)	Consumer Finance	3,479		80,605		79,817
Radian Group Inc.	Thrifts and Mortgage Finance	4,143		7,839		5,624
Randall & Quilter Investment Holdings Ltd.	Insurance Brokers	643		4,034		722
PRA Group, Inc.	Consumer Finance	1,901		4,366		4,394
White Mountains Insurance Group, Ltd.	Property & Casualty Insurance	3,309		7,001		3,738
Ambac Financial Group, Inc. (2)		$694		$12,303		$9,565
Percentile Rank vs. Peer Group		10	%	77	%	85	%
Note: Financial data reflects information available as of December 31, 2021
Source: S&P Capital IQ

(1) Enterprise value for ECN Capital Corp. and Navient Corporation are not available on S&P Capital IQ. These values have been calculated using a 6-month average market capitalization less cash and cash equivalents, plus total debt, preferred equity and total minority interest.

(2) Ambac's Enterprise Value includes the obligations of Variable Interest Entities for which Ambac or its subsidiaries are required to consolidate as a result of its financial guarantee insurance policies, plus its market capitalization, the value of all outstanding debt, preferred equity and total noncontrolling interests, less cash and cash and cash equivalents.

The Role of Management in Determining Pay


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Elements of Pay

Compensation for each of our NEOs is viewed on a total compensation basis and comprised of the following elements of pay:


Compensation Element	Purpose
Base Salary	l	Provides a minimum, fixed level of cash compensation to compensate executive officers for services rendered during the fiscal year that is competitive with organizations operating within the same marketplace for executive talent.
Short Term Incentive Awards	l	Drive achievement of annual corporate goals, including key financial and operating results by setting pre-established financial performance targets at the Company. Annual STIP awards are paid in cash.
Long-Term Incentives	l	Further align executive officers’ interests with the interests of stockholders by rewarding increases in the value of our share price, and tying long-term incentive compensation to performance metrics that we believe to be important value-drivers for our stockholders. LTIP awards are strictly equity based and denominated in PSUs and RSUs.
Post-Employment Benefits	l	Provide certain severance benefits to our executive officers. See “--Post-Employment Benefits” and for a description of post-employment benefits payable to Messrs. LeBlanc, Trick and Ksenak, see “Agreement with Claude LeBlanc,” and “Agreements with Other Executive Officers."
Perquisites	l	Provide a limited number of perquisites to all our employees, including our executive officers.

Before year-end compensation decisions are made, the Compensation Committee undertakes a comprehensive review of all elements of each executive officer’s compensation. This review includes information on cash and non-cash compensation for the past three fiscal years (including current and prior year base salaries, short-term and long-term incentive awards and other awards), and the value of benefits and other perquisites paid to our executive officers, as well as potential amounts to ~~meet~~be delivered under all post-employment scenarios. This comprehensive review is designed to ensure that each member of the Compensation Committee has a complete picture of the compensation and benefits paid to each of our executive officers.

The following table shows the base salary and incentive compensation paid to our NEOs for their ~~applicable~~performance in 2021 in the manner it was considered by the Compensation Committee. This presentation differs from that contained in the Summary Compensation Table by showing the value of the LTIP stock ~~ownership levels~~unit awards granted in 2022 for 2021 performance. The actual number of PSUs and RSUs granted was calculated based on an average closing price of Ambac common stock on the NYSE for the immediately preceding twenty trading days prior to the grant date, February 28, 2022 ($14.85), which were awarded based on 2021 performance, but are not reflected in the Summary Compensation Table because of SEC rules on proxy statement disclosure.


				Long Term Incentive Plan
Name	Year	Salary ($)	Short Term Incentive Plan ($)	PSU Awards ($)	RSU Awards ($)	Total ($)
Claude LeBlanc	2021	900,000	1,699,000	2,677,512	1,147,488	6,424,000
David Trick	2021	750,000	659,000	647,500	277,500	2,334,000
David Barranco	2021	500,000	688,000	595,000	255,000	2,038,000
Stephen M. Ksenak	2021	600,000	596,000	525,000	225,000	1,946,000
R. Sharon Smith	2021	500,000	612,000	577,500	247,500	1,937,000


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Pay Mix

A substantial portion of target total compensation is delivered through ~~open~~variable performance or equity based incentives that are at risk. As reflected in the table above and the graphs below, variable performance or equity based incentives constitute 86% of our CEO compensation mix and 72% of our NEO compensation mix.


