Maryland
|
001-08896
|
75-2027937
|
(State of Incorporation)
|
(Commission File No.)
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(I.R.S. Employer Identification No.)
|
8401 North Central Expressway
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|||
Suite 800
|
|||
Dallas, Texas
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75225
|
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(Address of Principal Executive Offices)
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(Zip Code)
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☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425). |
☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 230.14a-12). |
☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)). |
☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)). |
ITEM 5.02 | DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY ARRANGEMENTS OF CERTAIN OFFICERS. |
Executive
|
Current Annual
Base Salary
|
Annual Base Salary
Effective January 1, 2016
|
|||
Roy S. Kim
|
$325,000
|
$345,000
|
Executive Officer
|
Number of shares of
Restricted Common
Stock
|
Andrew F. Jacobs, President and Chief Executive Officer
|
24,881
|
Roy S. Kim, Senior Vice President - Asset and Liability Management
|
11,105
|
Phillip A. Reinsch, Executive Vice President and Chief Financial Officer
|
13,937
|
Robert R. Spears, Jr., Executive Vice President and Chief Investment Officer
|
17,414
|
Number of shares of Common
Stock into which the
Performance Units are
Convertible
|
|||
Executive Officer
|
Number of
Performance Units
|
Minimum
|
Maximum
|
Andrew F. Jacobs, President and Chief Executive Officer
|
99,527
|
0
|
199,054
|
Roy S. Kim, Senior Vice President - Asset and Liability Management
|
44,420
|
0
|
88,840
|
Phillip A. Reinsch, Executive Vice President and Chief Financial Officer
|
55,751
|
0
|
111,502
|
Robert R. Spears, Jr., Executive Vice President and Chief Investment Officer
|
69,656
|
0
|
139,312
|
ITEM 9.01. | FINANCIAL STATEMENTS AND EXHIBITS |
(d) | Exhibits. | |
2016 Annual Incentive Compensation Program
|
||
Form of Restricted Stock Award
|
||
2016 Long-Term Performance Unit Award Criteria
|
||
Performance Unit Agreement
|
CAPSTEAD MORTGAGE CORPORATION
|
||
February 4, 2016
|
By:
|
/s/ Phillip A. Reinsch
|
Phillip A. Reinsch
|
||
Executive Vice President, Chief Financial
Officer and Secretary
|
Purpose:
|
Capstead Mortgage Corporation (the “
Company
”) has established the 2016 Annual Incentive Compensation Program (the “
2016 Short Term Program”
) to implement the Company’s short-term incentive pay program in an effort to: (i) align executive variable cash compensation with the annual objectives of the Company, (ii) motivate executives to create sustained stockholder value, and (iii) ensure retention of key executives by ensuring that cash compensation remains competitive.
|
Participants:
|
Executive officers of the Company designated by the Compensation Committee.
|
Payout Criteria:
|
The formula and performance-based methodology for determining annual incentive compensation is adopted effective January 1, 2016. The “target” payment under the 2016 Short Term Program for each executive officer will be 125% of his or her base salary at January 1, 2016, with the award, if any, payable in cash.
The criteria for payment to participants under the 2016 Short Term Program and the weighting of such criteria is as follows:
|
Performance Metrics and Weighting
|
·
45% of the payout is calculated based on Relative Economic Return metrics
(30% measured against Peer Agency mREITs, as defined below)
(15% measured against Peer mREITs, as defined below)
·
10% of the payout is calculated based on a Relative Operating Efficiency metric, as measured against Peer mREITs
·
30% of the payout is calculated based on an Absolute Economic Return metric
·
15% of payout is calculated based on performance against Individual Objectives
|
Payout Factors:
|
The payout factor for each of the Relative Economic Return and the Absolute Economic Return metrics is 0% - 200%, rounded to the nearest whole percentage, based on actual performance against approved objectives, as more fully described below.
The payout factor for the Relative Operating Efficiency metric is 0% - 150%, rounded to the nearest whole percentage, based on actual performance against approved objectives, as more fully described below.
