-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HQXeUw5BE4JDZYkvmIsBkTxDK+uATf0FnHDTBgnhen8K6wUtikw9qO6+2WhMl4mF 77Qod8d+6zbRFHVmNvSiLQ== 0000930661-97-000530.txt : 19970306 0000930661-97-000530.hdr.sgml : 19970306 ACCESSION NUMBER: 0000930661-97-000530 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19970418 FILED AS OF DATE: 19970305 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CAPSTEAD MORTGAGE CORP CENTRAL INDEX KEY: 0000766701 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 752027937 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: 1934 Act SEC FILE NUMBER: 001-08896 FILM NUMBER: 97551177 BUSINESS ADDRESS: STREET 1: 2711 NORTH HASKELL AVE STREET 2: STE 900 CITY: DALLAS STATE: TX ZIP: 75204 BUSINESS PHONE: 2148742323 MAIL ADDRESS: STREET 1: 2711 NORTH HASKELL AVENUE STREET 2: STE 900 CITY: DALLAS STATE: TX ZIP: 75204 FORMER COMPANY: FORMER CONFORMED NAME: LOMAS MORTGAGE CORP DATE OF NAME CHANGE: 19891105 DEF 14A 1 DEFINITIVE NOTICE & PROXY STATEMENT ================================================================================ SCHEDULE 14A INFORMATION Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 (Amendment No. ) Filed by the Registrant [X] Filed by a Party other than the Registrant [_] Check the appropriate box: [_] Preliminary Proxy Statement [_] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) [X] Definitive Proxy Statement [_] Definitive Additional Materials [_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12 Capstead Mortgage Corporation - -------------------------------------------------------------------------------- (Name of Registrant as Specified In Its Charter) Capstead Mortgage Corporation - -------------------------------------------------------------------------------- (Name of Person(s) Filing Proxy Statement, if other than the Registrant) Payment of Filing Fee (Check the appropriate box): [X] No fee required. [_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. (1) Title of each class of securities to which transaction applies: ------------------------------------------------------------------------- (2) Aggregate number of securities to which transaction applies: ------------------------------------------------------------------------- (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined): ------------------------------------------------------------------------- (4) Proposed maximum aggregate value of transaction: ------------------------------------------------------------------------- (5) Total fee paid: ------------------------------------------------------------------------- [_] Fee paid previously with preliminary materials. [_] 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. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. (1) Amount Previously Paid: ------------------------------------------------------------------------- (2) Form, Schedule or Registration Statement No.: ------------------------------------------------------------------------- (3) Filing Party: ------------------------------------------------------------------------- (4) Date Filed: ------------------------------------------------------------------------- Notes: [LOGO OF CAPSTEAD APPEARS HERE] ---------------------------------------- NOTICE OF ANNUAL MEETING OF STOCKHOLDERS To Be Held April 18, 1997 ---------------------------------------- To the Stockholders of CAPSTEAD MORTGAGE CORPORATION: The Annual Meeting of Stockholders of Capstead Mortgage Corporation, a Maryland corporation (the "Company"), will be held at Cityplace Center East, 2711 North Haskell Avenue, Dallas, Texas on Friday, April 18, 1997 beginning at 9:00 a.m. for the following purposes: (i) To elect six directors to hold office until the next Annual Meeting of Stockholders or until their respective successors shall have been elected and qualified and (ii) To transact any other business that may properly come before the meeting or any adjournment thereof. Stockholders of record at the close of business on February 14, 1997 will be entitled to notice of and to vote at the meeting. IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING REGARDLESS OF THE SIZE OF YOUR HOLDINGS. EVEN IF YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE AND RETURN YOUR PROXY CARD AS PROMPTLY AS POSSIBLE. You may, of course, revoke your proxy if you attend the meeting and choose to vote in person. By order of the Board of Directors, /s/ Andrew F. Jacobs ANDREW F. JACOBS Secretary 2711 North Haskell Avenue, Suite 900 Dallas, Texas 75204-2915 March 5, 1997 CAPSTEAD MORTGAGE CORPORATION 2711 North Haskell Avenue, Suite 900 Dallas, Texas 75204-2915 ------------------------------------ ANNUAL MEETING OF STOCKHOLDERS To Be Held April 18, 1997 ------------------------------------ PROXY STATEMENT This Proxy Statement, together with the enclosed proxy, is solicited by and on behalf of the Board of Directors of Capstead Mortgage Corporation, a Maryland corporation (the "Company"), for use at the Annual Meeting of Stockholders to be held on April 18, 1997 (the "Annual Meeting"). This Proxy Statement and accompanying proxy will first be mailed to stockholders on or about March 5, 1997. At the Annual Meeting, action will be taken to elect six directors to hold office until the next Annual Meeting of Stockholders and until their successors shall have been elected and qualified. SOLICITATION OF PROXIES The enclosed proxy is solicited by the Board of Directors of the Company. The expense of soliciting proxies for the Annual Meeting, including the cost of mailing, will be borne by the Company. In addition to solicitation by mail, officers of the Company may solicit proxies from stockholders by telephone, telefax or personal interview. Such persons will receive no compensation for such services. The Company also intends to request persons holding Common Stock in their name or custody, or in the name of a nominee, to send proxy materials to their principals and request authority for the execution of the proxies, and the Company will reimburse such persons for their expense in so doing. The Company will also use the services of the proxy solicitation firm of Corporate Investor Communications, Inc. to assist in the solicitation of its proxies. For such services the Company will pay a fee that is not expected to exceed $5,000 plus out-of-pocket expenses. Stockholders are urged to sign the accompanying form of proxy solicited on behalf of the Board of Directors of the Company and, immediately after reviewing the information contained in this Proxy Statement and in the Annual Report outlining the Company's operations for the year ended December 31, 1996, return it in the envelope provided for that purpose. Valid proxies will be voted at the Annual Meeting and at any adjournment or adjournments thereof in the manner specified therein. VOTING The accompanying proxy card is designed to permit each stockholder of record at the close of business on February 14, 1997 to vote in the election of directors. The proxy card provides space for a stockholder to vote in favor of or to withhold voting for any or all nominees for the Board of Directors if the stockholder chooses to do so. With respect to the election of directors at the Annual Meeting, each share of the Company's outstanding shares of Common Stock, $.01 par value (the "Common Stock"), may be voted for up to six individuals. To be elected, each nominee must receive a majority of all votes cast at the meeting with respect to such position as director. For purposes of determining the number of votes cast with respect to any other voting matter that may properly come before the meeting (except as noted herein), all votes cast for or against and abstentions are included. Abstentions will have the same legal effect as a vote against a proposal. Broker nonvotes, if any, will be treated as not present and not entitled to vote for a proposal. 