CEO Total Direct Compensation						CEO Performance/Equity Based Incentive Compensation


Other NEOs Total Direct Compensation						Other NEOs Performance/Equity Based Incentive Compensation

Base Salary.Base salaries are intended to reflect the experience, skill and knowledge of our executive officers and other senior professionals in their particular roles and responsibilities, while retaining the flexibility to appropriately compensate for fluctuations in performance, both of the Company and the individual. Base salaries for our executive officers and any subsequent adjustments thereto are reviewed and approved by the Compensation Committee annually, based on a review of relevant market ~~purchases~~data and each executive’s performance for the prior year, as well as each executive’s experience, expertise and position. The base salaries paid in 2021 to each of ~~Company common stock. Until~~our NEOs was unchanged from prior years. Mr. LeBlanc received a ~~covered executive complies~~base salary of $900,000; Mr. Trick, $750,000; Mr. Barranco, $500,000; Mr. Ksenak, $600,000; and Ms. Smith, $500,000. Each of Messrs. LeBlanc, Trick and Ksenak is a party to an employment agreement with the ~~Stock Ownership Policy,~~Company that provides for a minimum annual


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base salary during the covered executive is required to retain 100% of net profit shares (which excludes shares withheld or sold to cover applicable taxes) from any compensatory stock award on exercise, vesting or earn-out. A copyterm of the ~~Stock Ownership Policy~~respective agreement. See "Agreement with Claude LeBlanc," and “Agreements with Other Executive Officers.”

Incentive Compensation.Incentive compensation is a key component of our executive compensation strategy. Our incentive compensation awards generally have two components: Short Term Incentive Plan awards (consisting of an annual cash incentive award) and Long Term Incentive Plan awards. Annual decisions with regard to incentive compensation are generally made in February of each year. Incentive compensation payouts can be highly variable from year to year.

Short Term Incentive Compensation. Annual incentives for our NEOs are meant to reward performance. Fifty percent of NEO 2021 short term incentive compensation awards were measured against pre-established financial performance targets at the Company related to reductions in: (i) Net Par Outstanding in the insured portfolio and (ii) Gross Operating Run Rate Expenses. These metrics were chosen because the Compensation Committee believed that they would be key drivers of stockholder value in 2021.

The remaining fifty percent of the short term incentive compensation award is based on strategic performance goals, more than 50% of which can be reviewed against objective, quantifiable or financial outcomes. These goals include formula driven financial performance targets as well as strategic goals related to:

•Active de-risking and ongoing rationalization of Ambac's capital and liability structures;

•Increasing organizational effectiveness and efficiency of the operating platform;

•Effective management of loss recovery through active litigation and exercise of contractual and legal rights; and

•Identification of potential actionablenew business opportunities to engage and pursue that meet Board approved criteria, including performance and growth expectations for the new specialty P&C insurance business. See "Compensation for Each of Our Named Executive Officers in 2021 - Strategic Performance Goals."


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The Compensation Committee believes that it is important to establish strategic performance goals because of the uncertainties associated with our legacy operating subsidiaries, AAC and Ambac UK, which are not writing new business and are in runoff, and Ambac’s strategic shift towards growing our specialty P&C insurance platform. The Compensation Committee assigns to each NEO an annual target incentive opportunity, expressed as a percentage of eligible earnings (base salary amount paid during the year), which is based on the executive’s position and the scope of responsibilities.

Target annual incentives (as a percent of base salary) for the NEOs for 2021 were set as follows: 125% for the Chief Executive Officer; and between 55% and 85% for each of the other NEOs. Actual incentive payouts can range from 0% to 200% of target for each of the NEOs based on the Compensation Committee’s review of overall corporate performance and individual and business unit achievement relative to the pre-established goals and objectives.


Key Changes in 2022 to Short Term Incentive Program: For the 2022 performance year, the Compensation Committee amended the financial performance metrics of the STIP to include Everspan performance, weighed at 20%, along with reductions in Net Par outstanding in the insured portfolio, weighed at 60%, and Gross Operating Run Rate Expenses, weighed at 20%. In addition, the Committee also increased the weighting of the STIP financial performance metrics from 50% to 60%.