The payout factor for the Individual Objectives metric is 0% - 150%, based on actual individual performance as measured against approved individual objectives.
|
Relative Economic Return, as Measured against Peer Agency mREITs:
|
A portion of the payout of each participant’s total award pursuant to the 2016 Short Term Program will be based on the relative economic performance of the Company, as compared with the Company’s peers which invest primarily in residential mortgage pass-through securities issued and guaranteed by government-sponsored entities, either Fannie Mae or Freddie Mac, or an agency of the federal government, Ginnie Mae, as selected by the Compensation Committee (“
Peer Agency mREITs
”). The economic performance for the Company and each of the Peer Agency mREITs will be calculated as the respective change in book value per share of common stock plus dividends declared per share of common stock during 2016, divided by beginning per share book value for each such entity (“
Relative Economic Return
”). The Company will then be ranked against each of the Peer Agency mREITs and assigned a percentile of relative performance. The portion of each participant’s total payout attributable to Relative Economic Return as measured against Peer Agency mREITs will equal 30% of the target award multiplied by the applicable payout factor.
|
The specific payout factor for Relative Economic Return, as measured against Peer Agency mREITs, will be calculated as follows:
|
Threshold
|
Relative Economic Return
Percentile, as Measured
Against Peer Agency mREITs
|
Payout Factor, as a
Percentage of Target
|
||||
<40 th Percentile | 0% | |||||
Minimum
|
40
th
Percentile
|
50%
|
|
|||
Target
|
60
th
Percentile
|
100%
|
|
|||
Maximum
|
≥80
th
Percentile
|
200%
|
|
If the Company’s Relative Economic Return, as measured against Peer Agency mREITS, equals or exceeds the 40
th
percentile when ranked against the Peer Agency mREITs, the payout factor as a percentage of the target payout will be determined using a straight-line interpolation between the minimum and target thresholds or the target and maximum thresholds, as the case may be, depending upon the actual percentile ranking of the Company relative to the Peer Agency mREIT peer group. By way of example, a ranking in the 50
th
percentile would result in a payout factor of 75%, and a ranking in the 70
th
percentile would result in a payout factor of 150%.
|
|
The specific payout factor for Relative Economic Return, as measured against Peer mREITs, will be calculated as follows:
|
Threshold
|
Relative Economic Return
Percentile, as Measured
Against Peer mREITs
|
Payout Factor, as a
Percentage of Target
|
||||
<40 th Percentile | 0% | |||||
Minimum
|
40
th
Percentile
|
50%
|
|
|||
Target
|
60
th
Percentile
|
100%
|
|
|||
Maximum
|
≥80
th
Percentile
|
200%
|
|
If the Company’s Relative Economic Return, as measured against Peer mREITS, equals or exceeds the 40
th
percentile when ranked against each of the Peer mREITs, the payout factor as a percentage of the target payout will be determined using a straight-line interpolation between the minimum and target thresholds or the target and maximum thresholds, as the case may be, depending upon the actual percentile ranking of the Company relative to the Peer mREIT group. By way of example, a ranking in the 50
th
percentile would result in a payout factor of 75%, and a ranking in the 70
th
percentile would result in a payout factor of 150%.
|
Relative Operating Efficiency, as
Measured against
Peer mREITs:
|
A portion of the payout of each participant’s total award pursuant to the 2016 Short Term Program will be based on relative operating efficiency of the Company, as compared with each of the Peer mREITs. The operating efficiency will be calculated based on the ratio of total general and administrative costs, including management fees, to long-term investment capital (defined as average stockholders’ equity plus average long-term unsecured borrowings), calculated for the 2016 calendar year. The portion of each participant’s total payout attributable to Relative Operating Efficiency as measured against Peer mREITs will equal 10% of the target award multiplied by the applicable payout factor.
