SECURITIES AND EXCHANGE
COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the
Securities Exchange Act of 1934
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Registrant
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Party other than the Registrant
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to §240.14a-12
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American Capital, Ltd.
(Name of Registrant as Specified in its Charter)
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Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
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Title of each class of securities to which transaction applies:
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously.
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Form, Schedule or Registration Statement No.:
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AMERICAN CAPITAL, LTD.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 26, 2013
To the stockholders:
On behalf of the Board of Directors, it is my pleasure to invite you to our 2013 Annual Meeting of Stockholders (the “Annual
Meeting”) to be held at the Hyatt Regency Bethesda, 7400 Wisconsin Avenue, Bethesda, Maryland 20814, on April 26, 2013, at 9:00 a.m. (ET), for the purposes set forth below.
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1.
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To elect eight directors, each to serve a one-year term;
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2.
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To ratify the appointment of Ernst & Young LLP to serve as our independent public accountant for the year ending December 31, 2013; and
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To transact such other business as may properly come before the meeting or any adjournment thereof.
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Stockholders of record at the close of business on March 1, 2013, are entitled to notice of, and to vote at, the Annual Meeting and
any adjournment of the meeting. If you wish to vote shares held in your name and attend the Annual Meeting in person, we request that you register in advance with our Investor Relations department either by email at
IR@AmericanCapital.com
or
by telephone at (301) 951-5917.
Attendance at the Annual Meeting will be limited to persons presenting proof of stock ownership on the record date and picture identification
.
If you hold shares directly in your name as the stockholder
of record, proof of ownership could include a copy of your account statement or a copy of your stock certificate(s). If you hold shares through an intermediary, such as a broker, bank or other nominee, proof of stock ownership could include a proxy
from your broker, bank or other nominee or a copy of your brokerage or bank account statement. Additionally, if you intend to vote your shares at the meeting, you must request a “legal proxy” from your broker, bank or other nominee and
bring this legal proxy to the meeting.
If you have received or requested a printed copy of the proxy materials from us
by mail, you may vote by completing, signing and promptly returning the enclosed proxy card promptly in the envelope provided, which requires no postage if mailed in the United States. Internet and telephone voting procedures are described in the
“General Information” section beginning on page 1 of this proxy statement and on the proxy card. For shares held through a benefit or compensation plan or a bank, broker or other nominee, you may vote by submitting voting instructions to
your plan trustee, bank, broker or nominee. If you attend the meeting, you may withdraw your proxy and vote in person.
BY ORDER OF THE BOARD OF DIRECTORS,
S
AMUEL
A.
F
LAX
Executive Vice President, General Counsel,
Chief Compliance Officer and Secretary
March 15, 2013
Enclosures
TABLE OF CONTENTS
AMERICAN CAPITAL, LTD.
PROXY STATEMENT
This proxy statement is furnished in connection with the solicitation of proxies by the Board of Directors (the “Board of Directors”) of American Capital, Ltd. (“American Capital,” the
“Company,” “we,” “our” and “us”), for use at our 2013 Annual Meeting of Stockholders (the “Annual Meeting”) to be held on April 26, 2013, at 9:00 a.m. (ET), at the Hyatt Regency Bethesda, 7400
Wisconsin Avenue, Bethesda, Maryland 20814, and for the purposes set forth in the accompanying Notice of Annual Meeting of Stockholders, and at any adjournments to the meeting. This proxy statement, the accompanying proxy card and our annual report
to stockholders, which includes our annual report on Form 10-K with audited financial statements for the year ended December 31, 2012, are first being sent to our stockholders on or about March 15, 2013.
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to be Held on April 26,
2013:
This proxy statement and our annual report on Form 10-K are available on the internet at
http://www.ACAS.com/2013proxymaterials.
On this site, you will be able to access our 2013 proxy statement, our annual report to stockholders,
which includes our annual report on Form 10-K for the fiscal year ended December 31, 2012, and any amendments or supplements to the foregoing materials that are required to be furnished to stockholders.
GENERAL INFORMATION
The enclosed proxy is solicited on behalf of the Board of Directors and is revocable at any time prior to the voting of the proxy, by the filing of an instrument revoking it, or a duly executed proxy
bearing a later date, with our Secretary. In the event that you attend the Annual Meeting, you may revoke your proxy and cast your vote personally at the meeting. Shares represented by valid proxies will be voted in accordance with instructions
contained therein. If no specification is made, such shares will be voted “FOR” all nominees under Proposal 1 and “FOR” Proposal 2.
The Board of Directors is not aware of any matter to be presented for action at the Annual Meeting other than the matters set forth herein. Should any other matter requiring a vote of stockholders arise,
it is the intention of the persons named in the proxies to vote in accordance with their best judgment on such matters.
We
will bear the cost of soliciting proxies on the accompanying form. In addition to the use of mail, our officers and employees may solicit proxies by telephone or facsimile. Upon request, we will reimburse brokers, dealers, banks, and trustees, or
their nominees, for reasonable expenses incurred by them in forwarding our proxy materials to beneficial owners of our common stock, $0.01 par value per share.
The Board of Directors has fixed the close of business on March 1, 2013, as the record date for determining the holders of our common stock entitled to receive notice of and to vote at the Annual
Meeting and any adjournments thereof. On the record date, there were 305,883,486 shares of our common stock legally outstanding. Only stockholders on the record date are entitled to vote at the Annual Meeting and such stockholders will be entitled
to one vote for each share of our common stock held, which may be given in person or by proxy duly authorized in writing. The presence in person or by proxy of a majority of shares of our common stock entitled to vote will constitute a quorum for
the transaction of business at the Annual Meeting. Shares represented by proxies received but marked as abstentions will be included in the calculation of the number of shares considered to be present at the meeting. Shares held in a brokerage
account that are voted by
the broker or other nominee on some but not all matters will be treated as shares present for purposes of determining the presence of a quorum. However, if you hold your shares in street name and
do not provide voting instructions to your broker, your shares will not be voted on any proposal on which your broker does not have discretionary authority to vote (a “broker non-vote”). Under current rules, your broker will not have
discretionary authority to vote your shares at the Annual Meeting on any of the matters to be considered at the Annual Meeting other than the ratification of our independent public accountants. We encourage you to provide instructions to your bank,
broker or nominee by carefully following the instructions provided. This will ensure that your shares are voted at the Annual Meeting as you direct.
You may submit your proxy or vote your shares of our common stock by any of the following methods:
By Telephone or the Internet
— Stockholders can vote their shares via telephone or the internet as instructed in the Notice of Internet Availability of Proxy Materials, the proxy card or the
voting instruction form. The telephone and internet procedures are designed to authenticate a stockholder’s identity, to allow stockholders to vote their shares and to confirm that their instructions have been properly recorded.
By Mail
— A stockholder who receives a paper proxy card or voting instruction form or requests a paper proxy card or voting
instruction form by telephone or internet may elect to vote by mail and should complete, sign and date the proxy card or voting instruction form and mail it in the pre-addressed envelope that accompanies the delivery of the proxy card or voting
instruction form. For stockholders of record, proxy cards submitted by mail must be received by the date and time of the Annual Meeting. For stockholders that hold their shares through an intermediary, such as a broker, bank or other nominee, the
voting instruction form submitted by mail must be mailed by the deadline imposed by your bank, broker or other agent for your shares to be voted.
In Person
— Shares held in your name as the stockholder of record on the record date may be voted by you in person at the Annual Meeting. Shares held beneficially by you in street name on the
record date may be voted by you in person at the Annual Meeting only if you obtain a legal proxy from the broker or other agent that holds your shares giving you the right to vote the shares and bring that proxy to the meeting.
Our principal executive offices are located at 2 Bethesda Metro Center, 14th floor, Bethesda, Maryland 20814. Notices of revocation of
proxies should be sent to that address, attention Secretary.
PROPOSAL 1:
ELECTION OF DIRECTORS
Pursuant to our Third Amended and Restated Certificate of Incorporation (our “Certificate of Incorporation”), stockholders elect each of the members of the Board of Directors annually. The term
of each director, including the Chairman of the Board of Directors, will expire at the Annual Meeting. Each director has been nominated by the Compensation and Corporate Governance Committee of the Board of Directors, in accordance with our Second
Amended and Restated Bylaws, as amended (“Bylaws”), to stand for re-election at the Annual Meeting and to hold office until the annual meeting to be held in 2014. It is expected that each of the nominees will be able to serve, but if any
such nominee is unable to serve for any reason, the proxies reserve discretion to vote or refrain from voting for a substitute nominee or nominees. A stockholder using the enclosed form of proxy can vote for or against any or all of the nominees or
may abstain from voting for any or all of the nominees.
We believe that all of our directors, each of whom is standing for
re-election, possess the personal and professional qualifications necessary to serve as a member of our Board of Directors. Our directors have been evaluated by the Compensation and Corporate Governance Committee pursuant to the guidelines described
below under “Compensation and Corporate Governance Committee” and the determination was made that each
2
of them fulfills and exceeds the qualities that we look for in members of our Board of Directors. Other than Mr. Wilkus, each of the nominees is independent as defined in the NASDAQ listing
standards and is not an “Interested Person” as defined in Section 2(a)(19) of the Investment Company Act of 1940, as amended (the “1940 Act”).
The information set forth below is as of March 1, 2013, with respect to each of our directors, each a nominee for election at the Annual Meeting. The business address of each nominee is American
Capital, Ltd., 2 Bethesda Metro Center, 14th floor, Bethesda, Maryland 20814. We have highlighted specific attributes for each Board member below.
NOMINEES FOR DIRECTOR
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Name and Year First Elected as a Director
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Age
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Qualifications and Experience
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Mary C. Baskin (2000)
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62
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Ms. Baskin has been Managing Director of the Ansley Consulting Group, a retained executive search firm, since 1999. From 1997 to
1999, Ms. Baskin served as Partner of Quayle Partners, a start-up consulting firm that she helped found. From 1996 to 1997, Ms. Baskin served as Vice President and Senior Relationship Manager for Harris Trust and Savings Bank. From 1990 to
1996, Ms. Baskin served as Director, Real Estate Division and Account Officer, Special Accounts Management Unit, for the Bank of Montreal. The Board has determined that Ms. Baskin is an “audit committee financial expert” (as defined
in Item 407 of Regulation S-K under the Securities Act of 1933, as amended (the “Securities Act”)).
Ms. Baskin’s experience in finance, accounting, risk management and executive compensation matters strengthens our Board’s collective qualifications, skills, experience and
viewpoints.
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Neil M. Hahl (1997)
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64
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Mr. Hahl is a general business consultant. He was President of The Weitling Group, a business consulting firm, from 1996 to 2001.
From 1995 to 1996, Mr. Hahl served as Senior Vice President of the American Financial Group. From 1982 to 1995, Mr. Hahl served as Senior Vice President and Chief Financial Officer and a Director of The Penn Central Corporation. The Board
has also determined that Mr. Hahl is an “audit committee financial expert” (as defined in Item 407 of Regulation S-K under the Securities Act).
Mr. Hahl’s public company accounting, finance and risk management expertise, including his extensive experience as a senior executive responsible for
the preparation of financial statements, strengthens our Board’s collective qualifications, skills, experience and viewpoints.
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Philip R. Harper (1997)
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69
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Mr. Harper is the retired Chairman of US Investigations Services, Inc. (“USIS”) (k/n/a Altegrity Risk International), a company that provides business intelligence and
risk management solutions, security and related services and expert staffing solutions for businesses and federal agencies. He served as Chairman from 1996 to 2007. From 1996 to 2005, he was also the Chief Executive Officer and President of USIS.
From 1991 to 1994, Mr. Harper served as President of Wells Fargo Alarm Services. From 1988 to
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Name and Year First Elected as a Director
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Age
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Qualifications and Experience
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1991, Mr. Harper served as President of Burns International Security Services—Western Business Unit. Mr. Harper served
in the U.S. Army from 1961 to 1982, where he commanded airborne infantry and intelligence units.
Mr. Harper’s extensive senior executive officer and board service and his experience with executive compensation and corporate governance matters strengthen our Board’s collective
qualifications, skills, experience and viewpoints.
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John A. Koskinen (2007)
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73
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Mr. Koskinen served as the Non-Executive Chairman of Freddie Mac from September 2008 to February 2012 and also served as the interim
CEO and the person performing the function of Principal Financial Officer of Freddie Mac for six months during 2009. Prior to that he was President of the United States Soccer Foundation and a member of its Board from 2004 to 2008. He has also been
a member of the Board of Directors of AES Corporation since 2004. From 2000 to 2003, Mr. Koskinen served as Deputy Mayor and City Administrator of the District of Columbia. From 1994 to 2000, Mr. Koskinen served in the White House as
Deputy Director for Management of the Office of Management and Budget and Assistant to the President and Chair of the President’s Council on Year 2000 Conversion. Prior to his service with the U.S. government, Mr. Koskinen served as the Vice
President and later the President and Chief Executive Officer of The Palmieri Company, a company which restructured large, troubled operating companies. He was also a member of the Board of Trustees of Duke University from 1985 to 1997, serving as
Chairman of the Board from 1994 to 1997. The Board has also determined that Mr. Koskinen is an “audit committee financial expert” (as defined in Item 407 of Regulation S-K under the Securities Act).
Mr. Koskinen’s extensive board, government and senior executive experience
managing a wide range of companies and divisions engaged in a variety of activities and his finance and risk management expertise strengthen our Board’s collective qualifications, skills, experience and viewpoints.
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Stan Lundine (1997)
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74
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Mr. Lundine is currently retired. From 1995 to 2008, he served as Of Counsel to the law firm of Sotir and Goldman and as Executive Director of the Chautauqua County Health
Network, a consortium of four hospitals. He was also President of the Chautauqua Integrated Delivery System, Inc., a for-profit Physician/Hospital organization. From 1987 to 1994, Mr. Lundine served as Lieutenant Governor of New York and
chaired several boards and councils in addition to assisting the Governor on a variety of tasks. From 1976 until 1987, Lundine was a Member of Congress serving on the Banking Committee and the Committee on Science and Technology. From 1970 until his
election to Congress, Lundine was Mayor of Jamestown, NY and an executive or board member of various governmental entities and institutions. Mr. Lundine has been a Director of John G. Ullman and Associates, Inc. and serves on the Advisory Board
of M&T Bank. He also served on the Board of Directors of Chautauqua Institution and the Robert H. Jackson
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Name and Year First Elected as a Director
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Age
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Qualifications and Experience
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Center. Previously he was also on the Board of Directors of U.S. Investigations Services, Inc. and National Forge Co.
Mr. Lundine’s extensive legal, board and government service and his experience
with corporate governance and executive compensation matters strengthen our Board’s collective qualifications, skills, experience and viewpoints.
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Kenneth D. Peterson, Jr. (2001)
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60
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Mr. Peterson has been Chief Executive Officer of Columbia Ventures Corporation, a private equity firm holding interests in domestic
and international telecommunications, specialty chemicals, real estate and other industries, since 1988. He is also a member of the Board of Directors of Metro One Telecommunications, Inc., Pac-West Telecomm, Inc. and Washington Policy
Center.
Mr. Peterson’s extensive board, senior executive and private
equity experience strengthens our Board’s collective qualifications, skills, experience and viewpoints.
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Alvin N. Puryear (1998)
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75
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Dr. Puryear is Professor Emeritus of Management and Entrepreneurship at Baruch College of the City University of New York where he
was the initial recipient of the Lawrence N. Field Professorship in Entrepreneurship. Dr. Puryear is also a management consultant, who advises existing and new businesses with high-growth potential. Prior to his appointment at Baruch College,
Dr. Puryear was on the faculty of the graduate school of business administration at Rutgers University. During leaves-of-absence from Baruch, he served as a Vice President at the Ford Foundation and First Deputy Comptroller for the City of New York.
Before joining the academic community, he held executive positions in finance and information technology with the Mobil Corporation and Allied Chemical Corporation, respectively. He is also a member of the Boards of Directors of American Capital
Agency Corp. and American Capital Mortgage Investment Corp. In the past five years, Dr. Puryear also served as a director of North Fork Bancorporation, North Fork Bank, and the Bank of Tokyo-Mitsubishi UFG Trust Company.
Dr. Puryear’s extensive academic and board service and his experience in
finance, corporate governance and executive compensation matters strengthen our Board’s collective qualifications, skills, experience and viewpoints.
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Malon Wilkus* (1986)
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61
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Mr. Wilkus founded American Capital in 1986 and has served as our Chief Executive Officer and Chairman of the Board of Directors since that time, except for the period from 1997
to 1998 during which he served as Chief Executive Officer and Vice Chairman of the Board of Directors. He also served as our President from 2001 to 2008 and from 1986 to 1999. In addition, Mr. Wilkus is the President of American Capital, LLC,
our fund management portfolio company. He is also Chief Executive Officer and Chair of the Board of Directors of American Capital Agency Corp. and Chief Executive Officer and Chair of the Board of Directors of American Capital Mortgage Investment
Corp.