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In the first quarter of each year, LTIP compensation awards (the size of which relates to the prior year's performance) are granted to our NEOs. In 2021, the Compensation Committee revised the LTIP performance metrics to better align management's goals with certain key drivers of stockholder value: risk reduction and managing the event driven nature of Ambac's business. LTIP awards granted in 2021 will be measured based on (i) reductions in Watch List and Adversely Classified Credits at AAC weighted at 75% and (ii) the achievement of certain cumulative EBITDA targets at Xchange weighted at 25%. In addition, the 2021 LTIP awards continued to incorporate the Total Shareholder Return ("rTSR") modifier as an additional metric with respect to performance based LTIP award payouts. The rTSR modifier for 2021 LTIP awards will cause any final PSU award payout at the end of a three year settlement period to be increased or decreased by 10% if the Company's stock performance compared to a peer group is at or above the 75th percentile or at or below the 25th percentile, respectively. While the payout of performance stock units (“PSUs") granted pursuant to the 2021 LTIP awards will not settle or be subject to the rTSR modifier until the end of a three year period, the measurement period for determining the achievement of goals against the pre-set metrics was ~~filed~~shortened to two years, consistent with the ~~SEC as Exhibit 99.2~~prior year awards, to create a better alignment between Company performance and management compensation.

LTIP awards in 2021 were denominated 60% in PSUs and 40% in restricted stock units ("RSUs"). PSUs represent a promise to deliver, within 75 days after the end of a three-year performance period, a number of shares of Ambac’s common stock ranging from 0% to 200% (not including any adjustment that may be applied pursuant to the rTSR modifier) of the amount of the initial grant, depending on the achievement of financial performance objectives determined by the Compensation Committee at the time of the grant. The RSUs are time-based awards and were granted in order to encourage the retention of our most valued employees. The RSUs granted as part of the 2021 LTIP awards represent the right to receive an equivalent number of shares of Ambac’s common stock and will vest and settle in three equal annual installments in March of 2022, 2023 and 2024.

The Compensation Committee determined the target value of the 2021 LTIP awards granted to each of our NEOs based on the Company’s ~~Current Report on Form 8-K filed on December 1, 2016.~~overall results, the individual executive’s contribution to overall performance, external market benchmark data and the proportion of total compensation comprised of LTIP awards. In addition, in setting target value of the 2021 LTIP awards granted to Messrs. LeBlanc, Trick and Ksenak, the Committee considered the terms and conditions set forth in their respective employment agreements. See "Agreement with Claude LeBlanc," and "Agreements with Other Executive Officers.”


Key Changes to Long Term Incentive Program for 2022 LTIP Grants: The Compensation Committee revised the PSU performance metrics to add Everspan EBITDA goals. PSU awards granted in 2022 will be measured based on performance, with reductions in Watch List and Adversely Classified Credits at AAC weighted at 60% and the achievement of certain EBITDA goals at Xchange and Everspan each weighted at 20%. LTIP awards in 2022 were denominated 70% in PSUs and 30% in RSUs.
In addition, the Compensation committee re-instituted a three-year performance and measurement period for determining the achievement of goals against pre-set metrics for 2022 LTIP awards given the shift in metrics towards our new businesses, as well as certain shareholder feedback.

~~Recoupment Policy~~LTIP Metrics. The metrics used to judge performance for PSU awards granted in March 2021 are reductions in Watch List and Adversely Classified Credits~~. Effective~~2 at AAC and the achievement of certain EBITDA goals at Xchange, each measured over a two-year period which runs from January 1, ~~2017,~~2021 until December 31, 2022 (the “Measurement Period”). Reductions in AAC's Watch List and Adversely Classified Credits are weighted at 75% and the ~~Board adopted~~achievement of certain EBITDA goals at Xchange is weighted at 25%.

________________________

2 Adversely Classified Credits represent credits that are either in default or have developed problems that eventually may lead to a ~~Recoupment Policy. Pursuant~~default. Watch List credits represent credits that demonstrate heightened potential for future adverse development based on qualitative and quantitative stress assumptions.


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The following table sets forth the percentage of the 2021 LTIP Target Award that each of our named executive officers could earn under the 2021 LTIP awards based on reductions in Watch List and Adversely Classified Credits and Cumulative Xchange EBITDA3 as of the last day of the Measurement Period.


Percentage of AAC LTIP Target Award Earned	Cumulative Xchange EBITDA ($ in millions) (1)	Watch List and Adversely Classified Credits ($ in billions) (1)
200%	$17.1	$9.135
100%	$13.7	$9,735
0	$10.3	$10.635

(1) Linear interpolation between levels of Cumulative Xchange EBITDA and Watch List and Adversely Classified Credits will result in a proportionate amount of the LTIP Target Award becoming earned and vested.