|
|
The specific payout factor for Relative Operating Efficiency, as measured against Peer mREITs will be calculated as follows:
|
Threshold
|
Relative Operating Efficiency
Percentile, as Measured
Against Peer Agency mREITs
|
Payout Factor, as a
Percentage of Target
|
||||
<85 th Percentile | 0% | |||||
Minimum
|
85
th
Percentile
|
50%
|
|
|||
Target
|
90
th
Percentile
|
100%
|
|
|||
Maximum
|
≥95
th
Percentile
|
150%
|
|
If the Company’s Relative Operating Efficiency, as measured against Peer mREITS, is between the 85
th
and 95
th
percentiles when ranked against each of the Peer mREITs, the payout factor as a percentage of the target payout will be determined using a straight-line interpolation between the minimum and target thresholds or the target and maximum thresholds, as the case may be, based on the actual percentile ranking of the Company relative to the Peer mREIT group. By way of example, a ranking in the 87
th
percentile would result in a payout factor of 70%, and a ranking in the 92
th
percentile would result in a payout factor of 120%.
|
Absolute
Economic
Return:
|
A portion of the payout of each participant’s total award pursuant to the 2016 Short Term Program will be based on absolute economic return of the Company. The absolute economic return for the Company will be calculated as the respective change in book value per share of common stock of the Company plus dividends declared per share of common stock during 2015, divided by beginning per share book value (“
Absolute Economic Return
”). The portion of each participant’s total payout attributable to Absolute Economic Return will equal 30% of the target award multiplied by the applicable payout factor.
|
|
The specific payout factor for Absolute Economic Return will be calculated as follows:
|
Threshold
|
Absolute Economic Return
|
Payout Factor, as a
Percentage of Target
|
||||||
<8.0%
|
0%
|
|
||||||
Minimum
|
8.0%
|
|
50%
|
|
||||
Target
|
10.0%
|
|
100%
|
|
||||
Maximum
|
≥12.0%
|
200%
|
|
If the Company’s Absolute Economic Return equals or exceeds 8.0%, the payout factor as a percentage of the target payout will be determined using a straight-line interpolation between the minimum and target thresholds or the target and maximum thresholds, as the case may be, depending upon the actual Absolute Economic Return of the Company. By way of example, an Absolute Economic Return of 9.0% would result in a payout factor of 75% of the target award, and an Absolute Economic Return of 11.0% would result in a payout factor of 150% of the target award.
|
Individual
Objectives:
|
A portion of the payout of each participant’s total award pursuant to the 2016 Short Term Program will be based on attaining individual objectives set by the Compensation Committee. The individual performance metric will be measured against the attainment of certain specified individual objectives. The portion of each participant’s total payout attributable to Individual Objectives will equal 15% of the target award multiplied by the applicable payout factor.
|
|
The specific payout factor for the Individual Objective metric will range from 0% to 150%, based on the individual’s performance rating measured against specific individual objectives as determined by the Compensation Committee.
|
Plan Year:
|
The 2016 Short Term Program will correspond with the Company’s 2016 fiscal year.
|
Eligibility:
|
Eligibility is limited to the executive officers of the Company. Participants must be actively employed by the Company on the last working day of the Plan Year to receive an incentive award, except as otherwise provided below or by regulatory provisions. If a participant dies, becomes disabled, or retires prior to the payment of awards, or if a participant’s job is eliminated and such job elimination makes the participant eligible to receive benefits under a Company severance plan or policy, the participant may receive a payout, at the time other incentive awards are paid, based on actual time in the position and actual results of the Company. Eligibility and individual target amounts may be prorated. A participant’s year-end base salary will be used to calculate the incentive award in the case of those individuals actively employed by the Company on the last working day of the Plan Year. A participant’s base salary at the time of death, disability, retirement, or job elimination will be used to calculate the pro-rated incentive award in those specific circumstances. All proration of incentive awards will be calculated based on whole month participation.
|
Definitions:
|
“Disability” is defined as permanent and total disability (within the meaning of Section 22(e)(3) of the Internal Revenue Service Code (“Code”).
|
|
“Retirement” is defined as (i) age fifty-five (55), so long as the participant has completed at least ten (10) years of continuous service immediately prior to retirement, or (ii) age sixty-five (65).