1 The holders of a majority of the outstanding shares of Common Stock will constitute a quorum for the transaction of business at the Annual Meeting. Abstentions and broker nonvotes will be counted as shares that are present and entitled to vote for the purpose of determining whether a quorum is present at the Annual Meeting. If a quorum should not be present, the Annual Meeting may be adjourned from time to time until a quorum is obtained. Stockholders are urged to sign the accompanying form of proxy and return it promptly. When a signed proxy card is returned with choices specified with respect to voting matters, the shares represented are voted by the Proxies designated on the proxy card in accordance with the stockholder's instructions to the tabulator. A stockholder wishing to name another person as his or her proxy may do so by crossing out the names of the three designated Proxies and inserting the name of such other person to act as his or her proxy. In that case, it will be necessary for the stockholder to sign the proxy card and deliver it to the person named as his or her proxy and for the person so named to be present and to vote at the Annual Meeting. Proxy cards so marked should not be mailed directly to the Company. If a signed proxy card is returned and the stockholder has made no specifications with respect to voting matters, the shares will be voted for the election of all of the nominees for director. Valid proxies will be voted at the Annual Meeting and at any adjournment in the manner specified. RIGHT TO REVOKE PROXY Any stockholder who has returned a proxy may revoke it at any time before it is voted at the Annual Meeting by executing and delivering to the Secretary of the Company prior to the Annual Meeting a later dated proxy, voting by ballot at the meeting, or filing with the Inspectors of Election an instrument of revocation at the meeting. VOTING SECURITIES The only outstanding voting equity securities of the Company are its shares of Common Stock. Each share of Common Stock entitles the holder to one vote. At February 14, 1997 there were outstanding and entitled to vote 46,306,880 shares of Common Stock. Only stockholders of record at the close of business on February 14, 1997 are entitled to vote at the Annual Meeting or any adjournment thereof. 2 ELECTION OF DIRECTORS One of the purposes of the Annual Meeting is to elect directors to hold office until the next annual meeting of stockholders and until their respective successors have been elected and qualified. Set forth below are the names, principal occupations, committee memberships, ages, beneficial ownership of the Company's Common Stock as of February 14, 1997, directorships held with other public companies, and other biographical data for the nominees for election as well as the year each nominee was first elected as a director of the Company. If any nominee should become unable to stand for election as a director--an event that the Board of Directors does not presently expect--the proxy will be voted for a replacement nominee if one is designated by the Board of Directors. ------------------------------- Nominees for Director -------------------------------
- ---------------------------------------------------------------------------------------------- BEVIS LONGSTRETH Mr. Longstreth has been a partner in the New York Partner, law firm of Debevoise & Plimpton since 1970. He Debevoise & Plimpton is also currently an Adjunct Professor of Law at Columbia University School of Law. He served as Commissioner of the Securities and Exchange Member: Audit and Commission from 1981 to 1984. He is a member of Compensation Committiees the Board of INVESCO plc, College Retirement Equities Fund, and the American Stock Exchange and serves as Chairman of the Finance Committees of Director since 1994 the Rockefeller Family Fund and the Nathan Shares beneficially owned 37,041 Cummings Foundation. Age 63 - ---------------------------------------------------------------------------------------------- PAUL M. LOW Mr. Low is the founder of and was Chairman of the Retired Chairman of the Board of New America Financial L.P., a mortgage Board, banking firm, from 1992 to 1994, when he retired. New America Financial L.P. He was President of Lomas Mortgage USA ("LMUSA") from July 1987 to his retirement in December 1990, serving in various executive positions with LMUSA Chairman: Executive and for more than five years prior to 1987. Mr. Low Nominating Committees served as Senior Executive Vice President of the Company from April 1985 to January 1988. Director since November 1990; and April 1985 to March 1990 Shares beneficially owned 97,754 Age 66 - ---------------------------------------------------------------------------------------------- RONN K. LYTLE Mr. Lytle has been Chairman and Chief Executive Chairman of the Board, Officer of the Company since August 1992 and Chief Executive Officer and President and Chief Operating Officer since President, January 1989. Prior thereto, he served in various Capstead Mortgage positions with the Company since its inception in Corporation 1985. Mr. Lytle also served as a director, Chairman and Chief Executive Officer of Tyler Cabot Mortgage Securities Fund, Inc. ("Tyler Cabot") Member: Executive and from March 1992 until its merger into the Company Nominating Committees in December 1992; and, prior thereto, from Tyler Cabot's organization in August 1988 until March Director since 1988 1992, as a director, President and Chief Operating Shares beneficially owned 565,521 Officer. Age 56 - ----------------------------------------------------------------------------------------------
3 ------------------------------- Nominees for Director -------------------------------