Following the end of the Performance Period, the Compensation Committee will determine the extent to which each participant’s LTIP award has been earned and the ~~Recoupment Policy,~~amount payable. The Compensation Committee may, in the ~~event~~exercise of its discretion, reduce the amount of any LTIP award that otherwise would have been earned based on the satisfaction of the performance metrics, but may not increase the size of any LTIP award.

The ultimate value of the PSUs and RSUs directly depends on the value of our common stock at the time of vesting. Each individual who receives a ~~“material financial restatement”~~PSU or ~~the imposition~~RSU becomes, economically, a long-term stockholder of ~~a “material financial penalty,”~~ the Company, ~~will require,~~with the same interests as our other stockholders. As a result, we believe our NEOs have a demonstrable and significant interest in increasing stockholder value over the long term.

________________________

3 Cumulative Xchange EBITDA is calculated by taking 80% of Xchange Group’s earnings before interest, taxes, depreciation and amortization (consistent with Xchange’s historical accounting framework) through the Measurement Period. Cumulative Xchange EBITDA shall be adjusted to exclude the ~~fullest extent permitted~~impact of retention payments to Xchange employees in connection with the acquisition by ~~applicable law, that a covered employee forfeit and/~~Ambac; purchase accounting; without duplication, EBITDA or ~~reimburse~~any costs related to any M&A transaction consummated during the ~~Company for all or such portion (if any) of the covered employee’s “recoverable compensation”~~Measurement Period; cost allocations; and any other adjustments as determined in the sole ~~and absolute~~ discretion of the Committee.


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Compensation for Each of Our Named Executive Officers in 2021

Our Chief Executive Officer

Mr. LeBlanc. Effective January 1, 2017, Claude LeBlanc was appointed President and Chief Executive Officer of Ambac and AAC. The Board believed that Mr. LeBlanc's significant experience and success over his career holding senior leadership functions overseeing strategy, corporate development, finance and risk, as well as his prior role actively leading the global remediation and asset recovery initiatives at Syncora Holdings Ltd. and evaluating strategic alternatives and overseeing all aspects of Syncora's finance function, made him uniquely qualified to lead Ambac. The Compensation Committee, which received input and advice from its nationally recognized independent compensation consultant, Meridian Compensation Partners, LLC, authorized the Company to enter into an employment agreement with Mr. LeBlanc on December 8, 2016, and amended on February 26, 2020. Pursuant to the employment agreement, as amended, Mr. LeBlanc is paid an annual base salary of $900,000. The employment agreement also provides that Mr. LeBlanc is eligible to receive (i) a target annual STIP award set at no less than 100% of his base salary and (ii) a target annual long-term incentive award set at no less than 150% of his base salary, as determined in ~~accordance~~the discretion of the Compensation Committee.

Fifty percent of the STIP award paid to Mr. LeBlanc for 2021 was based on the achievement of the financial performance metrics related to reductions in (i) Net Par Outstanding in the insured portfolio weighted at 80% and (ii) Gross Operating Run Rate Expenses weighted at 20%.

The remaining 50% of the STIP award paid to Mr. LeBlanc was based on the achievement of strategic performance goals established by the Compensation Committee for both the legacy financial guaranty business and the new specialty P&C insurance business. A majority of these strategic performance goals are objective and/or quantifiable.

For the 2021 fiscal year, we established the following targets for each of our STIP financial performance metrics and assigned the following weighting factors:


($ in millions)	Weighting Factor	Threshold ($ in millions)	Target ($ in millions)	Maximum ($ in millions)
Net Par Outstanding	80%	$30,250	$29,540	$28,940
Gross Operating Run Rate Expenses	20%	$17.2	$16.7	$16.4


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The following graph/charts shows the Company's 2021 actual performance compared to the threshold, target and maximum achievement levels as established for each of the financial performance metrics.


Net Par Outstanding						Gross Operating Run Rate Expenses

Target

Threshold

Maximum

------

Actual

With respect to each of these metrics, under Mr. LeBlanc's leadership in 2021, Ambac exceeded the target performance goal for reducing Net Par Outstanding and achieved the target performance goal for reducing Gross Operating Run Rate Expenses during the relevant period. Ambac's Net Par Outstanding at the beginning of the performance period of $33.89 billion was reduced to $27.87 billion. Gross Operating Run Rate Expenses for the fourth quarter of 2021 were reduced to $16.6 million. Applying the appropriate weighting to each performance metric as set forth above and using the appropriate payout levels for STIP awards under Mr. LeBlanc's employment agreement, the Committee assigned a 1.80 multiplier to the financial performance portion of Mr. LeBlanc's target STIP award for 2021.