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Name and Year First Elected as a Director
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Age
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Qualifications and Experience
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Mr. Wilkus’ extensive board and senior executive experience investing in and managing private and public investment vehicles and his financial expertise and deep knowledge
of our business as our founder and Chief Executive Officer strengthen our Board’s collective qualifications, skills, experience and viewpoints.
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*
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Director who is an “Interested Person” as defined in Section 2(a)(19) of the 1940 Act. Mr. Wilkus is an Interested Person because he is our employee
and officer.
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Director Resignation Policy
Our Bylaws require a candidate in an uncontested election for director to receive a majority of the votes cast in order to be elected as a
director. Under this provision, each vote is specifically counted “for” or “against” the director’s election, unless a stockholder abstains from voting with respect to the matter. Thus, a director nominee is required to
receive more votes “for” than “against” to be elected. Pursuant to Delaware law, a director shall remain in office until his or her successor is elected, even if the director has not received a vote sufficient for re-election.
Thus, a company could have a “holdover” director. However, pursuant to our Board-approved director resignation policy, an incumbent director must tender his or her resignation to the Board of Directors if the director is nominated but not
re-elected. The policy also requires the Compensation and Corporate Governance Committee to make a recommendation to the full Board of Directors on whether to accept or reject the resignation, and the full Board of Directors to make that
determination. The Board of Directors will publicly disclose its decision within 90 days after receipt of the tendered resignation.
Any director who tenders his or her resignation pursuant to this policy may not participate in the Compensation and Corporate Governance Committee recommendation or Board of Directors action regarding
whether to accept the resignation offer. If each member of the Compensation and Corporate Governance Committee does not receive a vote sufficient for re-election, then the independent directors who did not fail to receive a sufficient vote shall
appoint a committee amongst themselves to consider the resignation offers and recommend to the Board of Directors whether to accept them. If the only directors who did not fail to receive a sufficient vote for re-election constitute three or fewer
directors, all directors may participate in the action regarding whether to accept the resignation offers.
Conclusion and Recommendation; Vote Required
The election of directors nominated in Proposal 1 requires the vote of a majority of the votes of all shares of common stock present or represented and entitled to vote at the Annual Meeting. A
“majority” of the votes cast means that the number of votes cast “for” a director nominee must exceed the votes cast “against” that nominee. In the context of the election of eight directors at the Annual Meeting, it
will mean that each of the eight director nominees will be required to receive more votes “for” than “against” to be elected. Abstentions and broker non-votes will have no effect on the outcome of the proposal. THE BOARD OF
DIRECTORS RECOMMENDS A VOTE
FOR
THE ELECTION OF ALL OF THE NOMINEES NAMED ABOVE.
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DIRECTOR COMPENSATION AND STOCK OWNERSHIP GUIDELINES
The elements of compensation for our non-employee directors include a retainer, fees for attending meetings and, if
applicable, for serving on the boards of directors of our portfolio companies, stock options and compensation under our disinterested director retention plan. The retainer and fee rates noted below for 2012 did not increase from the rates approved
in 2010. The 2013 rates are also set at the same level.
For 2012, non-employee directors were paid a retainer for service on
the Board of Directors at the rate of $100,000 per year, with the lead director and members chairing a committee receiving an additional retainer at the rate of $25,000 and $15,000 per year, respectively. In addition, non-employee directors received
a fee of $3,000 for attending Board or committee meetings and certain other meetings, with approval of the Chairman of our Board of Directors. Non-employee directors received a fee from us for each American Capital portfolio company or fund board of
directors on which they served, in lieu of any payment by the portfolio company or fund. For such companies that are not public, that fee is set at the rate of $30,000 per year. For such companies that are public that fee is based on the fee payable
by the company to its other directors. Directors are reimbursed for travel, lodging and other out-of-pocket expenses incurred in connection with the Board of Directors and committee meetings. Directors who are our employees do not receive additional
compensation for service as a member of the Board of Directors.
The following table sets forth the compensation received by
each non-employee director during 2012:
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Name
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Fees Earned
or Paid in
Cash
($)
(1)
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Stock
Awards
($)
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Option
Awards
($)
(2)
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Non-Equity
Incentive Plan
Compensation
($)
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Change in
Pension
Value
and
Nonqualified
Deferred
Compensation
Earnings
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All Other
Compensation
($)
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Total
($)
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Mary C. Baskin (2000)
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223,000
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—
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—
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—
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—
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—
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223,000
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Neil M. Hahl (1997)
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295,000
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—
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—
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—
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—
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295,000
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Philip R. Harper (1997)
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266,000
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—
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—
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—
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—
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—
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266,000
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John A. Koskinen (2007)
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190,000
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—
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—
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—
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—
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—
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190,000
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Stan Lundine (1997)
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178,000
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—
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—
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—
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—
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—
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178,000
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Kenneth D. Peterson, Jr. (2001)
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136,000
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—
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—
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—
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—
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—
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136,000
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Alvin N. Puryear (1998)
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349,500
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—
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—
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—
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—
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—
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349,500
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(1)
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The column “Fees Earned or Paid in Cash” includes the following payments by us to our non-employee directors in 2012 for serving on certain boards of
directors of our portfolio companies in the following amounts: Ms. Baskin—$30,000 for eLynx Holdings, Inc.; Mr. Hahl—$30,000 for each of WIS Holdings Company Inc, HALT Medical, and The Meadows of Wickenburg, L.P.;
Mr. Harper—$30,000 for SMG Holdings Inc.; Dr. Puryear—$30,000 for Financial Asset Management Systems, Inc., $61,000 for American Capital Agency Corp., and $56,500 for American Capital Mortgage Investment Corp.
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(2)
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Amounts under the column “Option Awards” represent the fair value of stock option awards granted. In 2012 there were no stock option awards granted. As of
December 31, 2012, Ms. Baskin, Messrs. Hahl, Harper, Lundine, Peterson, Koskinen and Dr. Puryear had the following aggregate option awards outstanding: 305,000; 365,000; 458,750; 365,000; 433,750; 453,750; and 458,750, respectively.
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We have established a series of option plans for our non-employee directors, each of which must be approved by
the Securities and Exchange Commission (the “SEC”) under the 1940 Act to become effective (the “existing director option plans”). The first was the 1997 Disinterested Director Stock Option Plan, which was
7
approved by the SEC on May 14, 1999, and which provided for the issuance to participants of options to purchase an aggregate of 150,000 shares of our common stock. Messrs. Hahl, Harper and
Lundine and Dr. Puryear each received automatic grants of options to purchase 15,000 shares of our common stock when the plan was approved by the SEC. In addition, as of May 15, 2000, Messrs. Hahl, Harper and Lundine and Dr. Puryear
each received grants of options to purchase an additional 5,000 shares of our common stock. Ms. Baskin and Mr. Peterson were granted options to purchase 15,000 shares of our common stock each on June 15, 2000 and January 23,
2001, respectively, and Mr. Koskinen was granted options to purchase 20,000 shares of our common stock on February 2, 2007. All such options have vested and are fully exercisable except for the options that were granted on May 15,
2000 and June 15, 2000, which have all expired. All unexercised options expire ten years from the date of grant except that the May 14, 1999 grants to Messrs. Hahl, Harper and Lundine expired on November 6, 2007, and
Dr. Puryear’s initial grant expired on September 15, 2008.
The second plan was the 2000 Disinterested Director
Stock Option Plan, which provides for the issuance of options to purchase up to 150,000 shares of our common stock, and which became effective on February 28, 2006, when the SEC issued an order authorizing the plan. Ms. Baskin, Messrs.
Hahl, Harper, Lundine and Peterson, and Dr. Puryear, who were our directors on the date of the order, each received an automatic grant of options to purchase 25,000 shares of our common stock. All such options have now vested. These options
expire on October 30, 2013.
The third plan was the 2006 Stock Option Plan, which provides for the issuance to
non-employee directors of options to purchase up to 320,000 shares of our common stock, and which became effective on February 16, 2007, when the SEC issued an order authorizing the plan. Each of the non-employee directors received an automatic
grant of options to purchase 40,000 shares of our common stock on February 16, 2007. All such options have now vested. These options expire on May 11, 2016, except for Mr. Koskinen’s options, which will expire on February 1,
2017.
The fourth plan was the 2007 Stock Option Plan, which provides for the issuance of options to purchase up to 400,000
shares of our common stock, and which became effective on October 24, 2007, when the SEC issued an order authorizing the plan. Each of the non-employee directors received an automatic grant of options to purchase 50,000 shares of our common
stock. All such options have now vested. These options expire on May 4, 2017.
The fifth plan was the 2008 Stock Option
Plan, which provides for the issuance of options to purchase up to 750,000 shares of our common stock, and which became effective on September 30, 2009, when the SEC issued an order authorizing the plan. Each of the non-employee directors
received an automatic grant of options to purchase 93,750 shares of our common stock. All such options have now vested. These options expire on May 19, 2018.
The sixth plan was the 2009 Stock Option Plan, which provides for the issuance of options to purchase up to 750,000 shares of our common stock, and which became effective on October 8, 2010, when the
SEC issued an order authorizing the plan. Each of the non-employee directors received an automatic grant of options to purchase 93,750 shares of our common stock. All such options have now vested. These options expire on June 11, 2019.
The seventh plan was the 2010 Disinterested Director Option Plan (the “2010 Director Option Plan”), which provides
for the issuance of options to purchase up to 1,250,000 shares of our common stock, and which became effective on August 30, 2011, when the SEC issued an order authorizing the plan. Each of the non-employee directors received an automatic grant
of options to purchase 156,250 shares of our common stock. All such options will vest over the first three anniversaries of September 15, 2010 and expire on September 15, 2020. Vesting of these options will be automatically accelerated
upon the occurrence of death or disability of the director.
8
Stock Ownership Guidelines
Our Board of Directors believes that directors more effectively represent the best interests of the company if they are stockholders themselves. Thus, non-employee directors are encouraged to own shares
of our common stock equal in value to the lesser of two times the annual cash Board retainer (which was $100,000 for 2012) or 15,000 shares within five years of joining the Board (of which 3,000 shares should be owned within the first year of
joining the Board). The minimum number of shares to be held by the non-employee directors will be calculated on the first trading day of each calendar year based on their fair market value. In the event the cash retainer increases, the directors
will have five years from the time of the increase to acquire any additional shares needed to meet these guidelines. The Compensation and Corporate Governance Committee may waive or modify these requirements in certain situations.
PROPOSAL 2:
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANT FOR 2013
Ernst & Young LLP has served as our independent registered public accounting firm since 1993 and, at a meeting on
February 21, 2013, the Audit and Compliance Committee approved the appointment of Ernst & Young LLP to audit our consolidated financial statements for the year ending December 31, 2013. This appointment is subject to ratification
or rejection by the stockholders. Ernst & Young LLP has no financial interest in American Capital. A representative of Ernst & Young LLP is expected to be present at the Annual Meeting, will have an opportunity to make a statement
if he or she so desires and is expected to be available to respond to appropriate questions.
The following table presents a
summary of the fees billed by Ernst & Young LLP for professional audit services and other services provided for the two years ended December 31, 2012 and 2011.
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(in thousands)
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2012
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2011
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Audit Fees
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$
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3,206
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$
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2,919
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Audit-Related Fees
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725
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314
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Tax Fees
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—
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—
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All Other Fees
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—
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35
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Total Fees
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$
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3,931
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$
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3,268
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Audit Fees
“Audit Fees” relate to fees billed by Ernst & Young LLP for the annual audit, including the audit of our annual financial statements, audit of internal control over financial reporting,
review of our quarterly financial statements, comfort letters and consents related to debt and stock issuances and security custody examinations.
Audit-Related Fees
“Audit-Related
Fees” relate to fees billed for required agreed upon procedures related to our debt securitization transactions and accounting consultation.
Tax Fees
“Tax Fees” relate to fees
billed for professional services for tax compliance.
All Other Fees
“All Other Fees” relate to fees billed for required agreed upon procedures related to funds managed by one of our portfolio
companies.
9
All services rendered by Ernst & Young LLP were permissible under applicable laws
and regulations, and were pre-approved by the Audit and Compliance Committee for 2012 and 2011 in accordance with its pre-approval policy. The Audit and Compliance Committee has established a policy regarding the pre-approval of all audit and
permissible non-audit services provided by our independent auditors. The policy requires the Audit and Compliance Committee to approve each audit or non-audit engagement or accounting project involving the independent auditors, and the related fees,
prior to commencement of the engagement or project to make certain that the provision of such services does not impair the firm’s independence. Approval of such engagements may be provided in person at regularly scheduled meetings or, for
certain services, by email upon the affirmative assent thereto by at least two members of the Audit and Compliance Committee so long as no member objects thereto. In the case of an objection, approval must then be obtained at an in person meeting of
the Audit and Compliance Committee. Pre-approval is not required for audit or non-audit services that result in a
de minimis
amount of $10,000 or less, although such services are reported to the Audit and Compliance Committee promptly
thereafter. In addition, pursuant to the policy, pre-approval is not required for additional non-audit services if such services result in a
de minimis
amount of less than 5% of the total annual fees paid by us to the independent auditor
during the fiscal year in which the non-audit services are provided, were not recognized by us at the time of engagement to be non-audit services and are reported to the Audit and Compliance Committee promptly thereafter and approved prior to the
completion of the audit.
Conclusion and Recommendation; Vote Required
The affirmative vote of a majority of the votes cast by the holders of our common stock present or represented and entitled to vote at the
Annual Meeting is required to ratify the appointment of our independent auditors. Abstentions will have no effect on the outcome of the proposal. THE BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR
RATIFICATION OF THE APPOINTMENT OF ERNST &
YOUNG LLP AS OUR INDEPENDENT PUBLIC ACCOUNTANT FOR 2013.
10
REPORT OF THE AUDIT AND COMPLIANCE COMMITTEE
The Board of Directors has appointed an Audit and Compliance Committee presently composed of three directors, Ms. Baskin and Messrs.
Hahl and Koskinen. Each of the directors is independent as defined in the NASDAQ listing standards. The Board of Directors has determined that Ms. Baskin and Messrs. Hahl and Koskinen are all “audit committee financial experts” (as
defined in Item 407 of Regulation S-K under the Securities Act).
The Audit and Compliance Committee’s
responsibility is one of oversight as set forth in its charter, which is available on our web site at
www.AmericanCapital.com
. It is not the duty of the Audit and Compliance Committee to prepare our consolidated financial statements, to plan
or conduct audits or to determine that our consolidated financial statements are complete and accurate and are in accordance with U.S. generally accepted accounting principles. Our management is responsible for preparing our financial statements and
for maintaining internal controls. The independent auditors are responsible for auditing the consolidated financial statements and for expressing an opinion as to whether those audited consolidated financial statements fairly present our financial
position, results of operations, changes in net assets and cash flows in conformity with U.S. generally accepted accounting principles.
The Audit and Compliance Committee has reviewed and discussed our audited financial statements with management and with Ernst & Young LLP, our independent auditors for 2012.
The Audit and Compliance Committee has discussed with Ernst & Young LLP the matters required to be discussed by Statement on
Auditing Standards No. 61, as amended.
The Audit and Compliance Committee has received from Ernst & Young LLP
the written statements required by PCAOB Rule No. 3526,
“Communications with Audit Committees Concerning Independence,”
and has discussed Ernst & Young’s independence with Ernst & Young LLP, and has
considered the compatibility of non-audit services with the auditor’s independence.
Based on the review and discussions
referred to above, the Audit and Compliance Committee recommended to the Board of Directors that the audited consolidated financial statements for the year ended December 31, 2012, be included in our Annual Report on Form 10-K for the year
ended December 31, 2012, for filing with the Securities and Exchange Commission.
The Audit and Compliance Committee also
recommends the selection of Ernst & Young LLP to serve as independent public accountants for the year ending December 31, 2013.
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By the Audit and Compliance Committee:
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Neil M. Hahl, Chairman
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Mary C. Baskin
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John A. Koskinen
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Use of Report of the Audit and Compliance Committee
In accordance with and to the extent permitted by applicable law or regulation, the information contained in the foregoing Report of the
Audit and Compliance Committee is not “soliciting material” and is not to be incorporated by reference into any future filing under the Securities Act or the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
11
EXECUTIVE OFFICERS
The Board of Directors elects executive officers annually following our annual meeting of stockholders to serve until the meeting of the
Board following the next annual meeting. Set forth below is certain information about each executive officer as of March 1, 2013. The business address of each executive officer is American Capital, Ltd., 2 Bethesda Metro Center, 14th
floor, Bethesda, Maryland 20814.