- ---------------------------------------------------------------------------------------------- HARRIET E. MIERS Ms. Miers has served as President of the Dallas President and Shareholder, law firm of Locke Purnell Rain Harrell since March Locke Purnell Rain Harrell 1996 and has been a shareholder in the firm since (A Professional 1978. She served as a member of the Dallas City Corporation) Council from 1989 to 1991 and President of the State Bar of Texas from 1992 to 1993. She is also a director of Attorneys' Liability Assurance Chair: Audit Committee Society, Inc. Ms. Miers also serves as Chair of Member: Nominating the Texas Lottery Commission and on the Executive Committee Board of the Southern Methodist University Law School and as Chair of the Board of Editors for the American Bar Journal. Director since 1993 Shares beneficially owned 32,186 Age 51 - ---------------------------------------------------------------------------------------------- WILLIAM R. SMITH Mr. Smith has been Chairman and Chief Executive Chairman of the Board and Officer of Smith Capital Management, Inc., an Chief Executive Officer, asset management firm, for more than the previous Smith Capital Management, five years. He is on the Finance Committee of the Inc. Winthrop Rockefeller Foundation, the Investment Committee of the Navigators and is director and Chairman of the Investment Committee of the New Chairman: Compensation Horizons Foundation. Committee Member: Audit Committee Director since 1993 Shares beneficially owned 38,481 Age 57 - ---------------------------------------------------------------------------------------------- JOHN C. TOLLESON Mr. Tolleson is the founder of and has been Chairman of the Board and Chairman and Chief Executive Officer of First USA, Chief Executive Officer, Inc., a financial services company specializing in First USA, Inc. the credit card business, since August 1985. He is also a director of Visa International, Visa USA, Inc., Jayhawk Acceptance Corporation and Member: Compensation and First USA Paymentech, Inc. Mr. Tolleson also Executive Committees serves on the Executive Board of the Edwin L. Cox School of Business at Southern Methodist University. Director since 1994 Shares beneficially owned 65,139 Age 48 - ----------------------------------------------------------------------------------------------
4 BOARD OF DIRECTORS During the year ended December 31, 1996, the Board of Directors held four regular meetings and four dividend meetings. No director attended fewer than 92 percent of all meetings of the Board and the committees on which such director served. Directors who are not employees of the Company or its subsidiaries receive compensation at the rate of $40,000 annually and fees of $1,250 per meeting of the directors or of a committee attended and $500 for participation in telephonic meetings to declare dividends. In addition, nonemployee directors are reimbursed for their expenses related to attending Board or committee meetings. In accordance with the terms of the 1990 Director's Stock Option Plan (the "Directors Plan"), each nonemployee director was, on each of January 1, 1996 and 1997, automatically awarded options (which were immediately exercisable) to purchase 2,250 shares of Common Stock at an exercise price equal to the market price of the Common Stock on date of grant, and Dividend Equivalent Rights ("DERs") entitling them to receive additional shares of Common Stock at no cost upon exercise of outstanding options. Directors who are not employees of the Company do not receive any other salaries, fees, commissions or bonuses from the Company, nor do they receive any separate compensation from any of the Company's affiliates for their services as directors of the Company or committees of the Board. COMMITTEES OF THE BOARD The Board has established standing committees to assist it in the discharge of its responsibilities. The principal responsibilities of each committee are described in the succeeding paragraphs. Actions taken by any committee of the Board are reported to the Board of Directors, usually at its next meeting. Respective memberships on the various standing committees are identified in the "Election of Directors" section of this Proxy Statement. The Audit Committee, composed of three nonemployee directors, met twice during 1996. The functions of the Committee include reviewing with management and the independent auditors the annual results of operations, the accounting and reporting policies and the adequacy of internal controls. The Committee also recommends to the Board the independent auditors to serve for the following year, approves the type and scope of services to be performed by the auditors and reviews the related costs. The Compensation Committee, composed of three nonemployee directors, met four times during 1996. The Board has delegated to this committee the review of the overall compensation philosophy and compensation structure to determine its appropriateness; to review and approve the compensation arrangements of senior management and the Chief Executive Officer (other than for base salary); to evaluate the performance of the Chief Executive Officer and make recommendations with respect to base salary for the Chief Executive Officer to the full Board of Directors; to review and approve proposed amendments to the benefit plans; to administer short-, intermediate- and long-term incentive plans; and to review the compensation arrangements of the members of the Board. The Executive Committee, composed of three directors, did not meet during 1996. During the intervals between meetings of the Board of Directors, the Executive Committee has all of the powers and authority of the Board in the management of the business and affairs of the Company except those powers which by law cannot be delegated by the Board. The Nominating Committee, composed of three directors, met once during 1996. It recommends to the Board a slate of directors for election by the stockholders at each annual meeting. Stockholders wishing to recommend candidates for consideration by the Nominating Committee can do so by writing to the Secretary of the Company at its offices in Dallas, Texas. Such recommendation should give the candidate's name, biographical data and qualifications and should be accompanied by a written statement from the candidate of his or her consent to be named as a candidate and, if nominated and elected, to serve as a director. 5 EXECUTIVE OFFICERS The following table shows the names and ages of the executive officers of the Company. A description of the business experience of each for at least the past five years follows the table. Name Age Title - --------------------------- --- ---------------------------------------------- Capstead Mortgage Corporation Ronn K. Lytle.............. 56 Chairman, Chief Executive Officer and President Andrew F. Jacobs........... 37 Senior Vice President--Control, Treasurer and Secretary Julie A. Moore............. 35 Senior Vice President--Asset and Liability Management Capstead Inc. Christopher T. Gilson...... 55 President and Chief Operating Officer William H. Rudluff......... 54 Executive Vice President--Servicing Administration Larry G. Studinski......... 