|
|
“Actively Employed” is defined as the participant must not have been terminated prior to the identified date.
|
Repayment
Provision:
|
The participant in this 2016 Short Term Program agrees and acknowledges that this 2016 Short Term Program is subject to any policies that the Compensation Committee of the Board of Directors may adopt from time to time with respect to the repayment to the Company of any benefit received pursuant to this 2016 Short Term Program, including “clawback” policies.
|
CAPSTEAD MORTGAGE CORPORATION | |||
By:
|
|||
Andrew F. Jacobs
|
|||
President and Chief Executive Officer
|
|||
[GRANTEE] | |||
[________________]
|
Purpose:
|
Capstead Mortgage Corporation (the “
Company
”) has established the Amended and Restated 2014 Flexible Incentive Plan (the “
2014
Plan”
) to implement a key element of the Company’s long-term incentive pay program, in an effort to: (i) align executive equity compensation with the long-term objectives of the Company and (ii) motivate executives to create sustained stockholder value.
|
Participants:
|
Executive officers of the Company designated by the Compensation Committee.
|
Payout Criteria:
|
This performance-based methodology is adopted effective January 1, 2016. The performance metrics will be assessed for a three-year period commencing January 1, 2016 and ending December 31, 2018. The award will be in the form of performance units that are potentially convertible, following the end of the performance period, into shares of the Company’s common stock (the “Performance Units”). Provided some or all of the performance criteria are satisfied, the conversion will be automatic on a date determined by the Compensation Committee after the end of the performance period but no later than March 15, 2019. The “target award” for each executive officer will be a number of Performance Units that, if converted to common stock on the date of grant on a one-for-one basis, would have a value equal to 120% of such executive officer’s effective base salary at January 1, 2016. However, the actual number of shares into which the Performance Units convert will be a function of the payout factors described in each performance metric below.
|
|
The 2016 long-term Performance Unit award criteria and the weighting of such criteria is as follows:
|
Performance Metrics and Weighting
|
·
50% of the economic value of the total 2016 award is calculated based on the Relative Economic Return metric
(30% measured against Peer Agency mREITs, as defined below)
(20% measured against Peer mREITs, as defined below)
·
30% of the economic value of the total 2016 award is calculated based on the Absolute Economic Return metric
·
20% of the economic value of the total 2016 award is calculated based on the Relative Total Stockholder Return metric
|
Payout Factors:
|
The payout factor for each metric is 0% - 200% of the target award, rounded to the nearest whole percentage, based on actual performance against approved objectives, as more fully described below.
|
The specific payout factor for Relative Economic Return, as measured against Peer Agency mREITs, will be calculated as follows:
|
Threshold |
Relative Economic Return
Percentile, as Measured
Against Peer Agency mREITs
|
Payout Factor, as a
Percentage of Target
|
|||
<40 th Percentile | 0% | ||||
Minimum
|
40
th
Percentile
|
50%
|
|
||
Target
|
60
th
Percentile
|
100%
|
|
||
Maximum
|
≥80
th
Percentile
|
200%
|
|
If the Company’s Relative Economic Return, as measured against Peer Agency mREITS, is between the 40
th
and 80
th
percentiles when ranked against the Peer Agency mREITs, the payout factor as a percentage of the target payout will be determined using a straight line interpolation between the minimum and target thresholds or the target and maximum thresholds, as the case may be, depending upon the actual percentile ranking of the Company relative to the Peer Agency mREIT peer group. By way of example, a ranking in the 50
th
percentile would result in a payout factor of 75% of the target award, and a ranking in the 70
th
percentile would result in a payout factor of 150% of the target award.