Strategic Performance Goals. In determining the other fifty percent of Mr. LeBlanc's 2021 STIP award, the Compensation Committee gave consideration to the Company’s results against the strategic performance goals described below, which were communicated to Mr. LeBlanc in the first quarter of 2021.

For each of these performance goals the Compensation Committee assigned a relative weighting based on the current importance of such performance goals to the Company, with an aggregate total weighting of 100%. To assess results against these performance goals, the Committee utilized a definitive score card methodology to achieve a consistent, formula driven ratings process. Score results were determined by the Committee for each category and could range from 0-5, with 0 to 1 indicating results that were below the anticipated outcomes; a score between 2 and 3 indicating results were slightly below to slightly above the anticipated outcomes; and a score between 4 and 5 indicating results that exceeded or far exceeded the anticipated outcomes.

Strategic goals related to “active de-risking and ongoing rationalization of Ambac's capital and liability structures” as well as “increasing organizational effectiveness and efficiency of the operating platform” were given a combined 25% weighting, of which approximately 44% were reviewed against objective, quantifiable or financial outcomes. The remaining 75% weighting was attributable to strategic goals related to “effective management of loss recovery through active litigation and exercise of contractual and legal rights" and


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Strategic goals related to active de-risking and ongoing rationalization of Ambac's capital and liability structures, as well as organizational effectiveness were weighted at 25%, and included among other things
Goals			Results
✓ Active runoff of AAC and its subsidiaries through transaction terminations, policy commutations, settlements and restructurings, with a focus on watch list credits and adversely classified credits.			◦Total net par down $5.9 billion or 17% through December 31, 2021 (compared with an 11% reduction in full year 2020); ◦Watch List and Adversely Classified Credits’ down $3.0 billion or 23% through December (compared with an 8% reduction in full year 2020); and ◦Settlements reached (via Plan Support Agreements) on all remaining Puerto Rico exposures ($980 million in net par).
✓ Ongoing monitoring, evaluation and, to the extent possible, active remediation of credits impacted by the COVID-19 pandemic.			◦Rigorous oversight of COVID-19 affected credits with active management to eliminate several more significantly impacted credits, including the Mets Queens Ballpark transaction ($531 million in net par) and a public finance hotel occupancy tax transaction ($94 million in net par); and ◦No policy claims paid related to COVID-19.
✓ Evaluate and, as appropriate, execute Alternative Risk Transfer and reinsurance options to manage risk in the insured portfolio.			◦Significant and material de-risking reinsurance and refinancing transactions completed in 2021, including two public finance reinsurance transactions (ceded an aggregate of $1.376 billion in net par), and reinsurance for a structure finance transaction (ceded $263 million in net par).
✓ Evaluate and develop plan for refinancing of Ambac Secured Notes (LSNI).			◦Successfully refinanced the LSNI secured debt with the Sitka secured debt with lower coupon and extended maturity.
✓ Complete exchange of Corolla notes and junior surplus notes for senior surplus notes.			◦Successfully executed the Corolla note and certificate exchange capturing nominal discount/debt reduction of approximately $73 million; and ◦Successfully executed the landlord junior surplus note exchange capturing nominal discount/debt reduction of approximately $4 million.
✓ Increasing organizational effectiveness and efficiency of Ambac’s operating platform.			◦Successful integration of Xchange and Everspan; ◦Bolstering of Ambac's existing infrastructure framework to improve overall resilience to cyberattacks; and ◦Strengthening of disaster recovery protocols.


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Strategic goals related to new business activities, and litigation strategy were weighted at 75%. Some of the key criteria used to evaluate performance for new business activities included the following: the successful launch of Ambac’s specialty P&C insurance platform following Everspan Group’s receipt of an A- rating and Class VIII designation from AM Best in February 2021; and the successful build out of Everspan Group via (i) license expansions (currently authorized with full admitted P&C authority, in 50 domestic states and territories) and (ii) successful acquisition of an admitted “shell” carrier in 2021.

The Committee considered each of the strategic performance goals outlined above in evaluating Mr. LeBlanc's overall performance, assigned a score from 0-5 for each goal and then applied the scores to the relative weightings assigned to the performance goals at the beginning of 2021 to arrive a 1.22 multiplier to the strategic performance goals for Mr. LeBlanc's target 2021 STIP award. Weighting this multiplier equally with the ~~guidelines~~1.80 multiplier applicable to the financial performance portion of Mr. LeBlanc's target STIP award for 2021 produced an overall multiplier of 1.51 times target for Mr. LeBlanc's 2021 STIP award.