45 Senior Vice President--Control and Treasurer For a description of Mr. Lytle's business experience, see the "Election of Directors" section of this Proxy Statement. Mr. Gilson has served as President of Capstead Inc. since December 1993. Prior thereto, he served as President of NationsBanc Mortgage Corporation from January 1989 until his resignation in April 1993 to pursue other opportunities in mortgage banking. From 1973 to January 1989, Mr. Gilson served in various executive positions with Citicorp/Citibank, Inc., last serving as Executive Vice President of Citicorp Mortgage, Inc. Mr. Rudluff has served as Executive Vice President--Servicing Administration of Capstead Inc. since March 1994, and of the Company from October 1992 to February 1994. Prior thereto, he was Senior Vice President of LMUSA responsible for delinquency and foreclosure administration from 1987 to 1992. Mr. Rudluff had been associated with LMUSA since 1963. Mr. Jacobs has served as Senior Vice President--Control and Treasurer of the Company since October 1991 and Secretary of the Company since August 1992. From July 1989 to September 1991, he served as Vice President--Control and Treasurer of the Company. Mr. Jacobs has been associated with the Company since 1988. Mr. Jacobs also served as Senior Vice President--Control and Treasurer of Tyler Cabot from October 1991 until its merger into the Company in December 1992 and from February 1989 to September 1991 as Vice President--Control. Ms. Moore has served as Senior Vice President--Asset and Liability Management of the Company since October 1991. From July 1990 to September 1991, she served as Vice President--Asset and Liability Management of the Company. Ms. Moore has been associated with the Company since 1988. Mr. Studinski has served as Senior Vice President--Control and Treasurer of Capstead Inc. since January 1994. Prior thereto, he served as Senior Vice President of NationsBanc Mortgage Corporation from April 1990 to January 1994. From 1987 to April 1990, Mr. Studinski was the Chief Accounting Officer and Treasurer of Foster Mortgage. 6 EXECUTIVE COMPENSATION The Company's direction and policies are established by the Board of Directors and implemented by the Chief Executive Officer. The Summary Compensation Table shows certain compensation information for the Chief Executive Officer and the four other most highly compensated executive officers (the "Named Executives") for services rendered in all capacities during the years ended December 31, 1996, 1995 and 1994. SUMMARY COMPENSATION TABLE
Long-Term Annual Compensation Compensation ----------------------------------------------- -------------------------- Other Total Restricted Annual Annual Stock All Other Name and Salary Bonus Compensation Compensation Awards Options Compensation principal position Year ($) ($) ($) ($) ($) (#) ($) - --------------------------- ---- ------- ------- ------------ ------------ ----------- ------------ ------------ Ronn K. Lytle.............. 1996 546,000 688,000 130,965(a) 1,364,965 946,520(b) 81,034 124,279(c) Chairman, Chief Executive 1995 520,000 524,000 14,100(a) 1,058,100 - 234,845 105,042(c) Officer and President 1994 520,000 199,000 36,250(a) 755,250 - 270,427 45,478(c) Christopher T. Gilson...... 1996 330,000 237,500 48,392(a) 615,892 273,155(b)(d) 67,120 59,588(c) President and Chief 1995 315,000 79,750 17,908(a) 412,658 7,800(d) 5,976 42,891(c) Operating Officer of 1994 300,000 85,375 - 385,375 200,000(d) 180,000 27,756(c) Capstead Inc. Julie A. Moore............. 1996 176,000 183,500 36,992(a) 396,492 273,155(b)(d) 64,419 15,474(c) Senior Vice President-- 1995 168,000 104,000 4,840(a) 276,840 7,800(d) 5,475 14,358(c) Asset and Liability 1994 160,000 99,000 - 259,000 50,000(d) 90,706 10,550(c) Management Andrew F. Jacobs........... 1996 168,000 158,500 36,992(a) 363,492 273,155(b)(d) 64,419 14,130(c) Senior Vice President-- 1995 157,500 100,000 4,840(a) 262,340 7,800(d) 5,475 13,455(c) Control, Treasurer and 1994 150,000 91,000 - 241,000 50,000(d) 90,706 9,240(c) Secretary William H. Rudluff......... 1996 174,000 141,500 34,447(a) 349,947 226,904(b)(d) 52,204 34,920(c) Executive Vice 1995 168,000 78,000 9,196(a) 255,196 7,800(d) 4,994 33,165(c) President--Servicing 1994 160,000 97,000 - 257,000 100,000(d) 90,427 17,420(c) Administration of Capstead Inc.
- --------------- (a) Amount includes dividends paid on unvested shares of restricted stock. See footnotes (b) and (d), as applicable. None of the dividends paid were deemed preferential. (b) Amount includes the fair market value at the dates of grant of shares of restricted stock of the Company awarded pursuant to the Company's 1994 Flexible Long-Term Incentive Plan. Each officer is considered the record owner and is entitled to vote the shares and is entitled to receive all dividends and any other distributions declared on the shares. The shares granted on January 29, 1996 vest 25 percent on each of May 1, 1997, 1998, 1999 and 2000. On October 18, 1996, all full-time employees with one year of service as of November 1, 1996, were granted 1,000 shares of restricted stock, which vest 10 percent annually for ten years with initial vesting on November 1, 1997. Any unvested interest in the shares of restricted stock will revert to the Company in the event the officer or employee leaves the Company. The number and value of unvested restricted stock holdings of the Company's Common Stock by each of the Named Executives as of December 31, 1996 were as follows: Number Value -------- ---------- Ronn K. Lytle 61,000 $1,464,000 Christopher T. Gilson 16,000 $384,000 Julie A. Moore 16,000 $384,000 Andrew F. Jacobs 16,000 $384,000 William H. Rudluff 13,000 $312,000 On March 3, 1997, Mr. Lytle's January 29, 1996 restricted stock grant was amended to include certain performance-based criteria in order to qualify such grant under Section 162(m) of the Internal Revenue Code of 1986 (the "Code"). As amended, Mr Lytle's shares granted on January 29, 1996 will vest 25 percent on each February 1, 1998, 1999, 2000 and 2001, provided the Company attains certain performance goals. (c) Amount includes matching contribution by the Company of 50 percent of a participant's voluntary contribution of up to a maximum of 6 percent of a participant's compensation pursuant to the 401(k) plan adopted October 1993. Amount also includes matching contribution by the Company of a portion of the participant's voluntary contribution to a nonqualified deferred compensation plan adopted July 1994. Additionally, the amount includes a discretionary contribution made to all employees into the qualified and 7 nonqualified plans of 3 percent of a participants compensation regardless of participation in the above noted plans. All Company contributions are subject to certain vesting requirements. (d) Amount includes the fair market value at the dates of grant of shares of restricted stock of Capstead Inc. awarded pursuant to the Capstead Inc. 1994 Restricted Stock Plan. Each officer is considered the record owner of and is entitled to vote the shares and is entitled to receive all dividends and any other distributions declared on the shares. The shares vest over a seven- year period beginning in the year of grant as follows: 10 percent on each of July 1 for four years and 20 percent on each succeeding July 1 for three years. Any unvested interest in the shares will revert to Capstead Inc. in the event the officer leaves the Company for any reason, including death or disability, and Capstead Inc. will purchase the vested portion at Capstead Inc.'s fair market value. The shares cannot be sold, transferred or otherwise disposed of for any purpose whatsoever other than to the Company. In the event of a Change in Control (as defined therein), all outstanding unvested shares will automatically vest in full. The number of restricted stock holdings of Capstead Inc., subject to fractional vesting as described above, and the unvested value, as determined in good faith by management, as of December 31, 1996 were as follows:
Number Value ------ ----- Christopher T. Gilson 43 $438,600 Julie A. Moore 13 $132,600 Andrew F. Jacobs 13 $132,600 William H. Rudluff 20 $204,000
