COMPENSATION PROGRAMS (Tables)

12 Months Ended

Dec. 31, 2013

DERs issued and outstanding at December 31, 2013 and related compensation costs for the indicated periods were as follows:

	Total DERs		Year ended December 31
Grant Date	Granted		2013		2012		2011
July 2008		225,000	$	279,000	$	335,000	$	396,000
July 2009		225,000		279,000		335,000		396,000
July 2010		60,000		75,000		89,000		105,000
August 2011		72,000		89,000		107,000		63,000
July 2012		72,000		89,000		48,000		–
		654,000	$	811,000	$	914,000	$	960,000

Schedule Of Performance-Based Stock Awards

Information pertaining to absolute return performance-based stock awards issued to employees pursuant to this program is as follows:

Year of	Grant Date Fair Value		Total Original				Final Measurement Period Ends		Remaining Shares with Initial Measurement Periods Ending December 31
Grant	Per Share		Grants		Forfeited		December 31		2014		2015		2016
2008 ^(a)	$	10.18		140,658		5,464		n/a		–		–		–
2009 ^(b)		14.33		110,917		4,571		n/a		–		–		–
2010 ^(c)		12.44		128,766		5,759		2017		61,499		–		–
2011		12.72		132,490		5,050		2018		63,722		63,718		–
2012		11.67		145,399		5,697		2019		–		69,853		69,849

(a)

The absolute return metrics for the three-year measurement periods ending December 31, 2012 and 2011 were met resulting in the vesting of 67,595 shares associated with the second 50% of this grant in January 2013 and 67,599 shares associated with the first 50% of this grant in February 2012.

(b)

The absolute return metrics for the three-year measurement periods ending December 31, 2013 and 2012 were met resulting in the vesting of 52,915 shares associated with the second 50% of this grant in January 2014 and 53,431 shares associated with the first 50% of this grant in January 2013.

(c)

The absolute return metric for the first three-year measurement period ending December 31, 2013 was met resulting in the vesting of 61,508 shares associated with the first 50% of this grant in January 2014.

Schedule Of Service-Based Stock Awards

Information pertaining to service-based stock awards issued to directors and employees (subject to certain restrictions, principally continuous service), is as follows:

Year of	Grant Date Fair Value		Total Original		As of December 31, 2013				Remaining Shares Scheduled to Vest During:
Grant	Per Share		Grants		Vested		Forfeited		2014		2017
2007 ^(a)	$	12.93		156,000		121,004		12,832		22,164		–
2008 ^(b)		12.87		6,000		6,000		–		–		–
2009 ^(b)		11.39		6,000		6,000		–		–		–
2010 ^(b)		11.64		12,000		12,000		–		–		–
2011 ^(b)		13.23		24,000		24,000		–		–		–
2012 ^(b)		13.59		29,000		29,000		–		–		–
2013 ^(b)		13.02		28,000		–		–		28,000		–
2013 ^(c)		12.34		35,703		–		–		–		35,703

(a)

The remaining 2007 grant shares vested in January 2014.

(b)

Director stock awards have been granted annually upon election or reelection to the board of directors. These awards vest one year after issuance.

(c)

In December 2013 the Committee granted service-based awards to employees that were not awarded performance-based restricted stock units. These awards vest on January 2, 2017.

Schedule Of Performance- And Service- Based Stock Award Activity

Performance-based and service-based stock award activity for year ended December 31, 2013 is summarized below:

	Number of Shares			Weighted Average Grant Date Fair Value
Unvested stock awards outstanding at beginning year		657,720		$	12.48
Grants		63,703			12.64
Vestings		(172,523	)		12.41
Forfeitures		(19,969	)		12.65
Unvested stock awards outstanding at end of year		528,931			12.51

Schedule Of Option Award Activity

Option awards currently outstanding have ten-year contractual terms from the grant date and were issued with strike prices equal to the quoted market prices of Capstead’s common shares on the date of grant. The fair value of option awards was estimated on the date of grant using a Black-Scholes option pricing model. The Company estimated option exercises, expected holding periods and forfeitures based on past experience and expectations for option performance and employee or director attrition. Risk-free rates were based on market rates for the expected life of the options. Expected dividends were based on historical experience and expectations for future performance. Expected volatility factors were based on historical experience. No option awards have been granted since 2010. Option award activity for the year ended December 31, 2013 is summarized below:

	Number of Shares			Weighted Average Exercise Price
Option awards outstanding at beginning of year		97,500		$	11.63
Exercises		(15,000	)		10.61
Forfeitures		(5,000	)		12.87
Option awards outstanding at end of year		77,500			11.75