LTIP Award. In addition to his STIP award, Mr. LeBlanc received an LTIP award denominated 100% in stock units with an aggregate target value of $3,825,000, primarily reflecting Mr. LeBlanc's outstanding leadership and focus on executing the Company's strategic priorities through the challenges and uncertainties of 2021, including, among other things:

•Material advancement and growth of the Company' specialty P&C insurance business with the establishment of the Everspan Group of companies

◦Financial strength rating of 'A-' (Excellent) from AM Best,

◦Expanded to include an E&S carrier and five admitted carriers, one of which was added in 2021, and

◦Fully licensed with certificates of authority in 50 domestic states and territories;

•The effective support and integration of Xchange Benefits, LLC, acquired at the end of 2020; and

•Leading the Ambac management team in significantly de-risking the insured portfolio and rationalizing the Company’s capital structure, resulting in material expense savings to the Company.

Other Named Executive Officers

Performance Against STIP Performance Metrics and Strategic Performance Goals.

The Committee reviewed the Company's actual performance against each of the financial performance metrics set forth above, and after applying the appropriate weighting to each metric, the Committee assigned the same multiplier as that of Mr. LeBlanc to the financial performance portion of each NEO's 2021 STIP award .In determining the other fifty percent of the 2021 STIP award for each of the NEOs (other than Mr. LeBlanc), Mr. LeBlanc reviewed with the Compensation Committee the performance of each NEO individually and their overall contribution to the Company in 2021.In this process, Mr. LeBlanc assigned the same strategic performance goals and objectives to each of the NEOs that were assigned to him by the Compensation Committee, but individually adjusted the relative weighting based on each executive officer's areas of responsibility and influence. In addition, Mr. LeBlanc utilized the same score card approach as the Committee in his evaluation of each NEO in an effort to achieve a consistent ratings process. Based on the recommendation of Mr. LeBlanc, the Committee approved the 2021 STIP awards and 2022 LTIP awards granted to each of Messrs. Trick, Barranco and Ksenak, and Ms. Smith, as shown in the table in the section entitled "Elements of Pay."


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Performance against 2018 LTIP metrics.

In 2018, we established the following three year goals for each of our LTIP performance metrics and assigned weighting factors based on each NEOs areas of responsibility.


At AAC		At Ambac	Percentage of Target Award Earned
Net Asset Value (1) ($ in millions)	Watch List and Adversely Classified Credits Outstanding(1) ($ in billions)	Cumulative EBITDA (1) ($ in millions)

$(300)	$15.5	$30	200%
$(500)	$16.6	$17	100%
$(650)	$18.8	$—	—%

(1) Linear interpolation between levels results in a proportionate amount of the Ambac LTIP Target Award becoming earned and vested.

At AAC performance is judged based on (i) increases Net Asset Value weighted at 42.5% and (ii) reductions in Watch List and Adversely Classified Credit net par outstanding weighted 42.5%. At Ambac performance is judged based on cumulative EBITDA over the performance period. The following graph/charts shows the Company's actual performance over the three year performance period running from January 1, 2018 through December 31, 2020, compared to the achievement levels set forth in the ~~Recoupment Policy. A~~ “~~material financial restatement” means~~chart above.

AAC Adjusted
Net Asset Value

Watch List & Adversely Classified Credits Outstanding

Ambac
Cumulative EBITDA

The following table shows the ~~restatement of one or more previously issued financial statements~~grant date value of the ~~Company, for any period ending after December 1, 2016, due~~2018 LTIP awards granted to ~~a material error or a series~~each of ~~immaterial errors which could be considered material when viewed in~~our NEOs and the aggregate of any applicable financial reporting requirements under the securities laws. “Material financial penalty” means a penalty, fine, or other monetary sanction levied against the Company after December 1, 2016, by a regulator or other Federal or state governmental authority in an amount deemed material by the Board of Directors in its soleamounts realized upon vesting and absolute discretion. “Recoverable compensation” means certain incentive-based compensation received during a three year look-back period during which (i) the financial reporting measure specified in the applicable award was attained or (ii) the conduct giving rise to the imposition of a material financial penalty against the Company took place. If the grant or earning of an award is based, either wholly or in part, on satisfaction of a financial reporting measure, the award would be deemed received in the fiscal period when that measure was satisfied, in each case without regard to any ongoing service-based vesting requirements. Furthermore, if an award is granted or earned upon satisfaction of financial reporting measures that are based on multiple fiscal years (e.g., a three-year average), the whole award would be deemed Recoverable Compensation for purposes of this Policy ifsettlement.