OPTION GRANTS The table below shows information regarding grants of stock options and DERs made to the Named Executives under the Company's 1994 Flexible Long- Term Incentive Plan and 1990 Employee Stock Option Plan during the fiscal year ended December 31, 1996. The amounts shown for each of the Named Executives as potential realizable values are based on arbitrarily assumed annualized rates of stock price appreciation of 0 percent, 5 percent and 10 percent over the full ten-year term of the options. OPTION GRANTS IN LAST FISCAL YEAR
Individual Grants ------------------------------------------------- Potential Realizable Value at Assumed Annual Number of Percent of Market Rates of Stock Price Securities Total Options Price Appreciation for Option Term Underlying Granted to Exercise on Date ---------------------------- Options Employees in Price of Grant Expiration 0% 5% 10% Name Granted Fiscal Year ($/SH) ($/SH) Date ($) ($) ($) - --------------------------- ------------- ------------ --------- --------- ---------- -------- --------- --------- Ronn K. Lytle.............. 60,000(a) 6.8 15.42 15.42 1-29-06 0 581,740 1,474,244 21,034(b) 2.4 0.00 15.25 various 320,768 491,357 738,384 Christopher T. Gilson...... 60,000(a) 6.8 15.42 15.42 1-29-06 0 581,740 1,474,244 7,120(b) * 0.00 15.25 various 108,580 162,842 239,658 Julie A. Moore............. 60,000(a) 6.8 15.42 15.42 1-29-06 0 581,740 1,474,244 4,419(b) * 0.00 15.25 various 67,390 99,777 145,183 Andrew F. Jacobs........... 60,000(a) 6.8 15.42 15.42 1-29-06 0 581,740 1,474,244 4,419(b) * 0.00 15.25 various 67,390 99,777 145,183 William H. Rudluff......... 48,000(a) 5.5 15.42 15.42 1-29-06 0 465,392 1,179,395 4,204(b) * 0.00 15.25 various 64,111 95,428 139,489
- --------------------------- * Denotes less than 1 percent. (a) Stock options awarded at the fair market value of shares of Common Stock at the date of award and become exercisable one-fourth on each May 1, 1996, 1997, 1998 and 1999. Such options lapse at the earliest of ten years after award, six months after the optionee's termination of employment by reason of resignation, death, disability or retirement, or at the time of the optionee's termination of employment for cause. (b) DERs are awarded annually to plan participants pursuant to a formula based upon options previously granted and total dividends paid during the previous year in excess of a benchmark rate of return. The DERs entitle the holder to receive additional shares of Common Stock at no cost to the holder. DERs are exercisable only in conjunction with the exercise of the options on which they were awarded. The expiration date of the DERs is the same as the options on which they were awarded. 8 OPTION EXERCISES AND FISCAL YEAR END OPTION VALUES The following table shows stock option exercises by the Named Executive during 1996 including the net gain realized on the date of exercise. In addition, this table summarizes the total number of securities underlying stock options, both exercisable and unexercisable, held by the Named Executives at December 31, 1996. Also reported are the values for in-the-money options which represents the positive spread between the exercise price of any such existing stock options and the year end price of the Common Stock. AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION VALUES
Number of Securities Underlying Value of Unexercised Unexercised Options In-the-Money Shares at Fiscal Year End Options at Fiscal Year End Acquired Value ------------------------------------- ---------------------------------------- Name on Exercise Realized(a) Exercisable Unexercisable Exercisable Unexercisable - ---------------------- ----------- ----------- ---------------- ------------------ --------------- ----------------------- Ronn K. Lytle - - 481,071 123,235 $5,967,540 $1,476,375 Christopher T. Gilson 1,125 $ 11,672 206,971 45,000 $2,426,109 $ 386,235 Julie A. Moore 18,451 $120,007 121,004 45,000 $1,362,381 $ 386,235 Andrew F. Jacobs 7,000 $ 86,535 132,453 45,000 $1,490,240 $ 386,235 William H. Rudluff 1,125 $ 9,258 128,500 36,000 $1,450,527 $ 308,988
(a) Represents the difference between the fair market value of securities acquired and the exercise price of the option. EMPLOYMENT AGREEMENTS Mr. Lytle is a party to an Employment Agreement with the Company executed as of August 1, 1992 and initially expiring on December 31, 1995 (the 1992 Employment Agreement), subject, however, to automatic one year extensions of the then remaining term commencing on December 31, 1992 and on each December 31, thereafter through December 31, 2006 (age 65), unless at least 180 days prior to such December 31, the Company gives notice that it does not wish to extend. Thus, on December 31, 1996 the 1992 Employment Agreement was automatically extended one additional year and will now expire on December 31, 2000. During the term of the 1992 Employment Agreement, Mr. Lytle will serve as Chairman, Chief Executive Officer and President of the Company. Mr. Lytle's 1992 Employment Agreement provides for annual increases of at least 6 percent in base salary over the immediately preceding 12-month period. On January 1, 1996 Mr. Lytle's base salary was increased to $546,000 for 1996. In addition to base salary, Mr. Lytle is entitled to receive incentive compensation as approved as recommended by the Compensation Committee and approved by the Board of Directors. The 1992 Employment Agreement will terminate in the event of Mr. Lytle's death and may be terminated by the Company in the event of Mr. Lytle's disability or for Cause (as defined therein). Mr. Lytle may terminate his employment for Good Reason, which includes (i) a defined Change in Control, (ii) certain changes in Mr. Lytle's duties or compensation, and (iii) action by the Company to prevent the automatic extension of the 1992 Employment Agreement. If Mr. Lytle terminates his employment for Good Reason or if the Company terminates Mr. Lytle's employment in breach of the 1992 Employment Agreement, Mr. Lytle will be entitled to lump-sum severance pay equal to three times the amount of his base salary plus an amount equal to three times the average of the two highest of his three most recent annual incentive compensation payments. The 1992 Employment Agreement also provides for the continuation of all retirement and other benefit programs (or the payment of equivalent benefits) until three years after the date of termination, except in the case of termination for Cause. Mr. Gilson has an employment agreement for the duration of his employment with the Company. Mr. Gilson is entitled to receive the agreed to base salary (plus any merit increases) and incentive compensation as approved by the Compensation Committee. In the event of involuntary termination of employment, Mr. Gilson will be entitled to lump-sum severance pay equal to his base salary at the time of termination plus the average of his last two years incentive compensation. 