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Name
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Age
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Information about Executive
Officers
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Malon Wilkus
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61
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Chief Executive Officer (“CEO”) and Chairman of the Board of Directors. Further information about Mr. Wilkus may be found on page 5 of this proxy
statement.
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John R. Erickson
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53
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Mr. Erickson has served as the President, Structured Finance since 2008 and as our Chief Financial Officer (“CFO”) since 1998. He also served as our Secretary from 1999
to 2005 and an Executive Vice President from 2001 to 2008. From 1998 to 2001, Mr. Erickson was a Vice President. He is also Chief Financial Officer, Executive Vice President and a member of the Board of Directors of American Capital Mortgage
Investment Corp. and Chief Financial Officer, Executive Vice President and a member of the Board of Directors of American Capital Agency Corp.
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Samuel A. Flax
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56
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Mr. Flax has served as an Executive Vice President and our General Counsel (“GC”), Chief Compliance Officer and Secretary since 2005. From 1990 to 2005, he was a
partner in the Washington, D.C. law firm of Arnold & Porter LLP, where he served as our principal external counsel. He is also Executive Vice President, Secretary and a member of the Board of Directors of American Capital Agency Corp. and
Executive Vice President, Secretary and a member of the Board of Directors of American Capital Mortgage Investment Corp. Mr. Flax also served as Of Counsel to Arnold & Porter LLP in 2005.
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Gordon J. O’Brien
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47
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Mr. O’Brien has served as the President, Specialty Finance and Operations since 2008. From 2001 to 2008 he served as a Senior Vice President and Managing Director. Prior to
his election as a Senior Vice President, he served as a Vice President in 2001. From 1998 to 2001, he was a Principal. Mr. O’Brien was a Vice President at Pennington Partners & Company, a private equity fund from 1995 to
1998.
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Ira J. Wagner
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60
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Mr. Wagner has served as the President, European Private Finance since 2008. He previously served as our Chief Operating Officer from 2001 to 2008 and as a Senior Vice President
in 2001, prior to becoming an Executive Vice President from 2001 to 2008. He has been an employee since 1997 and has also held the positions of Principal and Senior Investment Officer. From 1993 to 1997, Mr. Wagner was a self-employed consultant and
financial advisor.
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Brian S. Graff
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47
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Mr. Graff has served as a Senior Vice President since 2004 and as a Senior Managing Director since 2008. From 2005 to 2008 he served as a Regional Managing Director and from 2004
to 2005 he served as a Managing Director. Mr. Graff also served as a Vice President and Principal from 2001 to 2004. From 2000 to 2001, he was a Principal of Odyssey Investments Partners, a private equity
fund.
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12
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Name
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Age
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Information about Executive
Officers
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Darin R. Winn
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48
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Mr. Winn has served as a Senior Vice President since 2002 and as a Senior Managing Director since 2008. From 2005 to 2008 he served as a Regional Managing Director and from 2002
to 2005 he served as a Managing Director. Mr. Winn also served as a Vice President from 2001 to 2002. From 1998 to 2001, he was a Principal. Prior to joining the Company, he worked at Stratford Equity Partners, a mezzanine and equity fund, from 1995
to 1998.
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Roland H. Cline
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65
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Mr. Cline has served as a Senior Vice President and Managing Director since 2001. From 1998 to 2001, he was a Vice President.
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COMPENSATION DISCUSSION AND ANALYSIS
We have reviewed our executive compensation programs, the performance of each of our executives and the company’s performance last
year in the current market environment and continue to believe that our focus on providing a mix of base salary, short-term cash incentive payments and stock-based long-term incentive compensation at levels generally consistent with prior years is
the best approach for the Company at this time. Thus, we have not made any material changes to the Company’s executive compensation policies and decisions for 2013.
The following is a discussion of certain aspects of our compensation program and practices as they relate to our principal executive officer, our principal financial officer and our three other most
highly-paid executive officers for 2012, whom we refer to below collectively as our “named executive officers,” or “NEOs.” We also refer to our CEO, Presidents, CFO and GC as our “senior management.” This section
includes a description of the philosophy and objectives underlying our executive compensation policies and our most important executive compensation decisions during 2012, and provides our analysis of these policies and decisions. It is also meant
to provide a context for the data we present in the compensation tables and related footnotes below, as well as the narratives that accompany the compensation tables.
Executive Compensation Philosophy and Objectives
We believe that our continued success as a leading private equity firm and alternative asset manager during various economic environments
is largely attributable to our ability to motivate and retain outstanding executive officers through the use of both current and long-term incentive compensation programs, which are competitive in a global market. We also believe that as a public
company, elements of our executive compensation programs should be designed to align employee interests with those of the stockholders and to reward performance above various goals, which is why we implemented our stock-based long-term incentive
compensation programs. We establish compensation levels for our named executive officers based on current competitive market conditions and individual and company performance, each in the context of the economic climate and the relative values of
different compensation programs. Our executive compensation programs and related data are reviewed throughout the year and on an annual basis by the Compensation and Corporate Governance Committee (the “Compensation Committee”) to
determine if our named executive officers are meeting their stated objectives and the programs are providing their intended results.
At our 2011 Annual Meeting of Stockholders, we held a stockholder advisory vote to approve the compensation paid to our named executive officers as described in our proxy statement for that meeting,
commonly referred to as a “say-on-pay” vote. Our stockholders approved the resolution on executive compensation with 88.66% voting in favor of the resolution. We considered the results of this vote and view this vote as confirmation that
our stockholders support our executive compensation policies and decisions.
13
Decision-Making Process; Role of Named Executive Officers
The Compensation Committee performs an extensive review of each element of compensation of our named executive officers at least once a
year and makes a final determination regarding any adjustments to current compensation structure and levels after considering a number of factors. The Compensation Committee generally takes into account the scope of an officer’s
responsibilities, performance and experience and balances these factors with competitive compensation levels, our performance and current market conditions. Among the factors considered are that our named executive officers also serve in various
officer and director positions in companies with which are affiliated and do so without receiving compensation from those companies. During the annual review process, the Compensation Committee reviews our full-year financial results against
financial performance in prior periods with members of senior management and considers research conducted by our senior vice president – human resources (“SVP HR”) and her staff on compensation structure and levels at similar firms
(“Industry Data”). We believe that we compete primarily with companies managing private equity funds, mezzanine debt funds, hedge funds and other types of specialized investment funds to retain our executive talent. Most of our competitors
are private companies and are not required to disclose their executive compensation practices and policies. The Compensation Committee also considers recommendations made by our CEO and SVP HR, with regard to compensation for each of the other NEOs,
based on the Industry Data, the performance of each named executive officer and our performance over the past year.
Compensation Consultants
Under its charter, the Compensation Committee has the authority to select, retain and terminate compensation consultants. In 2012, the Compensation Committee did not retain any compensation consultants.
Elements of Compensation
We pay our named executive officers a combination of base salary, short-term cash incentive payments and long-term incentive compensation, in addition to providing health, retirement and other benefits
generally of the same type as are provided to our other employees. In addition, we have entered into employment agreements with each of the NEOs. In accordance with applicable laws and regulations and the Compensation Committee’s charter, the
Compensation Committee is required to approve any changes in the compensation of our named executive officers. We have not adopted any formal policies or guidelines for allocating compensation between long-term compensation and regularly-paid income
or between cash and non-cash compensation. We strive to achieve an appropriate mix between equity incentive awards and cash compensation in order to meet our objectives, as set forth above. For our NEOs, annual salary constituted 14.6% to 22.9% of
total compensation, short-term cash incentive payments under our Performance Incentive Plan (“PIP”) for each quarter constituted 30.9% to 43.2% of total compensation and long-term stock based incentive compensation and 401(k) contributions
constituted the remaining 41.9% to 46.3% of total compensation in 2012. Thus, we believe that our NEOs remain closely aligned with our stockholders based upon this mix of long-term compensation and regularly-paid income and between cash and non-cash
compensation. Each element of compensation is discussed briefly below.
Base Salary
Base salary is one component of each named executive officer’s cash compensation. We establish base salary after considering a
variety of factors, including the current economic conditions and the competitive market for executive officers, the scope of each officer’s responsibilities, the performance of the named executive officer and our performance and if requested
by the Compensation Committee, recommendations from a retained compensation consultant. Base salaries are used to attract, motivate and retain outstanding employees.
Base salaries for our named executive officers are reviewed annually by the Compensation Committee and by our compensation consultants, if any, and at the time of a promotion or other change in
responsibility of a
14
named executive officer and may be adjusted after considering the above factors. Each named executive officer’s employment agreement sets a minimum base salary, as described below under
“Employment Agreements.” While the Compensation Committee believes that the named executive officers continued to perform well in 2012, they determined not to increase the salaries of the NEOs for 2013. Except for Mr. O’Brien,
who received a promotion in 2008, the base salaries of the NEOs have not been increased since 2007. The current base salaries for the NEOs are $1,495,000 for Mr. Wilkus, $1,085,000 for Mr. Erickson, and $1,020,000 for each of Messrs. Flax,
O’Brien and Wagner.
Short-Term Cash Incentive Payments
Each named executive officer is entitled to participate in a performance-based target incentive payment program under which he may receive
a cash incentive payment based on a target amount. The target amount for each NEO is generally determined by the Compensation Committee each year prior to or shortly after the beginning of the year. The Compensation Committee then makes a quarterly
determination regarding the amount, if any, of the target incentive payment that should be paid to each named executive officer for that quarter. Typically, only a portion of the incentive payment will be considered for payment after the end of each
of the first three quarters of the year, with the majority of the incentive payment considered for payment after the year has concluded and the Compensation Committee has reviewed our performance and the NEO’s performance for the entire year.
Payment of the quarterly and year-end target incentive payments in 2012 was contingent on our achievement of certain performance goals set by the Compensation Committee and intended to qualify under Section 162(m) of the Internal Revenue Code
of 1986, as amended, or the Code (the “Section 162(m) Criteria”) for all of the NEOs except for our CFO, to whom Section 162(m) does not apply. For 2013, we have established Section 162(m) Criteria for the period of February
and March, the second quarter, the third quarter, the fourth quarter and the full year. The portion of each named executive officer’s target incentive payment that is contingent on achievement of Section 162(m) Criteria is paid as part of
our Performance Incentive Plan and is described further below.
The quarterly payout of a target incentive payment, if any, is
intended to motivate our NEOs throughout the year and to match rewards with actual performance when value is added, with a larger amount typically paid at the end of the year. After the conclusion of each year, the Compensation Committee meets to
review each named executive officer’s performance and our overall performance for the year, including the achievement of the Section 162(m) Criteria, if applicable, as discussed below.
Each named executive officer’s employment agreement sets a minimum target incentive payment amount for which he is eligible to be
considered, which is described below. At the discretion of the Compensation Committee, an NEO may be considered for payment of a higher amount. For 2013, the Compensation Committee determined not to increase the target incentive payment amounts of
the NEOs from the following amounts set for 2012, which was also the same as for 2008, 2009, 2010 and 2011: Mr. Wilkus at $6,000,000, Mr. Erickson at $3,000,000, and $2,500,000 for each of Messrs. Flax, O’Brien and Wagner. The NEOs
were awarded 55.1-73.5% of their target incentive payment amount under the Performance Incentive Plan for 2012. After considering several factors including market data, the Compensation Committee concluded that the 2013 target incentive payment
amounts were reasonable and sufficient to meet our objectives as described above.
Stock-Based Long-Term Incentive
Compensation Plans
Each NEO participates in long-term incentive compensation plans as do virtually all of our
officers. The Compensation Committee and our Board of Directors believe that stock-based incentive compensation is necessary to help attract, motivate and retain outstanding officers and directors and to align further their interests with those of
our stockholders. As discussed above, long-term incentive compensation comprised 41.9% to 46.3% of the NEOs’ total compensation for 2012, which we believe helps to ensure that our NEOs are focused on rebuilding stockholder value as we continue
to emerge from the recent recession.
15
Stock-based compensation advances the interests of our company, but as a business
development company we are restricted under the 1940 Act in the forms of incentive compensation that we can provide to our employees. For instance, we cannot compensate employees with restricted stock or stock appreciation rights. However, we
compete with numerous private equity, mezzanine and hedge funds for our investment professionals. Such funds commonly pay to their partners and employees 20% of the profits (including capital gains), or carried interest, of each newly-raised fund
under management. The 1940 Act generally prohibits us from compensating our officers in this manner. We have established two types of long-term equity based incentive plans based on these considerations.
Employee Stock Option Plans
Under conditions specified in the 1940 Act, business development companies are permitted to issue stock options to their employees. Stock options are a key element of our named executive officers’
compensation. We currently maintain the 1997 Employee Stock Option Plan, the 2000 Employee Stock Option Plan, the 2002 Employee Stock Option Plan, the 2003 Employee Stock Option Plan, the 2004 Employee Stock Option Plan, the 2005 Employee Stock
Option Plan, the 2006 Stock Option Plan, the 2007 Stock Option Plan, the 2008 Stock Option Plan and the 2009 Stock Option Plan (collectively, the “Existing Option Plans”), which provide for the grant of nonqualified stock options.
Virtually all of our officers received options in 2012 under our Existing Option Plans. For 2012, the Compensation Committee awarded options to the NEOs in the following amounts: Mr. Wilkus, 867,882 Mr. Erickson, 490,549, Mr. Flax,
415,071, Mr. O’Brien, 415,071 and Mr. Wagner, 415,071.
We established the Existing Option Plans for the
purpose of attracting and retaining executive officers and other key employees. The Compensation Committee administers the Existing Option Plans for employee participants. Each of the Existing Option Plans sets a maximum number of shares that may be
granted to any single participant. The Compensation Committee uses such criteria as it deems important to make recommendations to the Board of Directors on who will receive awards and the number of options awarded, including the recommendations of
senior management. The Compensation Committee generally takes into account the scope of an officer’s responsibilities and experience and balances these factors against competitive compensation levels to attract, motivate and retain outstanding
officers. The Board of Directors has the authority to set the exercise price for options in accordance with applicable law and the terms of the plans and is required to adjust the exercise price following the occurrence of events such as stock
splits, stock dividends, recapitalizations and reorganizations. The grant dates of awards under our Existing Option Plans are the Board of Directors approval dates for the respective grants.
Options may be exercised during a period of no more than ten years following the date of grant. The Board of Directors has the discretion
to set the vesting period for options and to permit the acceleration of vesting under certain circumstances. Vesting is automatically accelerated upon the occurrence of specified change of control transactions. Section 61(a) of the 1940 Act
imposes certain requirements on our option plans including that the options must expire no later than ten years from grant, the options must not be separately transferable other than by gift, will or intestacy, the exercise price at the date of
issuance must not be less than the current market price for the underlying stock, the plan must be approved by a majority of our directors who are not “Interested Persons” and by the stockholders and we must not have a profit-sharing plan
as described in the 1940 Act.
Grants under the Existing Option Plans have generally been made to participating employees on a
quarterly basis on the recommendation of senior management and the timing of our grants to named executive officers has been in symmetry with our grants to participating employees more generally. However, we have not adopted any new employee stock
option plans since 2009 and by mid-2012, nearly all the shares of our common stock available for issuance pursuant to the Existing Option Plans were covered by existing option grants. Moreover, under the 1940 Act, the number of options that we can
have outstanding is limited to no more than 20% of the outstanding shares of our common stock, and the number of outstanding options is close to that limit. To the extent an optionee terminates employment with unvested options or chooses not to
exercise vested options within the period prescribed under the Existing Option Plans, shares of our common stock covered by those options
16
again become available for issuance. We did not award any options to our named executive officers in the second half of 2012, and we anticipate that if we do award any options to our named
executive officers in 2013, they will be in far smaller amounts than we have awarded in recent years. Nevertheless, we believe that the interests of our named executive officers will remain aligned with those of the stockholders given the number of
previously granted stock options and Performance Incentive Plan awards that remain outstanding.
Performance Incentive Plan
As discussed above, we believe that the Company’s employee compensation plans must provide an economic interest in us
similar to that generally gained by partners and employees of the management company of private equity, mezzanine and hedge funds. We believe that our Existing Option Plans only partially fulfill this objective. First, they do not allow option
holders to share in any dividends paid on our common stock. In addition, under our asset management strategy, we have expanded our management of assets to assets in externally managed funds in addition to assets that we own. Funding the asset
management strategy involves the raising of capital by entities other than us and does not involve the sale of shares of our common stock. As noted above, we are limited in our ability to issue additional options. Therefore, by using options alone,
we may not be able to compensate employees at competitive levels within the industry commensurate with the amount of assets we have under management.