Named Executive Officer	Grant Date PSU Award at Target #	Weighting between AAC/ Ambac	Payout Percentage	Shares Acquired on Vesting and Settlement #
Claude LeBlanc	119,284	85% / 15%	200%	238,568
David Trick	17,672	85% / 15%	200%	35,344
David Barranco	13,254	85% / 15%	200%	26,508
Stephen M. Ksenak	14,358	85% / 15%	200%	28,716
R. Sharon Smith	13,254	85% / 15%	200%	26,508



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~~Table~~

The Committee considered the Company's actual performance against each of ~~Contents~~

the LTIP metrics for AAC and Ambac for each of Messrs. LeBlanc, Trick, Barranco, Ksenak and Ms. Smith, and determined that the Net Asset Value was projected to decrease over the performance period but certain successful favorable achievements by management, such as (i) COFINA restructuring, (ii) Ballantyne Re PLC settlement, (iii) AMPS exchange and (iv) receipt of proceeds from a Citigroup - SEC settlement all contributed to the Net Asset Value increasing during the performance period. Reductions of Watchlist & Adversely Classified Credit net par outstanding at AAC during the performance period were positively impacted by active de-risking strategies including credit exposure reductions at Ballantyne Re PLC, NJ Transportation Trust Fund, COFINA and other risk remediation and reinsurance transactions. Cumulative EBITDA at Ambac during the performance period benefited from higher investment returns related to holdings of AAC issued securities and the receipt of annual expense reimbursements from AAC over the performance period.

Perquisites. The Company provided a limited number of perquisites to all our employees, including our executive officers. For Mr. LeBlanc and Ms. Smith, perquisites included reimbursement from Ambac for certain commuting expenses, and for Messrs. Trick and Barranco, included payments for tax preparation services as a result of their roles as executive directors of Ambac UK. Consistent with past practice, in order to support the long-term wellness and productivity of our executive officers, the Company also provided access to an extensive physical examination for all executive officers, at the Company's expense. Messrs. Barranco and Eisman and Ms. Smith accepted this offering in 2021.

~~any single fiscal year~~Employment Agreements. Certain of our active NEOs have entered into employment agreements with the Company which provide for certain compensation and benefits, including, severance benefits in certain circumstances. In December 2016, we entered into an employment agreement with our CEO, Claude LeBlanc, in connection with his appointment, which took effect on January 1, 2017. This agreement was subsequently amended on February 27, 2020. We also entered into an employment agreement with Mr. Trick in November of 2016, and Mr. Ksenak in January 2017. While the Compensation Committee considers employment agreements customary for the chief executive officer, the Committee believed it was important to execute an employment agreement with each of Messrs. Trick and Ksenak to retain their services to Ambac for the foreseeable future. (See “Agreement with Claude LeBlanc”, and “Agreements with Other Executive Officers” below). Severance Agreements have been entered into with various executive officers when the Compensation Committee believes it is in the best interest of the Company to secure an orderly separation between such officers and the Company, which typically include certain continuing obligations from the departing executive.

Post-Employment Benefits.Pursuant to Ambac's Severance Pay Plan, to provide protection in the event of an involuntary termination, each of our current executive officers (other than Messrs. LeBlanc, Trick and Ksenak) is entitled to receive a severance payment equal to 52 weeks of such executive officer's weekly base salary at the time of termination of his or her employment by Ambac as the result of (i) a job elimination, job discontinuation, office closing, reduction in force, business restructuring, redundancy, or such other circumstances as the Company deems appropriate for the payment of severance or (ii) a “termination by mutual agreement” (as defined in the Severance Pay Plan). In addition to this severance payment, each of our current NEOs (other than Messrs. LeBlanc, Trick and Ksenak) would be entitled to receive reimbursement for a portion of the premiums paid for COBRA continuation coverage under the Company's group health plan for the first twelve months following his or her termination of employment. The portion of the premiums to be paid by the Company will be the same as the amount paid by the Company for the same group health insurance coverage for active employees. For a description of post-employment benefits payable to Messrs. LeBlanc, Trick and Ksenak, see “Agreement with Claude LeBlanc,” and “Agreements with Other Executive Officers."