9 COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION Compensation for the executive officers of the Company is administered under the direction of the Compensation Committee of the Board (the Committee) which currently consists of three independent directors. The Committee approves the compensation arrangements of all executive officers and the Chief Executive Officer(other than for base salary)and submits its recommendations with respect to base salary for the Chief Executive Officer to the full Board of Directors. The following is the Committees report in its role as reviewer of the Company's executive pay programs on 1996 compensation practices for the executive officers of the Company. The report and the performance graph that appears immediately after such report shall not be deemed to be soliciting material or to be filed with the Securities and Exchange Commission under the Securities Act of 1933 or the Securities Exchange Act of 1934 or incorporated by reference in any document so filed. EXECUTIVE COMPENSATION PROGRAM PHILOSOPHY The philosophy behind the Company's executive compensation programs is to attract, motivate and retain the executives needed in order to maximize the creation of long-term stockholder value. The Committee believes that the uniqueness of the Company's business, its strategic direction and the required caliber of employees needed to execute its strategy require that compensation be determined based on the following factors: - - Responsibilities within the Company. - - Completion of individual business objectives established prior to the beginning of the year (which objectives may vary greatly from person to person). - - Business unit and overall Company performance. - - Amount, form and timing of prior compensation amounts. - - Contributions toward executing the business strategy of the Company. - - Compensation practices of a self-selected comparison group of five companies, consisting of companies that compete in the Company's primary lines of business and companies of comparable size and scope located in Dallas, Texas. The Committee believes that each of the above factors is important when determining compensation levels. No specific weighting or formula regarding such factors is used in determining compensation. The Committee considers the following four elements of compensation to be the primary components that constitute an executives total compensation program: (i) base salaries; (ii) annual incentives; (iii) long-term incentives and (iv) other executive programs and benefits. Each element is described in more detail below. Base Salaries The Chief Executive Officer reviews base salaries annually utilizing the above factors and makes recommendations to the Committee. 10 Annual Incentives The Company maintains three annual incentive plans. The Base Incentive Compensation Plan and the Profit Sharing Plan are for all Company and Capstead Inc. employees. The purpose of these plans is to focus employees on the attainment of superior returns on stockholders equity on an annual basis. The Incentive Bonus Plan, as approved by the stockholders of the Company, is for Named Executives and its purpose is to retain highly-qualified executives by providing appropriate performance-based incentive awards to align executive and stockholder long-term interests by creating a direct link between executive compensation and the success of the Company. An additional purpose of the Incentive Bonus Plan is to serve as a qualified performance-based compensation program under Section 162(m) of the Code in order to preserve the Company's tax deduction for compensation paid under the Incentive Bonus Plan to the Named Executives. The Compensation Committee has approved the creation of an incentive pool (the Incentive Pool), from which both Base Incentive Compensation and Incentive Bonuses are paid, equal to a percentage of net income above a certain return on stockholders equity (ROE), which is now set at 8 percent. Prior to the beginning of the year, the Chief Executive Officer recommends to the Committee a quarterly distribution (payable April, July and October of the following year) of a portion of the Incentive Pool to the executives, including the Chief Executive Officer. Prior to the end of the year, the Chief Executive Officer makes his recommendation to the Committee for the fourth quarterly distribution from the Incentive Pool (payable in December of that year or in January of the following year), which amount may or may not exceed the previous quarterly award and which amount is designed to qualify as performance-based compensation for the Named Executives under the Incentive Bonus Plan. Recommendations for distributions from the Incentive Pool are based on the same factors that are used in determining other elements of compensation as described above. Any amount remaining in the Incentive Pool after all distributions are made is carried over and may be used to make awards in subsequent years. The quarterly award can be terminated at any time by the Committee. The Profit Sharing Plan also creates a profit pool equal to a percentage of net income above certain levels of ROE. Awards can be paid in cash and/or stock. The Plan currently makes awards based only on tenure. Awards do not vary by position. Any amount remaining in the Profit Sharing Pool after all distributions are made is carried over and may be used to make awards in subsequent years. The Chief Executive Officer recommends award levels to the Committee. For 1996 the Company's ROE equaled 18.4 percent. As a result of exceeding the 8 percent ROE threshold, additional amounts were added to the Incentive Pool. Long-Term Incentives The Committee believes that the Company and its affiliates key employees should have an ongoing stake in the long-term success of the business. The Committee also believes that key employees should have a considerable portion of their total compensation paid in the form of stock. This element of the total compensation program is intended to tie the executives interest to that of the Company's stockholders through the granting of stock options, restricted stock and other incentive-based awards. The Chief Executive Officer periodically recommends long-term incentive grants for executive officers to the Committee under the Company's 1994 Flexible Long-Term Incentive Plan. The same factors that are used in determining other elements of compensation are used in determining long-term incentive grants. During 1996 the Committee made nonqualified stock option and restricted stock grants to executive officers as well as restricted stock grants to all employees, all of which were subject to certain vesting requirements. The nonqualified stock options were granted with an exercise price equal to the fair market value of the Common Stock on the date of grant. 11 Other Executive Programs and Benefits The Company maintains employee benefit plans in which all executive officers, including the Chief Executive Officer, participate. The Company sponsors a 401(k) plan and nonqualified deferred compensation plan (together the "Plans") whereby the Company matches employee contributions up to a preset percentage of the participant's compensation. The Company may also make discretionary contributions into the Plans regardless of a participant's participation. The Company believes its Plans are competitive with those of other companies in the Dallas market of comparable size and scope of business. 