Thus, in order to further align the interests of our employees and our stockholders, to address the fact that our employees were not receiving the benefit of any dividends paid on our common stock with
respect to their option grants and to reflect the additional assets under management through externally managed funds, we established the Performance Incentive Plan (formerly known as the Incentive Bonus Plan) in 2006. It is an unfunded bonus
program exempt from the Employment Retirement Income Security Act, or ERISA. Virtually all of our employees are eligible to and do participate in the Performance Incentive Plan. The Compensation Committee determines the dollar amount of each award
made to the named executive officers under the Performance Incentive Plan and approves an aggregate amount of awards made to other employees. Awards are based on competitive market conditions for each category of employee, level of responsibility,
the performance of each employee, as well as our performance. Awards under the Performance Incentive Plan are used to attract, motivate and retain outstanding employees.
There are two types of awards under the Performance Incentive Plan. Most of the awards are longer-term awards (“Incentive Awards”), in which all of our employees are eligible to participate. In
addition, our named executive officers can receive cash awards, which form part of the quarterly and annual target cash incentive payments for our named executive officers, which are described below (“Target Awards”).
Incentive Awards.
We established a trust fund to fund the payment of the Incentive Awards under the Performance Incentive
Plan (the “Trust”). The trustee of the Trust is First State Trust Company. In the past we made contributions of cash to the Trust based on the cash Incentive Awards approved by the Compensation Committee. Pursuant to the terms of the
trust agreement, we instruct the trustee, subject to its fiduciary duty, to invest this cash and any other cash generated by trust assets in money market securities for short-term investment purposes and in shares of our common stock for long-term
investment purposes, which are purchased on the open market. Shares of our common stock held in the Trust are enrolled in our dividend reinvestment plan and any dividends paid on these shares are reinvested in our common stock. We have not made any
such contributions to the Trust since 2008 and have no present plans to do so.
Each participant has an account under the
plan, which is allocated a hypothetical, or notional, number of shares of our common stock, generally based on the amount of each participant’s cash awards divided by the average open-market purchase price for the common stock purchased by the
Trust in connection with the respective awards. Once these notional shares are allocated to a participant’s account, the Incentive Awards are tied directly to the interests of our stockholders as the value of the award is directly related to
the market price of our common stock. Moreover, if dividends are paid on our common stock, the notional value of the dividends
17
attributable to the notional number of shares in the participant’s account is credited to the account, in the form of additional notional shares. Thus, the participant could receive a
benefit from any dividends, something not currently possible under the Existing Option Plans, further aligning the interests of plan participants with those of our stockholders since participants share similarly in any appreciation or decline in our
stock price.
Each participant vests in Incentive Awards in accordance with a vesting schedule specified by the Compensation
Committee. Vesting is generally based on continued employment, plus, for our named executive officers, the satisfaction of Performance Goals, as described below. The vesting schedule for prior Incentive Awards has varied from two to six years. In
addition, vesting generally accelerates upon a participant’s termination of employment as a result of death or disability, or upon the occurrence of a change of control.
Participants are eligible to receive distributions of the vested portions of Incentive Awards immediately upon vesting. All distributions are made directly by the Trust in the form of our common stock.
Participants have been able to elect to defer the payment of the vested portions of Incentive Awards to a later distribution date (or distribution dates) allowed by the Compensation Committee and as permitted under Section 409A of the Code (but
no later than ten years after the date of grant). Notwithstanding any deferral election, the vested portion of a participant’s Performance Incentive Plan account will generally be paid on the participant’s termination of employment or upon
the occurrence of a change of control. A participant is required to satisfy applicable withholding taxes upon vesting and distribution dates. Incentive Awards under the Performance Incentive Plan are included in the “Stock Awards” column
of the Summary Compensation Table, below, although the NEOs do not receive stock directly from us, as discussed above. As noted above, we did not grant any Incentive Awards to the NEOs in 2012.
Target Awards and Performance Goals.
As discussed above, Target Awards are made to the NEOs as part of our quarterly and
annual cash incentive payments. Both the Target Awards and the Incentive Awards for our named executive officers are, at the discretion of the Compensation Committee, subject to certain performance measures and an incentive payment formula
(“Performance Goals”). The Performance Goals also provide a non-exclusive framework that satisfies the standards of Section 162(m) of the Code, which is discussed below under “Impact of Regulatory Requirements.” Under this
aspect of the Performance Incentive Plan, the Compensation Committee designates Performance Goals, which they select from the following metrics, among others: return on equity, revenue, net operating income, net income, net book value per share,
dividend characterization, return on assets, cash flow, equity or investment growth, regulatory compliance (including compliance goals relating to the Sarbanes-Oxley Act of 2002), satisfactory internal or external audits, improvement of financial
ratings, achievement of balance sheet objectives, implementation or completion of one or more projects or transactions, intradepartmental or intra-office performance or any other objective goals established by the Compensation Committee, and may be
absolute in their terms or measured against or in relationship to other companies comparably, similarly or otherwise situated. Such Performance Goals may be particular to an NEO or the department, branch, subsidiary or other division in which he or
she works, or may be based on our performance and/or one or more of our subsidiaries, and may cover such period as may be specified by the Compensation Committee.
For the full year 2012, the Performance Goals required each NEO to satisfy four out of nine of the following measurement standards with respect to the company’s performance above certain confidential
levels: (1) gross revenue, (2) pre-tax net operating income, (3) total amortizations, prepayments and exits of investments, (4) minimum cash at period end, (5) realizable net asset value per share, (6) uncured loan
covenant violations, (7) return of capital to stockholders, (8) regulatory compliance, and (9) reduction of debt. For each quarter in 2012, the Performance Goals required each NEO to meet three of the following measurement standards
above certain confidential levels: items (1), (2), (3), (4), (5), (6) and (9) from above.
The Compensation
Committee determined that the NEOs qualified to be considered for all or a portion of the Target Award under the Performance Incentive Plan for each quarter of 2012 and for the full year 2012. After reviewing both individual officer performance and
our performance, the Compensation Committee decided that
18
is was appropriate to award each of our named executive officers a range of 55.1% to 73.5% of their respective total Target Award for 2012. Incentive payment amounts that were earned in 2012 that
were contingent upon the Section 162(m) Criteria are included in the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table, below.
For the full year 2013, the Performance Goals require meeting four out of nine of the following measurement standards above certain confidential levels: (1) gross revenue, (2) pre-tax net
operating income, (3) total amortizations, prepayments and exits of investments, (4) minimum cash at period end, (5) closed new investments, (6) realizable net asset value per share, (7) uncured loan covenant violations,
(8) return of capital to stockholders and (9) regulatory compliance. For the period of February and March 2013 and the second, third and fourth quarters of 2013, the Performance Goals require meeting four of the following measurement
standards above certain confidential levels: (1), (2), (3), (4), (5), (6) and (7).
Personal Benefits and
Perquisites
We offer certain health, retirement and other benefits to all employees. Our named executive officers are
eligible to participate in these benefit plans on the same basis as all other employees. These benefit plans include medical, dental, vision, disability, life and long term care insurance, as well as a 401(k) plan, described below. All employees
also receive qualified transportation benefits. We do not believe that it is appropriate for our named executive officers to receive special perquisites and benefits and thus our named executive officers do not receive any personal benefits or
perquisites that are not available on a non-discriminatory basis to all employees.
401(k) Plan
We had previously established the American Capital, Ltd. Employee Stock Ownership Plan (the “ESOP”) as an “employee
stock ownership plan” within the meaning of Section 4975(e)(7) of the Code, and the American Capital, Ltd. 401(k) Plan (the “401(k) Plan”) with a cash or deferred arrangement intended to qualify under Section 401(k) of the
Code. We maintained the ESOP and 401(k) Plan for the benefit of our employees to enable them to share in our growth and supplement their personal savings and social security. The ESOP provided that for plan years prior to January 1, 2010,
participants would receive allocations of our common stock at least equal to 3% of their annual compensation, up to certain statutory maximums. We did not make a contribution to the ESOP for the 2010 plan year, and effective on December 20,
2010, the ESOP was merged into the 401(k) Plan. Thus, there will be no further ESOP contributions. The 401(k) Plan allows participants to make elective deferrals of a portion of their income as a contribution to a Section 401(k) profit sharing
plan. Beginning with the 2010 plan year, the 401(k) Plan provided that we may make discretionary matching contributions to the 401(k) Plan. In 2010, 2011 and 2012, we matched 100% of an employee’s 401(k) contributions, up to the first 3% of his
or her compensation, subject to statutory maximums, and currently expect to do so again in 2013. The statutory maximum matching contribution for 2011 was $7,350, for 2012 is $7,500 and for 2013 is $7,650. The NEOs participate in the 401(k) Plan on
the same basis as all of our other employees.
Employment and Other Agreements
We previously entered into employment agreements with each of our named executive officers. We did not amend any of the employment
agreements in 2012 and have no present plans to do so.
The agreements of each of the named executive officers provide for a
two-year term that renews on a daily basis so that there will always be two years remaining until either party gives notice that the automatic renewals are to be discontinued. Each agreement also sets forth a minimum base salary for the NEO. The
minimum base salary under Mr. Wilkus’ agreement is $530,000 per year; the minimum base salary under the agreement of Mr. Erickson is $1,085,000 a year; and the minimum base salary under the agreements for each of Messrs. Flax,
O’Brien and Wagner is $1,020,000 a year. The Compensation Committee has the sole right to increase the base salary under each agreement. The respective employment agreements provide that Messrs. Wilkus, Erickson,
19
Flax, O’Brien and Wagner are entitled to participate in a performance-based target incentive payment program under which the target incentive payment amount that Mr. Wilkus will be
considered for will not be less than 230% of his base salary, the target incentive payment amount that Mr. Erickson will be considered for will not be less than $3,000,000, and the target incentive payment amounts that each of Messrs. Flax,
O’Brien and Wagner will be considered for will be not less than $2,500,000, depending on our portfolio performance and the officer’s performance against certain criteria established by the Compensation Committee. Each of the employment
agreements provides that the named executive officer’s employment with us will be his primary employment and provides for certain payments upon severance, disability, death or change in control, as discussed below under “Severance and
Change of Control Payments.”
Pension and Retirement Plans
Except for the 401(k) Plan, described above, in which all of our employees participate on a non-discriminatory basis, we do not maintain
any retirement, pension, defined benefits, supplemental executive retirement or similar plans for our named executive officers.
Stock Ownership Guidelines
We require our named executive officers to own significant amounts of our common stock. Our
stock ownership guidelines are designed to increase the executives’ equity ownership of us and to align further their interests more closely with those of our stockholders, as well as to show the executives’ support and belief in us. The
guidelines require that each named executive officer owns a minimum number of shares of our common stock based on a multiple of his base salary, which is 5x for our Chairman and CEO, 3x for Presidents and Executive Vice Presidents, and 2x for other
executive officers. Shares are valued at the higher of their purchase price or current trading price. Until the foregoing ownership requirements are met, each named executive officer is expected to retain one-half of all shares distributed from the
Performance Incentive Plan and one-half of all shares realized upon the exercise of stock options, net of any shares sold to pay taxes and associated costs due as a result of such distribution or exercise. If a named executive officer fails to meet
or show sustained progress toward meeting our stock ownership requirements, we may reduce the amount of the officer’s future equity awards. The Compensation Committee may modify these requirements in certain situations. We also believe it is
highly inappropriate for any of our employees, including our named executive officers, to short our stock or engage in transactions where the person will earn a profit based on a decline of our stock price. The NEOs’ ownership of our common
stock is shown in the stock ownership table on page 31.
Impact of Regulatory Requirements
Although we do not have a formal policy in place, in order to preserve flexibility with respect to the design of our compensation
programs, we endeavor to minimize the amount of our taxes and our employees’ taxes to maximize the return to our stockholders and employees. For example, Section 162(m) of the Code generally disallows a tax deduction to a public company
for compensation in excess of $1 million paid to the company’s chief executive officer and any other executive officer (other than the chief financial officer) required to be reported to its stockholders under the Exchange Act by reason of such
executive officer being one of the four most highly compensated executive officers. However, qualifying performance-based compensation is not subject to the deduction limitation if certain requirements are met. Thus, we have structured portions of
the Incentive Awards and Target Awards under the Performance Incentive Plan for the eligible NEOs to qualify as performance-based compensation under Section 162(m) of the Code, as described above. In addition, we have altered the allocation
between regularly-paid cash compensation and qualifying performance-based compensation, increasing the amounts allocated to the latter over the past few years. Awards that are not intended to qualify as “performance-based compensation”
under Section 162(m) of the Code may be based on these or such other performance measures as the Committee may determine.
20
Additionally, we consider the tax implications of Section 409A of the Code.
Section 409A of the Code sets forth certain requirements that a plan that provides for the deferral of compensation must meet, including requirements relating to when payments under such a plan may be made, acceleration of benefits, and the
timing of elections under such a plan. Failure to satisfy these requirements will generally lead to an acceleration of timing of inclusion in income of deferred compensation, as well as certain penalties and interest.
Conclusion
We believe that our compensation programs have been appropriately designed to continue to attract, retain and motivate our employees, including our NEOs, improve our financial performance and align the
interests of our NEOs with the long-term interests of our stockholders, particularly during challenging economic periods. We believe that our overall performance since going public in 1997, including our ability to continue operations during the
recent recession, is due in part to the effectiveness of our compensation programs for all of our employees, and particularly our named executive officers.
REPORT OF THE COMPENSATION AND CORPORATE GOVERNANCE COMMITTEE
Our Compensation and Corporate Governance Committee reviewed and discussed with our management the “Compensation Discussion and Analysis” contained in this proxy statement. Based on that review
and discussions, the Compensation and Corporate Governance Committee recommends to the Board of Directors that the “Compensation Discussion and Analysis” be included in this proxy statement.
By the Compensation and Corporate Governance Committee:
Phil R. Harper, Chairman
Stan Lundine
Alvin N. Puryear
21
SUMMARY COMPENSATION TABLE
The following table provides information concerning the compensation of the NEOs earned during the fiscal year ended December 31,
2012. In the column “Salary,” we disclose the amount of base salary paid to the NEO during the fiscal year. In the column “Bonus,” we disclose the amount of short-term cash incentive payments earned by the NEO during the fiscal
year. We disclose the amount of the NEO’s Incentive Awards under the Performance Incentive Plan in the column “Stock Awards,” although the NEOs do not receive stock from us; rather, we make cash contributions to the Trust, which
purchases shares of our common stock on the open market. The shares are allocated to each participant’s account. See “Performance Incentive Plan” under “Compensation Discussion and Analysis,” above.
The amount of the NEO’s performance-based Target Award earned during the fiscal year under our Performance Incentive Plan is
disclosed in the column “Non-Equity Incentive Plan Compensation.” The amount in the column “All Other Compensation” is comprised of our contribution to the 401(k)/ESOP plan, which was capped at $7,500 in 2012, $7,350 in 2011, and
$7,350 in 2010. The NEOs did not have any perquisites or other personal benefits in excess of the reporting thresholds during the fiscal year.
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Name and Principal Position
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Year
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Salary
($)
(1)
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Bonus
($)
(2)
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Stock
Awards
(3)
($)
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Option
Awards
(3)
($)
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Non-Equity
Incentive
Plan
Compensation
($)
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All
Other
Compensation
($)
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Total
($)
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Malon Wilkus
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2012
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1,495,000
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—
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—
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4,301,473
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4,410,000
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7,500
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10,213,973
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Chief Executive Officer and Chairman of the Board of Directors
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2011
2010
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1,495,000
1,495,000
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—
—
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—
—
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7,743,984
4,152,871
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3,900,000
3,000,000
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7,350
7,350
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13,146,334
8,655,221
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John R. Erickson
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2012
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1,085,000
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—
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—
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2,431,302
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2,205,000
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7,500
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5,728,802
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President, Structured Finance and Chief Financial Officer
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2011
2010
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1,085,000
1,085,000
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—
—
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—
—
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4,377,098
2,347,310
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1,950,000
1,500,000
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7,350
7,350
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7,419,448
4,939,660
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Ira J. Wagner
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2012
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1,020,000
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—
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—
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2,057,211
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1,378,125
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7,500
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4,462,836
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President, European Private Finance
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2011
2010
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1,020,000
1,020,000
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—
—
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—
—
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3,703,622
1,986,144
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1,625,000
1,250,000
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7,350
7,350
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6,355,972
4,263,494
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Samuel A. Flax
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2012
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1,020,000
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—
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—
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2,057,211
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1,837,500
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7,500
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4,922,211
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Executive Vice President, General Counsel, Chief Compliance Officer and Secretary
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2011
2010
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1,020,000
1,020,000
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—
—
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—
—
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3,703,622
1,986,144
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1,625,000
1,250,000
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7,350
7,350
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6,355,972
4,263,494
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Gordon J. O’Brien
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2012
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1,020,000
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—
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—
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2,057,211
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1,837,500
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7,500
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4,922,211
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President, Specialty Finance
and Operations
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2011
2010
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1,020,000
1,020,000
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—
—
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—
—
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3,703,622
1,986,144
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1,625,000
1,250,000
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7,350
7,350
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6,355,972
4,263,494
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(1)
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Each NEO’s employment agreement sets forth a minimum base salary, as discussed above in “Compensation Discussion and Analysis.”