The 2021 LTIP awards consisted of both PSUs and RSUs. The PSU award agreements for our NEOs provide that if a termination occurs prior to the last day of the performance period ~~occurs during~~by reason of disability, an involuntary termination other than for “cause,” or retirement, the ~~three year look-back period. A complete copy~~recipient would be entitled to receive the number of earned PSUs which would only be payable at the end of the ~~Recoupment Policy is attached as Exhibit 99.1 to the Company’s Current Report on Form 8-K filed on December 1, 2016.~~

~~Prohibition on Pledging and Hedging and Restrictions on Other Transactions involving Common Stock~~. Our Insider Trading Policy prohibits our executive officers, employees, and Board members from pledging Ambac common stock or using Ambac common stock as collateral for any margin loan. In addition, the Insider Trading Policy contains the following restrictions:

Executive officers and Board members are prohibited from engaging in transactions (such as trading in options) designed to hedge against the value of the Ambac common stock, which would eliminate or limit the risks and rewards of the common stock ownership;

Executive officers and Board members are prohibited from short-selling Ambac common stock, buying or selling puts and calls on Ambac common stock, or engaging in any other transaction that reflects speculation about the price of Ambac common stock or that might place their financial interests against the financial interests of the Company;

Executive officers and Board members are prohibited from entering into securities trading plans pursuant to SEC Rule 10b5-1 without pre-approval; further, no Board member or executive officer may trade in our Common Stock without pre-approval; and

~~Executive officers and Board members may trade in Common Stock only during open window periods, and only after they have pre-cleared transactions.~~

~~Conclusion~~

~~Our compensation program is designed to permit the Company to provide our NEOs with total compensation that is competitive, linked to our~~ performance and reinforces the alignment of employee and stockholder interests. At the same time, it is intended to provide us with sufficient flexibility to assure that such compensation is appropriate to attract and retain employees who are vital to the continued success of the Company and to drive outstanding individual and institutional performance. We believe the program met these objectives in 2019.

We are asking our stockholders to indicate their support for our named executive officer compensation as described in this Proxy Statement. This proposal, commonly known as a “say on pay” proposal, gives our stockholders the opportunity to express their views on our named executive officers’ compensation. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our named executive officers and the philosophy, policies and practices described in this Proxy Statement. Accordingly, we will ask our stockholders to vote “FOR” the following resolution at the Annual Meeting:

~~“RESOLVED,~~period provided that the stockholders approve, on an advisory basis, the compensation of the named executive officers, as disclosed in the Company’s Proxy Statement for the 2020 Annual Meeting of Stockholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Summary Compensation Table and the other related tables and disclosure.”

The say on pay vote is advisory, and therefore not binding on Ambac, the Compensation Committee or our Board of Directors. Our Board of Directors and our Compensation Committee value the opinions of our stockholders and to the extent there is any significant vote against the named executive officer compensation as disclosed in this Proxy Statement, we will consider our stockholders’ concerns and the Compensation Committee will evaluate whether any actions are necessary to address those concerns.

performance conditions



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~~Table of Contents~~

~~Compensation Committee Report~~

~~The Compensation Committee~~related to the award were satisfied. If a termination occurs by reason of death, the recipient would be entitled to receive the number of earned PSUs that the Participant would have been entitled to receive had the termination date not occurred prior to the end of the ~~Company has reviewed and discussed~~performance period at a 100% overall payout multiple regardless of the ~~Compensation Discussion and Analysis required by Item 402(b)~~outcome of ~~Regulation S-K with management and, based on such review and discussions,~~ the ~~Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be~~performance goals or rTSR. Comparable provisions were included in ~~this proxy statement.~~the 2019 and 2020 PSU award agreements. The 2021 RSU award agreements for our NEOs generally provide that if a termination occurs, other than for “cause” or voluntary resignation, the entire grant of RSUs shall vest on the termination date.

Compensation Committee

~~Alexander D.~~The Compensation Committee is currently comprised of Messrs. Prieur (Chairman) and Haft and Ms. Lamm-Tennant. The purpose of our Compensation Committee is to assist the Board in overseeing our compensation programs. The Compensation Committee’s responsibilities include:

• Reviewing the overall compensation principles governing the compensation and benefits of our executive officers and other employees.

• Evaluating the performance of our Chief Executive Officer.

• Reviewing the procedures for the evaluation of our executive officers, other than our Chief Executive Officer.

• Reviewing and approving the selection of our peer companies to use as a reference in determining competitive compensation packages.

• Determining all executive officer compensation (including but not limited to salary, bonus, incentive compensation, equity awards, benefits and perquisites).

• Acting as the administering committee for our stock and bonus plans and for any equity compensation arrangements that may be adopted by Ambac from time to time.

• Preparing the annual Compensation Committee Report for inclusion in our annual proxy statement.


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