1996 COMPENSATION FOR THE CHIEF EXECUTIVE OFFICER The same philosophies described above for executive compensation were used by the Committee to set, or in the case of base salary to recommend to the Board, the compensation of Mr. Ronn K. Lytle, Chairman, Chief Executive Officer and President. Base Salary Mr. Lytle's base salary in 1996 was $546,000. For 1997, the Committee recommended and the Board approved a 13.6 percent base salary increase for Mr. Lytle in 1997, which brings his base salary to $620,000. Annual Incentives In December 1996, the Committee reviewed the Company's projected operating results for 1996 and concluded that the performance goals for determining incentive compensation for Mr. Lytle would be met and awarded Mr. Lytle the highest level incentive compensation payable under the Company's incentive compensation plans established for 1996, after taking into consideration previous incentive bonuses paid to Mr. Lytle earlier in the year. As a result, Mr. Lytle's total incentive compensation for 1996 was $682,500. Mr. Lytle was also awarded $5,500 under the Profit Sharing Plan. Long-Term Incentives The Committee granted Mr. Lytle 60,000 nonqualified stock options (subject to certain vesting requirements) in January 1996. These options were granted with an exercise price equal to the fair market value of the Common Stock on the date of grant. In addition, the Committee granted Mr. Lytle 60,000 shares of restricted Common Stock (subject to certain vesting requirements) in January 1996. The Committee believes that these elements of the total compensation package will help tie Mr. Lytle's interest to that of the Company's stockholders. DEDUCTIBILITY OF EXECUTIVE COMPENSATION Section 162(m) of the Code generally precludes a publicly-held corporation from a federal income tax deduction for a taxable year for compensation in excess of $1 million paid to the chief executive officer or any of the four most highly compensated other executive officers. Exceptions are made for, among other things, qualified performance-based compensation. Qualified performance- based compensation means compensation paid solely on account of attainment of objective performance goals, provided that (i) performance goals are established by a compensation committee consisting solely of two or more outside directors, (ii) the material terms of the performance-based compensation are disclosed to and approved by a separate stockholder vote prior to payment and (iii) prior to payment, the compensation committee certifies that the performance goals were attained and other material terms were satisfied. The Incentive Bonus Plan and both the stock option grants and Mr. Lytle's January 29, 12 1996 restricted stock grant, as amended, granted under the 1994 Flexible Long- Term Incentive Plan, are designed to be fully deductible for income tax purposes and are in compliance with Section 162(m) of the Code. During 1996, $477,750 of the payment to Mr. Lytle as compensation for achieving annual performance goals would have met the requirements of performance-based compensation under Section 162(m) of the Code, except that such payment, as customarily made during the fourth quarter of the year, was made prior to the certification by the Committee of the attainment of the performance criteria based on final operating results for 1996. Approximately $262,000 of Mr. Lytle's compensation not considered performance based under Section 162(m) of the Code exceeded the $1 million threshold established under 162(m). Since the Company continues to qualify as a real estate investment trust and as a result was not subject to payment of federal income taxes for 1996, the Company believes the effect of exceeding the Section 162(m) threshold, if any, is not significant. The Company intends to operate its incentive programs taking into consideration the qualifications for deductibility of its executive compensation under 162(m) of the Code. During 1997, each of the chief executive officer and the four other most highly compensated officers of the Company (together with Capstead Inc.) will be entitled to performance-based compensation under the Incentive Bonus Plan upon the attainment of certain performance-based goals. CONCLUSION Executive compensation at Capstead is subject to considerable focus by the Committee, the Board of Directors and senior management. The Committee believes that the Company's mix of base salary, short- and long-term incentives and other benefits produces a strong attraction and motivation for its executive officers and helps align their interests with those of the Company's stockholders. William R. Smith, Chairman Bevis Longstreth John C. Tolleson 13 PERFORMANCE GRAPH Set forth below is a line graph comparing the yearly percentage change in the cumulative total stockholder return on the Company's Common Stock, with the cumulative total return of the S&P 500 Stock Index and the Russell 2000 Stock Index for the five years ended December 31, 1996, assuming the investment of $100 on December 31, 1991 and the reinvestment of dividends. The stock price performance shown on the graph is not necessarily indicative of future price performance. COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN CAPSTEAD MORTGAGE CORPORATION COMMON STOCK AND S&P 500 AND RUSSELL 2000 STOCK INDEX [PERFORMANCE GRAPH APPEARS HERE]
- -------------------------------------------------------------------------------- 12/31/91 12/31/92 12/31/93 12/31/94 12/31/95 12/31/96 - -------------------------------------------------------------------------------- Capstead $ 100.00 $ 146.89 $ 167.84 $ 78.98 $ 175.61 $ 307.23 - -------------------------------------------------------------------------------- S&P 500 $ 100.00 $ 107.61 $ 118.41 $ 119.97 $ 165.00 $ 202.85 - -------------------------------------------------------------------------------- Russell 2000 $ 100.00 $ 116.36 $ 136.14 $ 131.81 $ 166.35 $ 190.91 - --------------------------------------------------------------------------------
For purposes of preparing the above performance graph, the Company changed its comparison from the Standard & Poor's Financial Index (S&P Financial Index), as presented in the prior year, to the Russell 2000 Index. The Company believes that the Russell 2000 Index is a better measure of performance because it includes the Company and companies of similar market capitalization, whereas, the S&P Financial Index is designed to measure the performance of the financial sector of the S&P 500 Stock Index, which includes the country's largest financial institutions, brokerage firms and insurance companies, but does not include the Company. Further, the Company believes that the uniqueness of the Company's business prevents the identification of a peer group for measuring performance. Had the Company maintained its comparison to the S&P Financial Index as presented in the prior year, the performance graph would have reflected a five-year total return for the S&P Financial Index of 173.93 percent (22.3 percent compound annual growth rate) compared to the Company's five-year total return of 207.23 percent (25.1 percent compound annual growth rate). 14 SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS SECURITY OWNERSHIP OF MANAGEMENT Listed in the following table and the notes thereto is certain information with respect to the beneficial ownership of shares of Common Stock as of February 14, 1997 by each director nominee, the executive officers listed in the Summary Compensation Table and by all nominees for director and executive officers as a group.