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(2)
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Each NEO’s employment agreement sets forth a minimum target incentive payment amount, as discussed above in “Compensation Discussion and Analysis.”
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(3)
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In the columns “Stock Awards” and “Option Awards,” we disclose the amount of the award(s) measured in dollars and calculated in accordance with ASC
718, Compensation—Stock Compensation (“ASC 718”), as required by SEC regulations. Amounts under the column “Stock Awards” represent the fair market value of stock awards granted in such year in accordance with ASC 718. The
fair market value of a stock award is based on the fair market value of our stock on the date of grant. In 2012, 2011 and 2010 there were no incentive awards granted. Amounts under the column “Option Awards” represent the fair value per
share of stock option awards granted in 2012 based on the ASC 718 that require certain assumptions that we disclose in Note 5 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31,
2012.
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22
GRANTS OF PLAN-BASED AWARDS IN FISCAL YEAR 2012
In this table we provide information about each grant of an award made to an NEO in the most recently completed fiscal year under the
Existing Option Plans and the Performance Incentive Plan. The target amounts are the same as the maximum amounts under each of the plans. In each case, the grant date is the same date as the Compensation Committee approval date. Amounts disclosed
under “Non-Equity Incentive Plan Awards” include the performance-based portion of the Target Awards under the Performance Incentive Plan and the amounts disclosed under “Equity Incentive Plan Awards” include the performance-based
Incentive Awards under the Performance Incentive Plan. The column “All Other Option Awards” includes grants made under the Existing Option Plans. The exercise price of option awards is the closing price of our common stock on the date of
grant.
Amounts included in the “Grant Date Fair Value of Stock and Option Awards” column are valued in accordance
with ASC 718 without reduction of any assumed forfeitures and are based on certain assumptions that we disclose in Note 5 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2012.
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Estimated Possible Payouts
Under Non-Equity Incentive
Plan Awards
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Estimated Possible Payouts
Under Equity Incentive
Plan Awards (N/A)
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All Other
Stock
Awards:
Number
of
Shares or
Stock (#)
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All Other
Options
Awards:
Number of
Securities
Underlying
Options (#)
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Exercise
or Base
Price of
Option
Awards
($/Share)
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Grant Date
Fair Value
of Stock
and Option
Awards ($)
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Name
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Grant
Date
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Threshold
($)
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Target
($)
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Maximum
($)
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Threshold
(#)
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Target
(#)
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Maximum
(#)
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Malon Wilkus
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4,410,000
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1/31/2012
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460,733
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8.22
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2,165,932
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4/27/2012
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407,149
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9.64
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2,135,541
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John R. Erickson
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2,205,000
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1/31/2012
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260,418
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8.22
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1,224,240
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4/27/2012
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230,131
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9.64
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1,207,062
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Ira J. Wagner
|
|
|
|
|
|
|
|
|
1,378,125
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/31/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
220,349
|
|
|
|
8.22
|
|
|
|
1,035,873
|
|
|
|
|
|
4/27/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
194,722
|
|
|
|
9.64
|
|
|
|
1,021,338
|
|
|
Gordon J. O’Brien
|
|
|
|
|
|
|
|
|
1,837,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/31/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
220,349
|
|
|
|
8.22
|
|
|
|
1,035,873
|
|
|
|
|
|
4/27/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
194,722
|
|
|
|
9.64
|
|
|
|
1,021,338
|
|
|
Samuel A. Flax
|
|
|
|
|
|
|
|
|
1,837,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/31/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
220,349
|
|
|
|
8.22
|
|
|
|
1,035,873
|
|
|
|
|
|
4/27/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
194,722
|
|
|
|
9.64
|
|
|
|
1,021,338
|
|
23
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
The following table provides information about unexercised options, both exercisable and unexercisable, under the Existing Option Plans
and Incentive Awards under the Performance Incentive Plan that have not vested for each NEO outstanding as of December 31, 2012. The market value of the Incentive Awards is the market value of the NEO’s bookkeeping account held by the
Trust under the Performance Incentive Plan calculated with a stock price of $12.02, which was the closing price of our common stock as of December 31, 2012.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock
Awards
(1)
|
|
Name
|
|
Number of
Securities
Underlying
Options (#)
Exercisable
|
|
|
Number of
Securities
Underlying
Options (#)
Unexercisable
(2)
|
|
|
Equity
Incentive Plan
Awards:
Number of
Securities
Underlying
Unearned
Options
(#)
|
|
Option
Exercise
Price
($)
|
|
|
Option
Expiration
Date
|
|
|
Number
of
Shares
of Stock
that
Have
Not
Vested
(#)
(3)
|
|
|
Market
Value of
Shares of
Stock
that
Have Not
Vested
($)
|
|
|
Equity
Incentive
Plan
Awards:
Number of
Shares
that Have
Not
Vested (#)
|
|
Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Shares that
Have Not
Vested
($)
|
|
Malon Wilkus
|
|
|
28,580
|
|
|
|
—
|
|
|
|
|
|
14.42
|
|
|
|
5/15/2013
|
|
|
|
91,334
|
|
|
|
1,097,832
|
|
|
|
|
|
|
|
|
|
28,580
|
|
|
|
—
|
|
|
|
|
|
13.65
|
|
|
|
8/15/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
482,022
|
|
|
|
120,504
|
|
|
|
|
|
16.71
|
|
|
|
7/24/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
746,982
|
|
|
|
—
|
|
|
|
|
|
4.81
|
|
|
|
1/7/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
154,281
|
|
|
|
—
|
|
|
|
|
|
2.15
|
|
|
|
4/24/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
154,281
|
|
|
|
—
|
|
|
|
|
|
2.51
|
|
|
|
5/26/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
118,760
|
|
|
|
—
|
|
|
|
|
|
2.71
|
|
|
|
6/23/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
116,456
|
|
|
|
—
|
|
|
|
|
|
3.10
|
|
|
|
7/22/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
70,353
|
|
|
|
—
|
|
|
|
|
|
2.96
|
|
|
|
8/12/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
191,327
|
|
|
|
—
|
|
|
|
|
|
2.77
|
|
|
|
11/11/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
126,140
|
|
|
|
63,070
|
|
|
|
|
|
3.48
|
|
|
|
2/10/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
125,382
|
|
|
|
62,710
|
|
|
|
|
|
6.45
|
|
|
|
4/29/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
326,328
|
|
|
|
489,493
|
|
|
|
|
|
5.19
|
|
|
|
7/22/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
326,328
|
|
|
|
489,493
|
|
|
|
|
|
6.51
|
|
|
|
10/21/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
163,164
|
|
|
|
652,657
|
|
|
|
|
|
8.47
|
|
|
|
2/1/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
163,164
|
|
|
|
652,657
|
|
|
|
|
|
10.19
|
|
|
|
4/28/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
92,146
|
|
|
|
368,587
|
|
|
|
|
|
10.08
|
|
|
|
7/21/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
92,146
|
|
|
|
368,587
|
|
|
|
|
|
6.77
|
|
|
|
10/20/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
460,733
|
|
|
|
|
|
8.22
|
|
|
|
1/31/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
407,149
|
|
|
|
|
|
9.64
|
|
|
|
4/28/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John R. Erickson
|
|
|
256,715
|
|
|
|
64,178
|
|
|
|
|
|
16.71
|
|
|
|
7/24/2018
|
|
|
|
51,386
|
|
|
|
617,654
|
|
|
|
|
|
|
|
|
|
422,207
|
|
|
|
—
|
|
|
|
|
|
4.81
|
|
|
|
1/7/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
87,203
|
|
|
|
—
|
|
|
|
|
|
2.15
|
|
|
|
4/24/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
87,203
|
|
|
|
—
|
|
|
|
|
|
2.51
|
|
|
|
5/26/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
67,126
|
|
|
|
—
|
|
|
|
|
|
2.71
|
|
|
|
6/23/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
65,824
|
|
|
|
—
|
|
|
|
|
|
3.10
|
|
|
|
7/22/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
39,765
|
|
|
|
—
|
|
|
|
|
|
2.96
|
|
|
|
8/12/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
108,143
|
|
|
|
—
|
|
|
|
|
|
2.77
|
|
|
|
11/11/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
71,298
|
|
|
|
35,648
|
|
|
|
|
|
3.48
|
|
|
|
2/10/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
70,869
|
|
|
|
35,446
|
|
|
|
|
|
6.45
|
|
|
|
4/29/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
184,448
|
|
|
|
276,675
|
|
|
|
|
|
5.19
|
|
|
|
7/22/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
184,448
|
|
|
|
276,675
|
|
|
|
|
|
6.51
|
|
|
|
10/21/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
92,224
|
|
|
|
368,899
|
|
|
|
|
|
8.47
|
|
|
|
2/1/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
92,224
|
|
|
|
368,899
|
|
|
|
|
|
10.19
|
|
|
|
4/28/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
52,083
|
|
|
|
208,335
|
|
|
|
|
|
10.08
|
|
|
|
7/21/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
52,083
|
|
|
|
208,335
|
|
|
|
|
|
6.77
|
|
|
|
10/20/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
260,418
|
|
|
|
|
|
8.22
|
|
|
|
1/31/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
230,131
|
|
|
|
|
|
9.64
|
|
|
|
4/28/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ira J. Wagner
|
|
|
204,522
|
|
|
|
51,129
|
|
|
|
|
|
16.71
|
|
|
|
7/24/2018
|
|
|
|
46,411
|
|
|
|
557,862
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
30,163
|
|
|
|
|
|
3.48
|
|
|
|
2/10/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
59,965
|
|
|
|
29,992
|
|
|
|
|
|
6.45
|
|
|
|
4/29/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
56,068
|
|
|
|
234,105
|
|
|
|
|
|
5.19
|
|
|
|
7/22/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
156,068
|
|
|
|
234,105
|
|
|
|
|
|
6.51
|
|
|
|
10/21/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
78,034
|
|
|
|
312,139
|
|
|
|
|
|
8.47
|
|
|
|
2/1/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
78,034
|
|
|
|
312,139
|
|
|
|
|
|
10.19
|
|
|
|
4/28/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
44,069
|
|
|
|
176,280
|
|
|
|
|
|
10.08
|
|
|
|
7/21/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
44,069
|
|
|
|
176,280
|
|
|
|
|
|
6.77
|
|
|
|
10/20/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
220,349
|
|
|
|
|
|
8.22
|
|
|
|
1/31/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
194,722
|
|
|
|
|
|
9.64
|
|
|
|
4/28/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock
Awards
(1)
|
|
Name
|
|
Number of
Securities
Underlying
Options (#)
Exercisable
|
|
|
Number of
Securities
Underlying
Options (#)
Unexercisable
(2)
|
|
|
Equity
Incentive Plan
Awards:
Number of
Securities
Underlying
Unearned
Options
(#)
|
|
Option
Exercise
Price
($)
|
|
|
Option
Expiration
Date
|
|
|
Number
of
Shares
of Stock
that
Have
Not
Vested
(#)
(3)
|
|
|
Market
Value of
Shares of
Stock
that
Have Not
Vested
($)
|
|
|
Equity
Incentive
Plan
Awards:
Number of
Shares
that Have
Not
Vested (#)
|
|
Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Shares that
Have Not
Vested
($)
|
|
Samuel A. Flax
|
|
|
204,522
|
|
|
|
51,129
|
|
|
|
|
|
16.71
|
|
|
|
7/24/2018
|
|
|
|
42,681
|
|
|
|
513,021
|
|
|
|
|
|
|
|
|
|
357,252
|
|
|
|
—
|
|
|
|
|
|
4.81
|
|
|
|
1/7/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
55,696
|
|
|
|
—
|
|
|
|
|
|
3.10
|
|
|
|
7/22/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
33,647
|
|
|
|
—
|
|
|
|
|
|
2.96
|
|
|
|
8/12/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26,504
|
|
|
|
—
|
|
|
|
|
|
2.77
|
|
|
|
11/11/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60,328
|
|
|
|
30,163
|
|
|
|
|
|
3.48
|
|
|
|
2/10/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
59,965
|
|
|
|
29,992
|
|
|
|
|
|
6.45
|
|
|
|
4/29/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
156,068
|
|
|
|
234,105
|
|
|
|
|
|
5.19
|
|
|
|
7/22/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
156,068
|
|
|
|
234,105
|
|
|
|
|
|
6.51
|
|
|
|
10/21/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
78,034
|
|
|
|
312,139
|
|
|
|
|
|
8.47
|
|
|
|
2/1/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
78,034
|
|
|
|
312,139
|
|
|
|
|
|
10.19
|
|
|
|
4/28/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
44,069
|
|
|
|
176,280
|
|
|
|
|
|
10.08
|
|
|
|
7/21/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
44,069
|
|
|
|
176,280
|
|
|
|
|
|
6.77
|
|
|
|
10/20/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
220,349
|
|
|
|
|
|
8.22
|
|
|
|
1/31/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
194,722
|
|
|
|
|
|
9.64
|
|
|
|
4/28/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gordon J. O’Brien
|
|
|
204,522
|
|
|
|
51,129
|
|
|
|
|
|
16.71
|
|
|
|
7/24/2018
|
|
|
|
40,526
|
|
|
|
487,128
|
|
|
|
|
|
|
|
|
|
357,252
|
|
|
|
—
|
|
|
|
|
|
4.81
|
|
|
|
1/7/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
73,786
|
|
|
|
—
|
|
|
|
|
|
2.15
|
|
|
|
4/24/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
73,786
|
|
|
|
—
|
|
|
|
|
|
2.51
|
|
|
|
5/26/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
56,798
|
|
|
|
—
|
|
|
|
|
|
2.71
|
|
|
|
6/23/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
55,696
|
|
|
|
—
|
|
|
|
|
|
3.10
|
|
|
|
7/22/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
33,647
|
|
|
|
—
|
|
|
|
|
|
2.96
|
|
|
|
8/12/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
91,504
|
|
|
|
—
|
|
|
|
|
|
2.77
|
|
|
|
11/11/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60,328
|
|
|
|
30,163
|
|
|
|
|
|
3.48
|
|
|
|
2/10/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
59,965
|
|
|
|
29,992
|
|
|
|
|
|
6.45
|
|
|
|
4/29/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
156,068
|
|
|
|
234,105
|
|
|
|
|
|
5.19
|
|
|
|
7/22/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
156,068
|
|
|
|
234,105
|
|
|
|
|
|
6.51
|
|
|
|
10/21/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
78,034
|
|
|
|
312,139
|
|
|
|
|
|
8.47
|
|
|
|
2/1/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
78,034
|
|
|
|
312,139
|
|
|
|
|
|
10.19
|
|
|
|
4/28/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
44,069
|
|
|
|
176,280
|
|
|
|
|
|
10.08
|
|
|
|
7/21/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
44,069
|
|
|
|
176,280
|
|
|
|
|
|
6.77
|
|
|
|
10/20/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
220,349
|
|
|
|
|
|
8.22
|
|
|
|
1/31/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
194,722
|
|
|
|
|
|
9.64
|
|
|
|
4/28/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
We disclose the amount of the NEO’s Incentive Awards under the Performance Incentive Plan in the column “Stock Award,” although the NEOs do not receive
stock from us; rather, we make cash contributions to the Trust, which purchases shares of our common stock on the open market. The shares are allocated to each participant’s account. See “Performance Incentive Plan” under
“Compensation Discussion and Analysis” above.
