CAPSTEAD MORTGAGE CORPORATION (NYSE:CMO) Files An 8-K Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
ITEM 5.02
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DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY ARRANGEMENTS OF CERTAIN OFFICERS. |
Adjustments to 2017 Base Salaries
On January 3, 2017, the Compensation Committee (the Committee) of
the Board of Directors of Capstead Mortgage Corporation (the
Company) increased the base salary of Roy S. Kim, its Senior Vice
President and Treasurer from $345,000 to $375,000 effective
January 1, 2017.
2017 Annual Incentive Compensation Program Awards
On January 3, 2017, the Committee also adopted the 2017 Annual
Incentive Compensation Program applicable to the Companys
executive officers (the 2017 Annual Incentive Program). The 2017
Annual Incentive Program is structurally the same as the 2016
Annual Incentive Compensation Program, providing defined metrics
against which the Companys performance is to be measured,
specifically relative economic return, absolute economic return,
relative operating efficiency as well as individual goals and
objectives for each of the executive officers. Payouts are
determined formulaically, defining threshold, target and maximum
performance levels based on multiples of base salary, thereby
limiting the maximum annual incentive payout for each executive
officer. For 2017, the threshold and target performance levels
for the absolute economic return metric were adjusted to reflect
current market conditions.
The 2017 Annual Incentive Program is filed with this Form 8-K as
Exhibit 10.1 and is incorporated by reference herein. This
summary does not purport to be complete and is qualified in its
entirety by reference to Exhibit 10.1.
Award of Dividend Equivalent Rights (DERs)
In 2008 the Committee instituted an additional performance-based
short-term incentive compensation program for executives that
provides for quarterly cash payments equal to per share dividends
declared on the Companys common stock multiplied by a notional
amount of non-vesting or phantom shares of common stock, referred
to as DERs. DERs are not attached to any stock or option awards.
DERs outstanding during 2016 totaling 654,000 expired December
31, 2016. On January 3, 2017 the Committee awarded DERs expiring
December 31, 2017 as follows:
|
Executive Officer |
|
|
Phillip A. Reinsch, President and Chief Executive Officer |
200,000
|
|
Robert R. Spears, Jr., Executive Vice President and Chief Investment Officer |
200,000
|
|
Roy S. Kim, Senior Vice President – Asset and Liability Management |
125,000
|
2017 Long-Term Awards
to the 2014 Flexible Long-Term Incentive Plan, on January 3, 2017
the Committee granted two forms of incentive compensation awards
to the executive officers of the Company consisting of (a)
restricted common stock and (b) performance units (the
Performance Units).
Restricted Stock Awards
The restricted common stock awards vest in full on January 3,
2020 and were granted in the following share amounts determined
by reference to the closing stock price on the date of grant with
a value equal to 50% of each grantees effective salary on January
1, 2017:
|
Executive Officer |
Number of shares of
Restricted Common
Stock
|
|
Phillip A. Reinsch, President and Chief Executive Officer |
25,936
|
|
Robert R. Spears, Jr., Executive Vice President and Chief Investment Officer |
24,855
|
|
Roy S. Kim, Senior Vice President – Asset and Liability Management |
16,210
|
Each executive officer will enter into a Restricted Stock
Agreement with the Company in the form filed with this Form 8-K
as Exhibit 10.2.
Performance Units
Prior to granting Performance Units, the Committee adopted
long-term performance criteria (the 2017 Long-Term Performance
Unit Award Criteria). The 2017 Long-Term Performance Unit Award
Criteria are structurally the same as long-term performance
criteria adopted by the Committee in 2016, providing specific
metrics against which the Companys performance is to be measured,
specifically relative economic return, absolute economic return
and relative total stockholder return. The threshold and target
performance levels for the absolute economic return metric were
adjusted for 2017 to reflect current market conditions.