|
|
The specific payout factor for Relative Economic Return, as measured against Peer mREITs, will be calculated as follows:
|
Threshold
|
Relative Economic Return
Percentile, as Measured
Against Peer mREITs
|
Payout Factor, as a
Percentage of Target
|
|||
<40 th Percentile | 0% | ||||
Minimum
|
40
th
Percentile
|
50%
|
|
||
Target
|
60
th
Percentile
|
100%
|
|
||
Maximum
|
≥80
th
Percentile
|
200%
|
|
If the Company’s Relative Economic Return, as measured against Peer mREITS, is between the 40
th
and 80
th
percentiles when ranked against each of the Peer mREITs, the payout factor as a percentage of the target payout will be determined using a straight line interpolation between the minimum and target thresholds or the target and maximum thresholds, as the case may be, depending upon the actual percentile ranking of the Company relative to the Peer mREIT group. By way of example, a ranking in the 50
th
percentile would result in a payout factor of 75% of the target award, and a ranking in the 70
th
percentile would result in a payout factor of 150% of the target award.
|
Absolute
Economic
Return:
|
A portion of the payout of each participant’s total Performance Units will be based on absolute economic return of the Company. The absolute economic return for the Company will be calculated as the respective change in book value per share of common stock of the Company from January 1, 2016 to December 31, 2018, plus dividends declared per share of common stock during such three-year period, divided by beginning per share book value at January 1, 2016 and then divided by three (“
Absolute Economic Return
”). The portion of each participant’s Performance Units attributable to Absolute Economic Return will convert into a number of shares of common stock equal to 30% of the target award multiplied by the applicable payout factor.
|
|
The specific payout factor for Absolute Economic Return will be calculated as follows:
|
Threshold
|
Absolute Economic Return
|
Payout Factor, as a
Percentage of Target
|
||||||
<8.0%
|
0%
|
|
||||||
Minimum
|
8.0%
|
|
50%
|
|
||||
Target
|
10.0%
|
|
100%
|
|
||||
Maximum
|
≥12.0%
|
200%
|
|
|
If the Company’s Absolute Economic Return, is between 8.0% and 12.0%, the payout factor as a percentage of the target payout will be determined using a straight line interpolation between the minimum and target thresholds or the target and maximum thresholds, as the case may be, depending upon the actual Absolute Economic Return of the Company. By way of example, an Absolute Economic Return of 9% would result in a payout factor of 75% of the target award, and an Absolute Economic Return of 11% would result in a payout factor of 150% of the target award.
|
The specific payout factor for Relative Total Stockholder Return will be calculated as follows:
|
Threshold
|
Relative Total Stockholder
Return Percentile, as Measured
Against Peer mREITs
|
Payout Factor, as a
Percentage of Target
|
|||
<40
th
Percentile
|
0%
|
||||
Minimum
|
40
th
Percentile
|
50%
|
|
||
Target
|
60
th
Percentile
|
100%
|
|
||
Maximum
|
≥80
th
Percentile
|
200%
|
|
If the Company’s Relative Total Stockholder Return, as measured against Peer mREITS, is between the 40
th
and 80
th
percentiles when ranked against each of the Peer mREITs, the payout factor as a percentage of the target payout will be determined using a straight line interpolation between the minimum and target thresholds or the target and maximum thresholds, as the case may be, depending upon the actual percentile ranking of the Company relative to the Peer mREIT group. By way of example, a ranking in the 50
th
percentile would result in a payout factor of 75% of the target award, and a ranking in the 70
th
percentile would result in a payout factor of 150% of the target award.
|
Dividends:
|
To the extent the Performance Units are ultimately convertible into Common Stock, the executive officer shall be entitled to receive all dividends and any other distributions declared during the performance period with respect to the shares of Common Stock into which the Performance Units are ultimately converted, as if such Common Stock had been issued on the first day of the performance period (provided, however, that nothing contained herein shall cause the Company to declare any such dividends or to make any such distributions). If the Performance Units expire without converting into any Common Stock, the executive officer is not entitled to receive any such amounts representing accrued dividends or distributions.
|
2014 Plan:
|
Each participant who is eligible for awards pursuant to Performance Units set forth herein shall agree and acknowledge that awards made are governed by the terms and provisions of the 2014 Plan.
|
CAPSTEAD MORTGAGE CORPORATION
|
|||
By:
|
|||
Phillip A. Reinsch | |||
Executive Vice President & Chief Financial Officer | |||
GRANTEE
|
|||
«Name» |