|
|
(2)
|
Vesting dates of unvested option awards are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vest Date
|
|
Malon Wilkus
|
|
|
John R. Erickson
|
|
|
Ira J. Wagner
|
|
|
Gordon J. O’Brien
|
|
|
Samuel A. Flax
|
|
|
1/31/2013
|
|
|
92,146
|
|
|
|
52,083
|
|
|
|
44,069
|
|
|
|
44,069
|
|
|
|
44,069
|
|
|
2/1/2013
|
|
|
163,164
|
|
|
|
92,224
|
|
|
|
78,034
|
|
|
|
78,034
|
|
|
|
78,034
|
|
|
2/11/2013
|
|
|
63,070
|
|
|
|
35,648
|
|
|
|
30,163
|
|
|
|
30,163
|
|
|
|
30,163
|
|
|
4/27/2013
|
|
|
81,429
|
|
|
|
46,026
|
|
|
|
38,944
|
|
|
|
38,944
|
|
|
|
38,944
|
|
|
4/28/2013
|
|
|
163,164
|
|
|
|
92,224
|
|
|
|
78,034
|
|
|
|
78,034
|
|
|
|
78,034
|
|
|
4/29/2013
|
|
|
62,710
|
|
|
|
35,446
|
|
|
|
29,992
|
|
|
|
29,992
|
|
|
|
29,992
|
|
|
7/21/2013
|
|
|
92,146
|
|
|
|
52,083
|
|
|
|
44,070
|
|
|
|
44,070
|
|
|
|
44,070
|
|
|
7/22/2013
|
|
|
163,164
|
|
|
|
92,225
|
|
|
|
78,035
|
|
|
|
78,035
|
|
|
|
78,035
|
|
|
7/24/2013
|
|
|
120,504
|
|
|
|
64,178
|
|
|
|
51,129
|
|
|
|
51,129
|
|
|
|
51,129
|
|
|
10/20/2013
|
|
|
92,146
|
|
|
|
52,083
|
|
|
|
44,070
|
|
|
|
44,070
|
|
|
|
44,070
|
|
|
10/21/2013
|
|
|
163,164
|
|
|
|
92,225
|
|
|
|
78,035
|
|
|
|
78,035
|
|
|
|
78,035
|
|
|
1/31/2014
|
|
|
92,146
|
|
|
|
52,083
|
|
|
|
44,070
|
|
|
|
44,070
|
|
|
|
44,070
|
|
|
2/1/2014
|
|
|
163,164
|
|
|
|
92,225
|
|
|
|
78,035
|
|
|
|
78,035
|
|
|
|
78,035
|
|
|
4/27/2014
|
|
|
81,430
|
|
|
|
46,026
|
|
|
|
38,944
|
|
|
|
38,944
|
|
|
|
38,944
|
|
|
4/28/2014
|
|
|
163,164
|
|
|
|
92,225
|
|
|
|
78,035
|
|
|
|
78,035
|
|
|
|
78,035
|
|
|
7/21/2014
|
|
|
92,147
|
|
|
|
52,084
|
|
|
|
44,070
|
|
|
|
44,070
|
|
|
|
44,070
|
|
25
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vest Date
|
|
Malon Wilkus
|
|
|
John R. Erickson
|
|
|
Ira J. Wagner
|
|
|
Gordon J. O’Brien
|
|
|
Samuel A. Flax
|
|
|
7/22/2014
|
|
|
163,164
|
|
|
|
92,225
|
|
|
|
78,035
|
|
|
|
78,035
|
|
|
|
78,035
|
|
|
10/20/2014
|
|
|
92,147
|
|
|
|
52,084
|
|
|
|
44,070
|
|
|
|
44,070
|
|
|
|
44,070
|
|
|
10/21/2014
|
|
|
163,164
|
|
|
|
92,225
|
|
|
|
78,035
|
|
|
|
78,035
|
|
|
|
78,035
|
|
|
1/31/2015
|
|
|
92,147
|
|
|
|
52,084
|
|
|
|
44,070
|
|
|
|
44,070
|
|
|
|
44,070
|
|
|
2/1/2015
|
|
|
163,164
|
|
|
|
92,225
|
|
|
|
78,035
|
|
|
|
78,035
|
|
|
|
78,035
|
|
|
4/27/2015
|
|
|
81,430
|
|
|
|
46,026
|
|
|
|
38,944
|
|
|
|
38,944
|
|
|
|
38,944
|
|
|
4/28/2015
|
|
|
163,164
|
|
|
|
92,225
|
|
|
|
78,035
|
|
|
|
78,035
|
|
|
|
78,035
|
|
|
7/21/2015
|
|
|
92,147
|
|
|
|
52,084
|
|
|
|
44,070
|
|
|
|
44,070
|
|
|
|
44,070
|
|
|
7/22/2015
|
|
|
163,165
|
|
|
|
92,225
|
|
|
|
78,035
|
|
|
|
78,035
|
|
|
|
78,035
|
|
|
10/20/2015
|
|
|
92,147
|
|
|
|
52,084
|
|
|
|
44,070
|
|
|
|
44,070
|
|
|
|
44,070
|
|
|
10/21/2015
|
|
|
163,165
|
|
|
|
92,225
|
|
|
|
78,035
|
|
|
|
78,035
|
|
|
|
78,035
|
|
|
1/31/2016
|
|
|
92,147
|
|
|
|
52,084
|
|
|
|
44,070
|
|
|
|
44,070
|
|
|
|
44,070
|
|
|
2/1/2016
|
|
|
163,165
|
|
|
|
92,225
|
|
|
|
78,035
|
|
|
|
78,035
|
|
|
|
78,035
|
|
|
4/27/2016
|
|
|
81,430
|
|
|
|
46,026
|
|
|
|
38,945
|
|
|
|
38,945
|
|
|
|
38,945
|
|
|
4/28/2016
|
|
|
163,165
|
|
|
|
92,225
|
|
|
|
78,035
|
|
|
|
78,035
|
|
|
|
78,035
|
|
|
7/21/2016
|
|
|
92,147
|
|
|
|
52,084
|
|
|
|
44,070
|
|
|
|
44,070
|
|
|
|
44,070
|
|
|
10/20/2016
|
|
|
92,147
|
|
|
|
52,084
|
|
|
|
44,070
|
|
|
|
44,070
|
|
|
|
44,070
|
|
|
1/31/2017
|
|
|
92,147
|
|
|
|
52,084
|
|
|
|
44,070
|
|
|
|
44,070
|
|
|
|
44,070
|
|
|
4/27/2017
|
|
|
81,430
|
|
|
|
46,027
|
|
|
|
38,945
|
|
|
|
38,945
|
|
|
|
38,945
|
|
|
(3)
|
Vesting dates of unvested shares of stock purchased by the Trust under the Performance Incentive Plan are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vest Date
|
|
Malon Wilkus
|
|
|
John R. Erickson
|
|
|
Ira J. Wagner
|
|
|
Gordon J. O’Brien
|
|
|
Samuel A. Flax
|
|
|
1/9/2013
|
|
|
30,718
|
|
|
|
16,360
|
|
|
|
16,360
|
|
|
|
10,933
|
|
|
|
13,034
|
|
|
2/1/2013
|
|
|
3,418
|
|
|
|
2,696
|
|
|
|
2,696
|
|
|
|
2,238
|
|
|
|
2,291
|
|
|
11/11/2013
|
|
|
28,599
|
|
|
|
16,165
|
|
|
|
13,678
|
|
|
|
13,678
|
|
|
|
13,678
|
|
|
11/11/2014
|
|
|
28,599
|
|
|
|
16,165
|
|
|
|
13,677
|
|
|
|
13,677
|
|
|
|
13,678
|
|
26
OPTION EXERCISES AND STOCK VESTED
The following table provides information relating to exercises of stock options and vesting of Incentive Awards during the year ended
December 31, 2012, on an aggregated basis. The amounts under the “Value Realized on Vesting” column were calculated by multiplying the number of shares acquired on vesting by the share price on the date the award vested.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
(1)
|
|
|
Name
|
|
Number of Shares
Acquired on Exercise (#)
|
|
|
Value Realized
on Exercise ($)
|
|
|
Number of Shares
Acquired on Vesting (#)
|
|
|
Value Realized
on Vesting ($)
|
|
|
Malon Wilkus
|
|
|
—
|
|
|
|
—
|
|
|
|
180,143
|
|
|
|
1,795,576
|
|
|
John R. Erickson
|
|
|
—
|
|
|
|
—
|
|
|
|
103,005
|
|
|
|
1,027,850
|
|
|
Ira J. Wagner
|
|
|
481,463
|
|
|
|
3,317,545
|
|
|
|
100,518
|
|
|
|
998,924
|
|
|
Gordon J. O’Brien
|
|
|
—
|
|
|
|
—
|
|
|
|
83,158
|
|
|
|
841,029
|
|
|
Samuel A. Flax
|
|
|
269,370
|
|
|
|
2,318,097
|
|
|
|
83,869
|
|
|
|
838,138
|
|
|
(1)
|
Participants in the Performance Incentive Plan are permitted to defer the distribution of vested portions of Incentive Awards to a date up to ten years after the date
of the grant. Of the amounts included in the table above, the vested awards were deferred as follows:
|
|
|
•
|
|
Mr. Wilkus elected to defer the distribution of 20,517 and 70,511 shares until 2016 and 2017, respectively.
|
|
|
•
|
|
Mr. Erickson elected to defer the distribution of 15,434 and 18,878 shares until 2013 and 2016, respectively.
|
|
|
•
|
|
Mr. Wagner elected not to defer any of the vested shares.
|
|
|
•
|
|
Mr. O’Brien elected to defer the distribution of 21,896 shares until 2016.
|
|
|
•
|
|
Mr. Flax elected to defer the distribution of 3,439, 3,439, 10,582, 16,472 and 6,468 shares until 2013, 2014, 2015, 2016, and 2017, respectively.
|
SEVERANCE AND CHANGE OF CONTROL PAYMENTS
Employment Agreements
Each of the employment agreements that we have entered into with an executive officer contains provisions for payments upon certain events
as follows:
Disability.
|
|
•
|
|
continuation of the officer’s base salary for one year (two years in the case of Mr. Wilkus) reduced by the amount of any long-term
disability payments received by him during this period;
|
|
|
•
|
|
pro rated target incentive payment for the year in which the officer’s employment is terminated following a disability based on the highest target
incentive payment amount that could have been earned in that year by him;
|
|
|
•
|
|
an additional severance payment equal to the highest target incentive payment amount that could have been earned by him during the year in which the
disability termination occurred (multiplied by two in the case of Mr. Wilkus); and
|
|
|
•
|
|
insurance and other employee benefits during the base salary continuation period following a disability.
|
Termination by us other than for Misconduct or by the executive officer with Good Reason.
|
|
•
|
|
continuation of base salary and insurance benefits for a specified period;
|
27
|
|
•
|
|
an additional lump sum severance payment in a specified amount ($3,000,000 for Mr. Wilkus, $1,500,000 for Mr. Erickson, $1,250,000 for
Messrs. Flax, Wagner and O’Brien); and
|
|
|
•
|
|
an additional severance payment equal to the greater of the highest target incentive payment amount that the officer could have earned during the year
in which the termination occurred or the highest target incentive payment made to the officer for any of the three calendar years ending prior to the year in which the termination occurred, multiplied by 2 for Mr. Wilkus and by 1.25 for Messrs.
Erickson, Flax, O’Brien and Wagner.
|
In the case of Mr. Wilkus, the continuation period is two
years, in the case of Messrs. Erickson, Flax, O’Brien and Wagner, the period is 15 months. During the continuation period, the base salary will be continued at the highest rate in effect in the 24 months preceding termination.
Change of Control.
A “Change of Control” is defined in each of the employment agreements as the occurrence of any of the following events: (i) any person or group of persons (as defined in Section 13(d)
and 14(d) of the Exchange Act) together with its affiliates, excluding employee benefit plans of the company, becomes, directly or indirectly, the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act) of securities of the
company representing 25% or more of the combined voting power of the company’s then outstanding securities; (ii) the stockholders of the company approve a merger or consolidation of the company with any other corporation or entity
regardless of which entity is the survivor, other than a merger or consolidation that would result in the voting securities of the company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or being
converted into voting securities of the surviving entity) at least 51% of the combined voting power of the voting securities of the company or such surviving entity outstanding immediately after such merger or consolidation; or (iii) the
stockholders of the company approve a plan of complete liquidation or winding-up of the company or an agreement for the sale or disposition by the company of all or substantially all of the company’s assets.
In the event of a termination of a named executive officer (other than Mr. Wilkus) by us other than for misconduct or by the officer
for Good Reason in the two months preceding or 18 months following a Change of Control of us, including a deemed termination for misconduct by giving written notice of our intent to discontinue the daily extensions of the Term without the named
executive officer’s written consent, the salary continuation period noted above would be lengthened to two years and the multiplier for the second additional severance payment would be increased from 1.25 to 2. “Good Reason” is
defined in the employment agreements (other than for Mr. Wilkus) as any of the following that occurs in the two months preceding or 18 months following a Change of Control of us: (1) a material diminution of the executive’s authority,
duties or responsibilities with the company; (2) a material breach by us of any material provision of the employment agreement; or (3) any material change in the geographic location at which the executive must perform services.
Mr. Wilkus has the right to declare that Good Reason exists if we take any of the actions above, regardless of whether a Change of
Control has occurred. In addition, in the event of a Change of Control, Mr. Wilkus may terminate his employment for Good Reason within the two months preceding or 18 months following the Change of Control, regardless of whether we take any of
the actions above. In the event of a termination of Mr. Wilkus by us other than for misconduct or by Mr. Wilkus with Good Reason in the two months preceding or 18 months following a Change of Control of us, the salary continuation period
noted above would be lengthened to three years and the multiplier for the second additional severance payment would be increased from 2 to 3.
Death.
If any NEO dies during the term of his employment agreement,
his estate will be entitled to receive:
|
|
•
|
|
his target incentive payment for the year in which the death occurs, prorated through the date of death based on the highest target incentive payment
amount that could have been earned in that year; and
|
28
|
|
•
|
|
a continuation of health benefits for a period equal to two months multiplied by the number of full years (up to nine) during which he was employed by
us.
|
In addition, each of the employments agreements contains a non-competition provision that prevents the
executive officer, without the prior written consent of our Board of Directors, from being involved as an officer, employee, partner, stockholder, consultant or otherwise with (A) any person that competes with us or provides or proposes to
provide services or investments to a current client of us or (B) any of our potential customers with whom we have discussed a relationship in the 12 months prior to such executive officer’s termination date. The non-competition period (the
“Restricted Period”) lasts for two years from the termination date if the company terminates the executive officer’s employment for other than “misconduct” or disability or if the executive officer terminates employment for
“good reason” or one year if the executive officer’s employment is otherwise terminated. Each of the employment agreements also contains a provision preventing the executive officer from soliciting any of our employees or interfering
in a similar manner with our business during the Restricted Period.
Stock Option and Stock Plans
Under the terms of the Employee Option Plans, a participant’s options vest in full upon a change of control of us. Under the
Performance Incentive Plan, notwithstanding a participant’s election to defer distributions of a vested incentive payment award, the vested portion of a participant’s account(s) will generally be distributed upon the occurrence of a change
of control.
The following table summarizes the estimated payments to be made under the employment agreement for each NEO at,
following, or in connection with any termination of employment, including by resignation, retirement, disability, or a change in control. Under each employment agreement, the NEO is not entitled to any amount if such NEO’s termination was for
misconduct by the NEO. In accordance with SEC regulations, the following table does not include any amount to be provided to a named executive officer under any arrangement that does not discriminate in scope, terms or operation in favor of the
named executive officer and that are available generally to all salaried employees. Also, the following table does not duplicate information already provided in the outstanding equity awards at fiscal year-end table, except to the extent that the
amount payable to the named executive officer would be enhanced by the termination event. The amounts in the following table are hypothetical and based on SEC regulations. Actual payments will depend on the circumstances and timing of any
termination.
In accordance with SEC regulations, for purposes of the quantitative disclosure in the following table, we have
assumed that the termination took place on December 31, 2012, but under the terms of the current employment agreements and that the price per share of our common stock is the closing market price as of December 31, 2012, or $12.02.