The Performance Units are convertible into shares of common stock
of the Company following a three-year performance period ending
December 31, 2019. The number of shares of common stock into
which the Performance Units are convertible is dependent on
satisfaction of the performance metrics outlined in the 2017
Long-Term Performance Unit Award Criteria during the performance
period.
For example, if the targeted performance levels are achieved over
the three-year period, the Performance Units will convert into
shares of common stock equal to the number of Performance Units
granted. If the Company exceeds the targeted performance levels
and reaches maximum performance levels, the Performance Units
will convert into shares of common stock equal to twice the
number of Performance Units granted. If the Company does not
achieve the targeted performance levels but does achieve exactly
the threshold performance levels, the Performance Units will
convert into shares of common stock equal to one-half the number
of Performance Units granted. If the Company does not achieve
even the threshold performance levels, the Performance Units will
expire without converting into any shares of common stock. The
conversion ratio will be adjusted to interpolate the appropriate
conversion factor if performance levels are above the thresholds
but below the maximums. Accordingly, the Performance Units could
expire without converting into any shares of common stock or
could be convertible into as many as 200% of the number of
Performance Units granted.
Each executive officer of the Company was granted the following
Performance Units in amounts determined by reference to the
closing stock price on the date of grant with a value equal to
100% of each grantees effective salary on January 1, 2017. These
units are convertible into the indicated number of shares of
common stock:
|
Number of shares of Common Stock into which the Performance Units are Convertible |
||||||||||||
|
Executive Officer |
Number of Performance Units |
Threshold |
Maximum |
|||||||||
|
Phillip A. Reinsch, President and Chief Executive Officer |
60,518
|
121,036
|
||||||||||
|
Robert R. Spears, Jr., Executive Vice President and Chief Investment Officer |
57,997
|
115,994
|
||||||||||
|
Roy S. Kim, Senior Vice President – Asset and Liability Management |
37,824
|
75,648
|
The common stock into which the Performance Units are convertible
will be issued by the Company following the end of the three-year
performance period and on or prior to March 15, 2020. Dividends
accrue from the date of grant and will be paid in cash when and
if the units convert into shares of common stock based on the
number of shares ultimately issued.
The 2017 Long-Term Performance Unit Award Criteria is filed with
this Form 8-K as Exhibit 10.3 and is incorporated by reference
herein. This summary does not purport to be complete and is
qualified in its entirety by reference to Exhibit 10.3.
Each executive officer will enter into a Performance Unit
Agreement with the Company in the form filed with this Form 8-K
as Exhibit 10.4.
ITEM 9.01. |
FINANCIAL STATEMENTS AND EXHIBITS |
(d) |
Exhibits.
|
10.1* |
2017 Annual Incentive Compensation Program
|
10.2* |
Form of Restricted Stock Award
|
10.3* |
2017 Long-Term Performance Unit Award Criteria
|
10.4* |
Performance Unit Agreement
|
*Filed herewith
About CAPSTEAD MORTGAGE CORPORATION (NYSE:CMO)
Capstead Mortgage Corporation is a self-managed real estate investment trust (REIT). The Company invests in a leveraged portfolio of residential mortgage pass-through securities consisting exclusively of short-duration adjustable-rate mortgage (ARM) securities issued and guaranteed by government-sponsored enterprises (GSEs), either the Federal National Mortgage Association (Fannie Mae) or the Federal Home Loan Mortgage Corporation (Freddie Mac) (together, the GSEs), or by an agency of the federal Government, the Government National Mortgage Association (Ginnie Mae). The Company finances its residential mortgage investments primarily by borrowing under repurchase arrangements with commercial banks and other financial institutions supported by its long-term investment capital. The repurchase arrangements entered into by the Company involve the sale and a simultaneous agreement to repurchase the transferred assets at a future date. CAPSTEAD MORTGAGE CORPORATION (NYSE:CMO) Recent Trading Information
CAPSTEAD MORTGAGE CORPORATION (NYSE:CMO) closed its last trading session down -0.07 at 10.48 with 609,035 shares trading hands.