Title of Amount and Nature of Percent Class Name of Beneficial Owner Beneficial Ownership (a) of Class * - ------ ------------------------ ------------------------ ---------- Common Bevis Longstreth........... 37,041 * Stock Paul M. Low................ 97,754(b) * Ronn K. Lytle.............. 565,521(c) 1.2 Harriet E. Miers........... 32,186 * William R. Smith........... 38,481 * John C. Tolleson........... 65,139 * Christopher T. Gilson...... 242,193(c) * Julie A. Moore............. 115,479(c) * Andrew F. Jacobs........... 108,401(c) * William H. Rudluff......... 130,758(c) * All nominees for Director and Executive Officers as a group (11 persons).. 1,505,794(c) 3.2
____________ * Denotes less than 1 percent. (a) Amounts include shares of Common Stock issuable as follows:
Right to Acquire --------------------------------------------------- Series B Preferred Stock ------------------------------- Number of Converted to Exercisable Shares Common Stock Options ------------- ---------------- ------------------ Bevis Longstreth........... - - 20,139 Paul M. Low................ - - 12,396 Ronn K. Lytle.............. 1,976 1,431 438,113 Harriet E. Miers........... - - 23,381 William R. Smith........... - - 23,381 John C. Tolleson........... - - 20,988 Christopher T. Gilson...... - - 224,693 Julie A. Moore............. - - 85,620 Andrew F. Jacobs........... - - 89,097 William H. Rudluff......... - - 117,169 All nominees for Director and Executive Officers as a group (11 persons). 1,976 1,431 1,114,780
(b) Includes 16,679 shares of Common Stock held in trust for Mr. Low's son. Mr. Low is settlor and trustee of this trust and has voting and dispositive power over the shares but expressly disclaims beneficial ownership. (c) Includes shares of restricted Common Stock granted January 29, 1996, which vest 25 percent on each of May 1, 1997, 1998, 1999 and 2000, except in the case of Mr. Lytle's that shall vest on February 1, 1998, 1999, 2000 and 2001 provided the Company attains certain performance goals, as follows: Ronn K. Lytle, 60,000 shares; Christopher T. Gilson, 15,000 shares; Julie A. Moore, 15,000 shares; Andrew F. Jacobs, 15,000 shares; William H. Rudluff, 12,000 shares; and all nominees for Director and Executive Officers as a group (11 persons), 129,000 shares. In addition, includes 1,000 shares of restricted Common Stock granted October 18, 1996, which vest 10 percent annually on November 1 over ten years for each of the Named Executives and all nominees for Director and Executive Officers as a group (11 persons), 6,000 shares. 15 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS No person or group within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, is known to the management of the Company to be the beneficial owner of more than 5 percent of the outstanding Common Stock. INDEPENDENT AUDITORS During the year ended 1996, the Company engaged Ernst & Young LLP to provide it with audit and tax services. Services provided included the examination of annual financial statements, limited review of unaudited quarterly financial information, review and consultation regarding filings with the Securities and Exchange Commission and the Internal Revenue Service, assistance with management's evaluation of internal accounting controls, consultation on financial and tax accounting and reporting matters, and verification procedures as required by collateralized mortgage obligation securities indentures. Representatives of Ernst & Young LLP will be present at the meeting, will have the opportunity to make a statement if they desire to do so, and will be available to respond to appropriate questions. OTHER MATTERS Management is not aware of any other matters to be presented for action at the Annual Meeting; however, if any such matters are properly presented for action, it is the intention of the persons named in the enclosed form of proxy to vote in accordance with their best judgment on such matters. Proposals of stockholders intended to be presented at the 1998 annual meeting of stockholders must be received at the Company's principal executive offices no later than November 15, 1997 to be included in the proxy statement and form of proxy for such meeting. By order of the Board of Directors, /s/ Andrew F. Jacobs ANDREW F. JACOBS Secretary March 5, 1997 16 CAPSTEAD MORTGAGE CORPORATION PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF P THE COMPANY FOR AN ANNUAL MEETING APRIL 18, 1997 R The undersigned hereby appoints Ronn K. Lytle, Andrew F. Jacobs and Julie A. Moore, and each of them, his true and lawful agents and proxies with O full power of substitution in each, to represent the undersigned at the annual meeting of stockholders of Capstead Mortgage Corporation to be held X at CityPlace Center East, 2711 North Haskell Avenue, Dallas, Texas, on Friday, April 18, 1997, and at any adjournments thereof, on all matters Y coming before said meeting. Election of Directors, Nominees: Bevis Longstreth, Paul M. Low, Ronn K.Lytle, Harriet E. Miers, William R. Smith and John C. Tolleson YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES, SEE REVERSE SIDE, BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. THE PROXY COMMITTEE CANNOT VOTE YOUR SHARES UNLESS YOU SIGN AND RETURN THIS CARD. _______________ | SEE REVERSE | | SIDE | _______________ - -------------------------------------------------------------------------------- PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE. X SHARES IN YOUR NAME REINVESTMENT SHARES - ----- 1. Election of Directors (see reverse). FOR WITHHELD [_] [_] For, except vote withheld from the following nominee(s): - --------------------------------------------------------- 2. In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting. FOR AGAINST ABSTAIN [_] [_] [_] - -------------------------------------------------------------------------------- SIGNATURE(S) ________________________ DATE ____________________________________ SIGNATURE(S) ________________________ DATE ____________________________________ NOTE: PLEASE SIGN EXACTLY AS NAME APPEARS HEREON. JOINT OWNERS SHOULD EACH SIGN. WHEN SIGNING AS ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH. -----END PRIVACY-ENHANCED MESSAGE-----