29
The information below constitutes forward-looking statements for purposes of the Private
Litigation Securities Reform Act of 1995.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive Benefits and Payments
upon Termination
|
|
Termination by
Company Without
Cause
($)
|
|
|
Termination by
Company
or
Voluntary
Termination for
Good Reason, each in
connection with a
Change in Control
($)
|
|
|
Voluntary
Termination
($)
|
|
|
Disability
($)
|
|
|
Death
($)
|
|
|
Malon Wilkus
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance Payment
|
|
|
2,990,000
|
|
|
|
4,485,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Base Salary
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,990,000
|
|
|
|
—
|
|
|
Unused Accrued Vacation Time
(1)
|
|
|
0 – 172,500
|
|
|
|
0 – 172,500
|
|
|
|
0 – 172,500
|
|
|
|
0 – 172,500
|
|
|
|
0 – 172,500
|
|
|
Target Incentive Payment
(2)
|
|
|
15,000,000
|
|
|
|
21,000,000
|
|
|
|
—
|
|
|
|
18,000,000
|
|
|
|
6,000,000
|
|
|
Insurance Benefits
(3)
|
|
|
29,978
|
|
|
|
44,967
|
|
|
|
—
|
|
|
|
29,978
|
|
|
|
22,483
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL:
|
|
|
18,192,478
|
|
|
|
25,702,467
|
|
|
|
172,500
|
|
|
|
21,192,478
|
|
|
|
6,194,983
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John R. Erickson
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance Payment
|
|
|
1,356,250
|
|
|
|
2,170,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Base Salary
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,085,000
|
|
|
|
—
|
|
|
Unused Accrued Vacation Time
|
|
|
0 – 104,327
|
|
|
|
0 – 104,327
|
|
|
|
0 – 104,327
|
|
|
|
0 – 104,327
|
|
|
|
0 – 104,327
|
|
|
Target Incentive Payment
|
|
|
5,282,539
|
|
|
|
7,552,062
|
|
|
|
—
|
|
|
|
6,000,000
|
|
|
|
3,000,000
|
|
|
Insurance Benefits
|
|
|
26,081
|
|
|
|
41,729
|
|
|
|
—
|
|
|
|
20,865
|
|
|
|
31,297
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL:
|
|
|
6,769,197
|
|
|
|
9,868,118
|
|
|
|
104,327
|
|
|
|
7,210,192
|
|
|
|
3,135,624
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Samuel A. Flax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance Payment
|
|
|
1,275,000
|
|
|
|
2,040,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Base Salary
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,020,000
|
|
|
|
—
|
|
|
Unused Accrued Vacation Time
|
|
|
0 – 78,462
|
|
|
|
0 – 78,462
|
|
|
|
0 – 78,462
|
|
|
|
0 – 78,462
|
|
|
|
0 – 78,462
|
|
|
Target Incentive Payment
|
|
|
4,375,000
|
|
|
|
6,250,000
|
|
|
|
—
|
|
|
|
5,000,000
|
|
|
|
2,500,000
|
|
|
Insurance Benefits
|
|
|
26,081
|
|
|
|
41,729
|
|
|
|
—
|
|
|
|
20,865
|
|
|
|
27,819
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL:
|
|
|
5,754,543
|
|
|
|
8,410,191
|
|
|
|
78,462
|
|
|
|
6,119,327
|
|
|
|
2,606,281
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ira J. Wagner
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance Payment
|
|
|
1,275,000
|
|
|
|
2,040,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Base Salary
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,020,000
|
|
|
|
—
|
|
|
Unused Accrued Vacation Time
|
|
|
0 – 98,077
|
|
|
|
0 – 98,077
|
|
|
|
0 – 98,077
|
|
|
|
0 – 98,077
|
|
|
|
0 – 98,077
|
|
|
Target Incentive Payment
|
|
|
4,375,000
|
|
|
|
6,250,000
|
|
|
|
—
|
|
|
|
5,000,000
|
|
|
|
2,500,000
|
|
|
Insurance Benefits
|
|
|
26,081
|
|
|
|
41,729
|
|
|
|
—
|
|
|
|
20,865
|
|
|
|
31,297
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL:
|
|
|
5,774,158
|
|
|
|
8,429,806
|
|
|
|
98,077
|
|
|
|
6,138,942
|
|
|
|
2,629,374
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gordon J. O’Brien
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance Payment
|
|
|
1,275,000
|
|
|
|
2,040,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Base Salary
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,020,000
|
|
|
|
—
|
|
|
Unused Accrued Vacation Time
|
|
|
0 – 98,077
|
|
|
|
0 – 98,077
|
|
|
|
0 – 98,077
|
|
|
|
0 – 98,077
|
|
|
|
0 – 98,077
|
|
|
Target Incentive Payment
|
|
|
4,375,000
|
|
|
|
6,250,000
|
|
|
|
—
|
|
|
|
5,000,000
|
|
|
|
2,500,000
|
|
|
Insurance Benefits
|
|
|
26,081
|
|
|
|
41,729
|
|
|
|
—
|
|
|
|
20,865
|
|
|
|
31,297
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL:
|
|
|
5,774,158
|
|
|
|
8,429,806
|
|
|
|
98,077
|
|
|
|
6,138,942
|
|
|
|
2,629,374
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Unused accrued vacation time for each NEO is a range of minimum and maximum amounts payable, depending on the amount of vacation time accrued at the time of
termination.
|
|
(2)
|
Amounts in the rows titled “Target Incentive Payment” have been calculated assuming no other payments have been made to the NEO as of December 31, 2012,
for the current year.
|
30
|
(3)
|
Insurance Benefits are based on the December 2012 monthly payment for Health, Dental, Vision, Life and Disability coverage for each NEO.
|
|
(4)
|
As discussed above in “Compensation Discussion and Analysis,” Mr. Wilkus has the right under his employment agreement to declare that good reason exists
regardless of whether a change of control has occurred in certain circumstances.
|
SECURITY OWNERSHIP OF MANAGEMENT
AND CERTAIN BENEFICIAL OWNERS
The following table sets forth as of
March 1, 2013 (unless otherwise indicated), the beneficial ownership of each current director, each nominee for director, each of our named executive officers, our executive officers and directors as a group and each stockholder known to
management to own beneficially more than 5% of the legally outstanding shares of our common stock. Unless otherwise indicated, we believe that the beneficial owner set forth in the table has sole voting and investment power.
|
|
|
|
|
|
|
|
|
|
|
|
|
Name and Address of Beneficial Owner
|
|
Number of
Shares Beneficially
Owned
(1)
|
|
|
Percent of
Class
|
|
|
Dollar Range
of
Equity
Securities
Beneficially
Owned
(2)
|
|
Beneficial Owners of more than 5%:
|
|
|
|
|
|
|
|
|
|
|
|
The Vanguard Group
|
|
|
17,731,930
|
(10)
|
|
|
5.5
|
%
|
|
N/A
|
|
Directors and Named Executive Officers:
|
|
|
|
|
|
|
|
|
|
|
|
Malon Wilkus
|
|
|
5,530,462
|
(3)(4)(7)
|
|
|
1.8
|
%
|
|
over $100,000
|
|
John R. Erickson
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|
|
2,961,112
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(3)(4)(8)
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|
|
*
|
|
|
N/A
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|
Ira J. Wagner
|
|
|
889,948
|
(3)
|
|
|
*
|
|
|
N/A
|
|
Samuel A. Flax
|
|
|
2,064,642
|
(3)(4)
|
|
|
*
|
|
|
N/A
|
|
Gordon O’Brien
|
|
|
2,213,019
|
(3)(4)
|
|
|
*
|
|
|
N/A
|
|
Mary C. Baskin
|
|
|
293,129
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(5)(6)
|
|
|
*
|
|
|
over $100,000
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|
Neil M. Hahl
|
|
|
344,126
|
(5)
|
|
|
*
|
|
|
over $100,000
|
|
Philip R. Harper
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|
|
1,818,156
|
(5)(9)
|
|
|
*
|
|
|
over $100,000
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|
John A. Koskinen
|
|
|
451,586
|
(5)
|
|
|
*
|
|
|
over $100,000
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|
Stan Lundine
|
|
|
393,029
|
(5)
|
|
|
*
|
|
|
over $100,000
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|
Kenneth D. Peterson, Jr.
|
|
|
730,948
|
(5)(10)
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|
|
*
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|
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over $100,000
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|
Alvin N. Puryear
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|
|
445,068
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(5)
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|
|
*
|
|
|
over $100,000
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|
Directors and Executive Officers as a group (15 persons)
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|
|
21,828,497
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|
|
|
6.8
|
%
|
|
N/A
|
|
(1)
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Pursuant to the rules of the SEC, shares of our common stock subject to options held by our directors and named executive officers that are exercisable within 60 days
of March 1, 2013, are deemed outstanding for the purposes of computing such director’s or executive officer’s beneficial ownership.
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(2)
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The dollar range of our equity securities beneficially owned is calculated by multiplying the closing price of our common stock as reported on The NASDAQ Global Select
Market as of March 1, 2013, times the number of shares beneficially owned, in accordance with Rule 16a-1(a)(2) of the Exchange Act.
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(3)
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Includes vested and deferred shares allocated to the account of each executive officer as a participant in our Performance Incentive Plan, each as of March 1,
2013, and shares issuable upon the exercise of options that are exercisable within 60 days of March 1, 2013: Mr. Wilkus has 761,214 shares in the PIP and 4,132,103 shares issuable upon the exercise of options; Mr. Erickson has 367,773
shares in the PIP and 2,287,514 shares issuable upon the exercise of options; Mr. Wagner 873,869 shares issuable upon the exercise of options; Mr. Flax has 270,462 shares in the PIP and 1,653,492 shares issuable upon the exercise of
options; and Mr. O’Brien has 270,648 shares in the PIP and 1,922,862 shares issuable upon the exercise of options.
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31
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(4)
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Includes the equivalent number of shares held as units in our 401(k) Plan of which the named executive officer is the beneficial owner: Mr. Wilkus has the
equivalent of 80,934 shares; Mr. Erickson has the equivalent of 10,279 shares; Mr. Flax has the equivalent of 4,766 shares; and Mr. O’Brien has the equivalent of 9,036 shares.
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(5)
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Includes shares issuable upon the exercise of stock options that are exercisable within 60 days of March 1, 2013. Ms. Baskin, Messrs. Hahl, Harper, Koskinen,
Lundine and Peterson, and Dr. Puryear have 252,906, 312,906, 406,656, 401,656, 312,906, 381,656 and 406,656 such shares, respectively.
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(6)
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Includes 14,606 shares that are owned by Ms. Baskin’s husband. Also includes 165 shares that are owned by Ms. Baskin’s son, of which Ms. Baskin
disclaims beneficial ownership of such shares.
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(7)
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Includes 91,963 shares that are owned by Mr. Wilkus’ wife.
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(8)
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Includes 242,155 shares that are held by a family trust. Also includes 48,687 shares held by another family trust, of which Mr. Erickson disclaims beneficial
ownership of such shares.
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(9)
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Includes 12,747 shares that are owned by Mr. Harper’s wife.
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(10)
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This information is based on Amendment No. 1 to Schedule 13G (the “Vanguard Schedule 13G”) filed with the SEC on February 22, 2013, by The
Vanguard Group with a business address at 100 Vanguard Blvd., Malvern, PA 19355. The Vanguard Schedule 13G indicates that as of December 31, 2012, the Vanguard Group had sole voting power with respect to 58,878 shares, sole dispositive power
with respect to 17,688,931 shares, and shared dispositive power with respect to 42,999 shares, and that Vanguard Fiduciary Trust Company, a wholly-owned subsidiary of The Vanguard Group, Inc., is the beneficial owner of 42,999 shares as a result of
its serving as investment manager of collective trust accounts, and Vanguard Investments Australia, Ltd., also a wholly-owned subsidiary of The Vanguard Group, Inc., is the beneficial owner of 15,879 shares as a result of its serving as investment
manager of Australian investment offerings.
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CORPORATE GOVERNANCE
Our Board of Directors has developed corporate governance practices to help it fulfill its responsibility to stockholders to
oversee the work of management in the conduct of our business. The governance practices are memorialized in corporate governance guidelines to assure that the Board will have the necessary authority and practices in place to review and evaluate our
business operations as needed and to make decisions that are independent of management. These guidelines, in conjunction with our Certificate of Incorporation, Bylaws and committee charters, form the framework for our governance. All of these
documents are available on our website at
www.AmericanCapital.com.
Board Leadership
Structure
Our Board of Directors is currently comprised of seven independent directors and one employee director,
Mr. Wilkus. Mr. Wilkus has served as our Chairman and Chief Executive Officer since he founded the company in 1986, except for the period from 1997 to 1998, during which he served as Chief Executive Officer and Vice Chairman of the Board
of Directors. We believe that combining the positions of Chairman and Chief Executive Officer is the best corporate governance leadership structure for the company because it permits clear accountability, effective decision-making and alignment on
corporate strategy. We also believe that this structure is particularly appropriate and beneficial to us because it most effectively utilizes Mr. Wilkus’ broad experience and knowledge regarding the company, including by allowing him to
set the agendas and priorities of the Board and lead discussions on our business and strategy.
Although we believe that it is
more effective for us to combine the positions of Chairman and Chief Executive Officer, we recognize the importance of strong independent leadership on the Board. We believe that our Board’s independent oversight continues to be substantial.
Our Board of Directors has determined that all of the current directors, except Mr. Wilkus, are “independent” as defined in The NASDAQ Stock Market listing standards (the “NASDAQ listing standards”). Similarly, only
Mr. Wilkus is an “Interested Person” of American Capital under the 1940 Act. In addition, each of our Board’s Audit and Compliance Committee and
32
Compensation and Corporate Governance Committee is composed entirely of independent directors. These independent committees of our Board also have the authority under their respective charters to
hire independent advisors and consultants, at our expense, to assist them in performing their duties.
Further, it is our
Board’s policy as a matter of good corporate governance to have a majority of our independent directors annually elect a “lead independent director” to preside over regular meetings of the independent directors, without management or
employee directors present, to facilitate the Board’s effective independent oversight of management. The designation of a lead independent director is for a three-year term and a lead independent director may run for re-election at the end of a
term. If the lead independent director is unavailable for a meeting, his or her immediate predecessor will serve as lead independent director for such meeting. At a meeting on July 22, 2010, Mr. Harper was designated as the lead director
for the current three-year term.
Meetings of Disinterested Directors.
Members of the Board of Directors who are
not “Interested Persons” as defined in the 1940 Act have decided to hold quarterly meetings without persons who are members of management present. These directors also designate a director who is “independent,” as defined in Rule
5605(a)(2) of the NASDAQ listing standards, to serve as the “lead independent director” and preside at these meetings. Presently, our disinterested directors meet quarterly and may hold additional meetings at the request of the lead
independent director or another disinterested director.
Committees of the Board
The Board of Directors holds regular monthly meetings and meets on other occasions when required by circumstances. Certain directors also
serve on the Board of Directors’ principal standing committees. Such committees, their primary functions and memberships are described below.
Executive Committee.
This committee has the authority to exercise all powers of the Board of Directors except for actions that must be taken by the full Board of Directors under the Delaware
General Corporation Law or the 1940 Act. Members of the Executive Committee are Messrs. Harper and Wilkus and Dr. Puryear.
Audit and Compliance Committee.
This committee makes recommendations to the Board of Directors with respect to the engagement
of independent auditors and questions our management and independent auditors on the application of accounting and reporting standards in our financial statements. Its purpose and responsibilities are more fully set forth in the committee’s
charter which was adopted by the Board of Directors and is available in the Investor Relations section of our web site at
www.AmericanCapital.com
. The charter was adopted by the Board of Directors on February 24, 2005, and amended on
February 21, 2008 and October 25, 2012, following a review by this committee. This committee’s meetings include, whenever appropriate, executive sessions with our independent auditors, without the presence of management. The Audit and
Compliance Committee reviews and provides a recommendation to the Board of Directors with regard to its approval of the valuations of portfolio companies presented by management. In such review, the committee discusses the proposed valuations with
our independent auditors and any other relevant consultants. It also has the responsibility for reviewing matters regarding accounting, ethics, legal and regulatory compliance and for engaging, evaluating and terminating any internal audit service
providers and approving fees to be paid to such internal audit service providers. The Audit and Compliance Committee annually reviews the experience and qualifications of the senior members of the independent external audit function and the internal
audit function and the quality control procedures of the independent external auditors and the internal auditors. In addition, the Audit and Compliance Committee discusses with the independent auditors, internal auditors and any internal audit
service providers (as may be engaged from time to time) the overall scope, plans and budget for their respective audits, including the adequacy of staffing and other factors that may affect the effectiveness and timeliness of such audits. The Audit
and Compliance Committee is currently composed of Ms. Baskin and Messrs. Hahl and Koskinen. Mr. Hahl serves as Chairman. Each member of this committee is independent, as defined in Rule 4200(a)(15) of the NASDAQ listing standards. The
Board of Directors has determined that each of Ms. Baskin and Messrs. Hahl and Koskinen is an “audit committee financial expert” (as defined in Item 407 of Regulation S-K under the Securities Act).
33
Compensation and Corporate Governance Committee.
This committee has the
responsibility for setting the terms of employment of our Chief Executive Officer and reviewing and approving the salaries, incentive payments and other compensation and benefits of the other executive officers, reviewing and advising management
regarding benefits and other terms and conditions of compensation of the our other employees, and administering our employee stock option plans. Although the committee consults with senior management to establish our general compensation philosophy,
they have the sole authority to set the compensation of our executive officers. It also has responsibility for recommending and considering corporate governance practices and policies and monitoring our litigation docket. Its purpose and
responsibilities are more fully set forth in the committee’s charter, which was adopted by the Board and is available in the Investor Relations section of our web site at
www.AmericanCapital.com
. The charter was adopted by the Board of
Directors on February 24, 2005, and amended on March 8, 2007, February 21, 2008 and October 25, 2012, following a review by this committee. Members of this committee are Messrs. Harper and Lundine and Dr. Puryear.
Mr. Harper serves as Chairman. Each member of this committee is independent, as defined in Rule 4200(a)(15) of the NASDAQ listing standards.
Under its charter, the Compensation and Corporate Governance Committee has the authority to select, retain and terminate compensation consultants. The Compensation and Corporate Governance Committee did
not retain any compensation consultants in 2012.
The Compensation and Corporate Governance Committee also serves as the Board
of Directors’ standing nominating committee. Nominations for election to the Board of Directors may be made by the Board of Directors, or by any stockholder entitled to vote for the election of directors. Candidates proposed by stockholders
will be evaluated by the Compensation and Corporate Governance Committee under the same criteria that are applied to other candidates.
Although there is not a formal list of qualifications, in discharging its responsibilities to nominate candidates for election to the Board of Directors, the Compensation and Corporate Governance
Committee endeavors to identify, recruit and nominate candidates based on the following eligibility and experience criteria: a candidate’s ability to best represent the interests of our stockholders, integrity and business ethics, strength of
character, judgment, experience and independence, as well as factors relating to the composition of the Board of Directors, including its size and structure, the relative strengths and experience of current directors and principles of diversity,
including diversity of experience, personal and professional backgrounds, race, gender and age. Although the committee does not have formal objective criteria for determining the amount of diversity needed on the Board of Directors, it is one of the
factors the committee considers in its evaluation. In nominating candidates to fill vacancies created by the expiration of the term of a member of the Board of Directors, the committee determines whether the incumbent director is willing to stand
for re-election. If so, the committee evaluates his or her performance in office to determine suitability for continued service, taking into consideration the value of continuity and familiarity with our business.
The committee schedules regular meetings to coincide with the quarterly in-person meetings of the Board of Directors and also meets at
the request of senior management or at such other times as it determines. Our Secretary in consultation with the Chairman of the committee sets agendas for the meetings.
Meetings.
Under our Bylaws and Delaware law, the Board of Directors is permitted to take actions at regular or special meetings and by written consent. The Board of Directors held 14 meetings
during 2012. The Compensation and Corporate Governance Committee held 9 meetings during 2012, the Audit and Compliance Committee held 8 meetings during 2012, and the Executive Committee held 2 meetings in 2012. Each of the directors attended at
least 86% of the meetings of the Board of Directors and 100% of the meetings of the committees on which he or she served. Although we do not have a policy on director attendance at the Annual Meeting, directors are encouraged to attend the Annual
Meeting. At the 2012 Annual Meeting, all eight directors attended in person.
34
Risk Oversight
One of the roles of our Board of Directors is being responsible for the general oversight of the company, including the performance of
senior management and the company’s risk management processes, to assure that the long-term interests of our stockholders are being served. In performing its risk oversight function, the Board and its standing committees regularly review our
material strategic, operational, financial, compensation and compliance risks with senior management. The Board also annually reviews the company’s strategic plan, which addresses, among other things, the risks and opportunities facing us. The
Board has delegated certain risk management oversight responsibility to its Board committees. Our Audit and Compliance Committee assists the Board in fulfilling its oversight responsibilities for our accounting and financial reporting processes and
the audits of our financial statements, including, without limitation, by monitoring:
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•
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the integrity of our financial statements and internal controls over financial reporting;
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|
•
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|
the qualifications, independence and performance of our independent auditor;
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•
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|
the performance of our internal audit function; and
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•
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our compliance with legal and regulatory requirements.
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The Audit and Compliance Committee also is responsible for reviewing and discussing with management our major financial risk exposures and the steps management has taken to monitor and control such
exposures, including our policies and practices with respect to risk assessment and risk management. The Audit and Compliance Committee receives regular reports from management on the status of the Company’s internal controls over financial
reporting and ensures that appropriate steps are being taken to mitigate any risk.
The Compensation and Corporate Governance
Committee of our Board also considers and addresses risk as it relates to compensation and benefit decisions as well as corporate governance and litigation matters during the performance of their specific committee responsibilities. The Compensation
and Corporate Governance Committee and the Audit and Compliance Committee routinely report their findings to the full Board at the next regularly scheduled Board meeting following their committee meetings and when appropriate.
COMPENSATION AND CORPORATE GOVERNANCE COMMITTEE
INTERLOCKS AND INSIDER PARTICIPATION
No member of the Compensation and Corporate Governance Committee during fiscal year 2012 served as an officer, former officer, or employee of ours or had a relationship discloseable under “Related
Person Transactions.” Further, during 2012, none of our executive officers served as:
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•
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a member of the compensation committee (or equivalent) of any other entity, one of whose executive officers served as one of our directors or was an
immediate family member of a director, or served on our Compensation and Corporate Governance Committee; or
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•
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a director of any other entity, one of whose executive officers or their immediate family member served on our Compensation and Corporate Governance
Committee.
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COMPANY AND STOCKHOLDER COMMUNICATIONS
Investor and Public Relations
.
The Board of Directors is of the view that management is primarily responsible for all
communications on behalf of American Capital with stockholders and the public at large. We employ a Senior Vice President, Finance whose primary responsibilities and those of certain members of his staff include investor and stockholder relations.
35
Stockholder Communication with Directors
. Stockholders who wish to communicate
with the Board of Directors or with a particular director may send a letter to our Secretary at American Capital, Ltd., 2 Bethesda Metro Center, 14th floor, Bethesda, MD 20814. Any communication should clearly specify that it is intended to be made
to the entire Board of Directors or to one or more particular director(s). Under this process, our Secretary reviews all such correspondence and will forward to the Board of Directors a summary of all such correspondence and copies of all
correspondence that, in the opinion of the Secretary, deals with the functions of the Board of Directors or committees thereof or that he otherwise determines requires their attention. Directors may at any time review a log of all correspondence
received by American Capital that is addressed to members of the Board of Directors and request copies of any such correspondence. Concerns relating to accounting, internal controls or auditing matters are immediately brought to the attention of the
chairman of the Audit and Compliance Committee and handled in accordance with procedures established by the Audit and Compliance Committee with respect to such matters. A copy of the Audit and Compliance Committee’s procedures for the
submission and handling of complaints or concerns regarding accounting, internal accounting controls or auditing matters is included in our Code of Ethics and Conduct (the “Code of Ethics”), which is published in the Investor Relations
section of our web site at
www.AmericanCapital.com
.
Stockholder proposals or nominees for the Board of Directors must
be made in accordance with the procedures set forth in our Bylaws and described in “Proposals of Stockholders” below, and not the procedures set forth in the preceding paragraph.
CODE OF ETHICS AND CONDUCT
We have adopted the Code of Ethics, which requires our directors and employees (including our Chief Executive Officer, Chief Financial Officer and principal accounting officer) to abide by high standards
of business conduct and ethics. The Code of Ethics is available in the Investor Relations section of our web site at
www.AmericanCapital.com
. We intend to post amendments to or waivers from the Code of Ethics (to the extent applicable to our
Chief Executive Officer, Chief Financial Officer and principal accounting officer) at that location on its web site. The Code of Ethics was last amended by the Board of Directors on July 26, 2007.
CERTAIN TRANSACTIONS WITH RELATED PERSONS
We have procedures in place for the review, approval and monitoring of transactions involving us and certain persons related to us. As a
BDC, the 1940 Act restricts us from participating in transactions with any persons affiliated with us, including our officers, directors, and employees and any person controlling or under common control with us (“Affiliates”), subject to
certain exceptions.
In the ordinary course of business, we enter into transactions with portfolio companies that may be
considered related party transactions. We have implemented certain procedures, both written and unwritten, to ensure that we do not engage in any prohibited transactions with any persons affiliated with us. If such affiliations are found to exist,
we seek Board and/or committee review and approval or exemptive relief for such transactions, as appropriate.
In addition,
the Code of Ethics, which is reviewed and approved by the Board of Directors and provided to all employees, directors and independent contractors, requires that all employees, directors and independent contractors avoid any situations or
relationships that involve actual or potential conflicts of interest, or perceived conflicts of interest, between an individual’s personal interests and the interests of the company or our portfolio companies. Pursuant to the Code of Ethics,
each employee, director, and independent contractor must disclose any conflicts of interest, or actions or relationships that might give rise to a conflict, to their supervisor or the Chief Compliance Officer. If a conflict is determined to exist,
the employee, director or independent contractor must disengage from the conflict situation or terminate his or her employment with us. Our Chief Executive
36
Officer, Chief Financial Officer, principal accounting officer, Controller and certain other persons who may be designated by the Board of Directors or our Audit and Compliance Committee
(collectively, the Financial Executives) must consult with our Chief Compliance Officer with respect to any proposed actions or arrangements that are not clearly consistent with the Code of Ethics. In the event that a Financial Executive wishes to
engage in a proposed action or arrangement that is not consistent with the Code of Ethics, the Financial Executive must obtain a waiver of the relevant Code of Ethics provisions in advance from our Audit and Compliance Committee.
Loan Transactions.
We previously entered into a series of loan transactions with certain employees, including some of our
executive officers pertaining to the exercise of options under certain of our Existing Option Plans. None of the loan transactions were entered into in 2012 and none are currently outstanding.
Since the July 30, 2002 enactment of Sarbanes-Oxley Act of 2002, neither American Capital nor any of its subsidiaries has made any
loans to any of our executive officers or directors.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING
COMPLIANCE
Section 16(a) of the Exchange Act and the disclosure requirements of Item 405 of SEC Regulation S-K
require that our directors and executive officers, and any persons holding more than 10% of any class of our equity securities report their ownership of such equity securities and any subsequent changes in that ownership to the SEC, The NASDAQ
Global Select Market and to us. Based solely on a review of the written statements and copies of such reports furnished to us by our executive officers, directors and greater than 10% beneficial owners, we believe that during fiscal year 2012 all
Section 16(a) filing requirements applicable to the executive officers, directors and stockholders were timely satisfied, except that a Form 4 reporting two sales of stock by Mr. Winn was filed four and five days late, respectively.
PROPOSALS OF STOCKHOLDERS
Proposals received from stockholders in accordance with Rule 14a-8 under the Exchange Act are given careful
consideration by our Compensation and Corporate Governance Committee and our Board of Directors. If a stockholder intends to present a proposal at the 2014 annual meeting of stockholders pursuant to Rule 14a-8 under the Exchange Act, in order for
such stockholder proposal to be included in our proxy statement for that meeting, the proposal must be received by our Secretary at American Capital, Ltd., 2 Bethesda Metro Center, 14
th
floor, Bethesda, Maryland 20814, on or before November 15, 2013, unless the date of the 2014 annual meeting
of stockholders is changed more than 30 days from April 26, 2014. If such proposal is in compliance with all of the requirements of Rule 14a-8 under the Exchange Act, the proposal will be included in our proxy statement and proxy card relating
to such meeting. Such proposals should be submitted by certified mail, return receipt requested. Nothing in this paragraph shall be deemed to require us to include any stockholder proposal that does not meet all the requirements for such inclusion
established by the SEC in effect at that time.
In order for a stockholder proposal submitted outside of Rule 14a-8, including
any nominations for the Board of Directors made by stockholders, to be considered at the 2014 annual meeting of stockholders, such proposal must be made by written notice (setting forth the information required by our Bylaws) and received by our
Secretary not less than sixty and not more than ninety days in advance of an annual meeting.
METHOD OF COUNTING VOTES
All duly executed proxies will be voted in accordance with the instructions set forth on the back side of the proxy card except that if no choice is specified, shares will be voted FOR the election of all
nominees for director. Abstentions and “broker non-votes” will be counted as present for purposes of determining a quorum.
37
Abstentions are not counted either “for” or “against” Proposals 1 and 2. A “broker non-vote” occurs when a nominee holding shares on behalf of a beneficial owner has
not received voting instructions from the record holder and does not have discretionary authority to vote the shares on certain proposals. In tabulating the voting results on Proposal 1, shares that constitute broker non-votes are not entitled to
vote on these proposals. Broker non-votes will not have an effect on the outcome of Proposal 1.
FINANCIAL STATEMENTS AVAILABLE
A copy of our 2012 Annual Report on Form 10-K containing audited consolidated financial statements accompanies this proxy statement. Such financial statements are hereby incorporated herein by reference.
ALONG WITH THIS PROXY STATEMENT, WE WILL PROVIDE TO EACH STOCKHOLDER A COPY (WITHOUT EXHIBITS, UNLESS OTHERWISE REQUESTED) OF
OUR ANNUAL REPORT ON FORM 10-K FILED WITH THE SEC FOR THE YEAR ENDED DECEMBER 31, 2012. COPIES OF THESE DOCUMENTS MAY ALSO BE ACCESSED ELECTRONICALLY BY MEANS OF THE SEC’S HOME PAGE ON THE INTERNET AT HTTP://WWW.SEC.GOV. THE ANNUAL REPORT ON
FORM 10-K IS NOT PART OF THE PROXY SOLICITATION MATERIALS.
REPURCHASES OF COMMON STOCK
Subject to compliance with the 1940 Act and other applicable law, we may repurchase on the open market or in privately
negotiated transactions, our outstanding shares. There is no assurance that such open market purchases will be made and such authorization may be terminated at any time.
OTHER MATTERS
The Board of Directors does not
intend to bring other matters before the Annual Meeting except items incident to the conduct of the meeting. However, on all matters properly brought before the meeting by the Board of Directors or others, the persons named as proxies in the
accompanying proxy, or their substitutes, will vote in accordance with their best judgment.
38
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Electronic Voting Instructions
Available 24 hours a day, 7 days a week!
Instead of mailing your proxy, you may choose one of the voting methods outlined below to vote your proxy.
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VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE
BAR.
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Proxies submitted by the Internet or telephone must
be received by 1:00 a.m., Central Time, on April 26, 2013.
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Vote by Internet
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• Go to
www.investorvote.com/acas
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• Or scan the QR code with your smartphone
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• Follow the steps outlined on the secure website
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Vote by telephone
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•
Call toll free 1-800-652-VOTE (8683) within the USA, US territories & Canada on a touch tone telephone
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Using a
black ink
pen, mark your votes with an
X
as shown
in
this example. Please do not write outside the designated areas.
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x
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•
Follow the instructions provided by the recorded message
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q
IF YOU HAVE NOT VOTED VIA THE INTERNET
OR
TELEPHONE, FOLD ALONG THE PERFORATION,
DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
q
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A
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Proposals – The Board of Directors recommends a vote FOR all of the nominees listed and FOR Proposal 2.
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1.
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Election of Directors:
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For
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Against
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Abstain
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For
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Against
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Abstain
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For
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Against
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Abstain
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+
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01 - Mary C. Baskin
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02 - Neil M. Hahl
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03 - Philip R. Harper
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¨
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¨
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04 - John A. Koskinen
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¨
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¨
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05 - Stan Lundine
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¨
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¨
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06 - Kenneth D. Peterson
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¨
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¨
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¨
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07 - Alvin N. Puryear
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¨
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¨
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¨
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08 - Malon Wilkus
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¨
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¨
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¨
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For
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Against
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Abstain
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2.
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Ratification of the appointment of Ernst & Young LLP to serve as our independent public accountant for the year ending December 31, 2013.
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¨
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¨
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The proxies are authorized to vote in their
discretion on any matter that may properly come before said meeting or any adjournment thereof.
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B
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Non-Voting Items
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Change of Address
– Please print new address below.
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Comments
– Please print your comments below.
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C
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Authorized Signatures – This section must be completed for your vote to be counted – Date and Sign Below
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Please sign exactly as your name appears on your stock certificate. If your shares are registered in the names of two or
more persons, each person should sign. Executors, administrators, trustees, guardians, attorneys, and corporate officers should show their full titles.
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Date (mm/dd/yyyy) – Please print date below.
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Signature 1 – Please keep signature within the box.
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Signature 2 – Please keep signature within the box.
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/
/
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q
IF YOU HAVE NOT VOTED VIA THE INTERNET
OR
TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE
ENCLOSED ENVELOPE.
q
Proxy – AMERICAN CAPITAL, LTD.
THIS PROXY IS SOLICITED BY THE BOARD OF
DIRECTORS FOR THE 2013
ANNUAL MEETING OF STOCKHOLDERS OF AMERICAN CAPITAL, LTD.
TO BE HELD ON APRIL 26, 2013.
The
undersigned hereby appoints Samuel A. Flax and Richard Konzmann and each of them, as proxies, with full power of substitution, to vote all shares of the undersigned as shown below on this proxy at the Annual Meeting of Stockholders to be held at the
Hyatt Regency Bethesda, 7400 Wisconsin Avenue, Bethesda, Maryland 20814 on April 26, 2013, at 9:00 a.m., Eastern Time, and any adjournments thereof.
This proxy is revocable and your shares will be voted in accordance with your instructions. If no choice is specified, this proxy will be voted (i) FOR the election of all nominees for Director and
(ii) FOR proposal 2.
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SEE REVERSE
SIDE
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SEE REVERSE
SIDE
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American Capital Strategies (NASDAQ:ACAS)
과거 데이터 주식 차트
부터 6월(6) 2024 으로 7월(7) 2024
American Capital Strategies (NASDAQ:ACAS)
과거 데이터 주식 차트
부터 7월(7) 2023 으로 7월(7) 2024
