8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report: November 30, 2012

(Date of Earliest Event Reported)

CAPSTEAD MORTGAGE CORPORATION

(Exact Name of Registrant as Specified in its Charter)

Maryland	001-08896	75-2027937
(State of Incorporation)	(Commission File No.)	(I.R.S. Employer Identification No.)
8401 North Central Expressway Suite 800 Dallas, Texas		75225
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s Telephone Number, Including Area Code: (214) 874-2323

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425).

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 230.14a-12).

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)).

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)).

ITEM 5.03 AMENDMENTS TO ARTICLES OF INCORPORATION OR BYLAWS; CHANGE IN FISCAL YEAR.

Amendment of Bylaws

Effective November 30, 2012, the Board of Directors (the “Board”) of Capstead Mortgage Corporation (the “Company”) adopted and approved Amended and Restated Bylaws of the Company to provide for a majority vote standard for uncontested director elections, while retaining a plurality vote standard for contested elections.

The foregoing summary is qualified in its entirety by reference to the Amended and Restated Bylaws filed as Exhibit 99.1 and incorporated herein by reference.

ITEM 5.05 AMENDMENTS TO THE REGISTRANT’S CODE OF ETHICS, OR WAIVER OF A PROVISION OF THE CODE OF ETHICS

Amendment of Code of Business Conduct and Ethics

Effective November 30, 2012 and in connection with a review of its governance policies, the Board adopted and approved minor revisions to the Company’s Code of Business Conduct and Ethics that applies to all employees, officers and directors. These revisions refresh and update the Code of Business Conduct and Ethics by providing more specificity in certain areas, including in connection with the reporting process for violations of the Code of Business Conduct and Ethics.

The foregoing summary is qualified in its entirety by reference to the revised Code of Business Conduct and Ethics filed as Exhibit 99.2 and incorporated herein by reference.

ITEM 7.01 REGULATION FD DISCLOSURE

Amendment of Board of Directors’ Guidelines

Effective November 30, 2012, the Board adopted and approved amendments to the Board of Directors’ Guidelines of the Company to include a provision requiring any incumbent director who does not receive a majority of the votes cast in an uncontested election to tender his or her resignation, subject to acceptance by the Board.

The foregoing summary is qualified in its entirety by reference to the revised Board of Directors’ Guidelines filed as Exhibit 99.3.

ITEM 9.01.  FINANCIAL STATEMENTS AND EXHIBITS

(d) Exhibits.

99.1	Bylaws of the Company, as amended.
99.2	Code of Business Conduct and Ethics, as amended.
99.3	Board of Directors’ Guidelines, as amended.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

CAPSTEAD MORTGAGE CORPORATION

December 6, 2012	By:	/s/ Phillip A. Reinsch
		Phillip A. Reinsch
		Chief Financial Officer and
		Executive Vice President

EX-99.1

Exhibit 99.1

CAPSTEAD MORTGAGE CORPORATION

AMENDED AND RESTATED BYLAWS

As of November 30, 2012

TABLE OF CONTENTS

	Page
ARTICLE I. STOCKHOLDERS		1
SECTION 1.1. Annual Meeting		1
SECTION 1.2. Special Meeting		1
SECTION 1.3. Director Nomination by Stockholder		2
SECTION 1.4. Place of Meetings		2
SECTION 1.5. Fixing of Record Date		2
SECTION 1.6. Notice of Meetings; Waiver of Notice		2
SECTION 1.7. Quorum; Voting		2
SECTION 1.8. Adjournments		3
SECTION 1.9. General Right to Vote; Proxies		4
SECTION 1.10. List of Stockholders		4
SECTION 1.11. Organization and Order of Business		4
SECTION 1.12. Conduct of Voting		4
ARTICLE II. BOARD OF DIRECTORS		5
SECTION 2.1. Function of Directors		5
SECTION 2.2. Number of Directors		5
SECTION 2.3. Election and Tenure of Directors		5
SECTION 2.4. Removal of Director		5
SECTION 2.5. Vacancy on Board		6
SECTION 2.6. Regular Meetings		6
SECTION 2.7. Special Meetings		6
SECTION 2.8. Meeting by Conference Telephone		6
SECTION 2.9. Notice of Meeting		7
SECTION 2.10. Quorum and Action by Directors		7
SECTION 2.11. Organization		8
SECTION 2.12. Action by Consent		8
SECTION 2.13. Compensation		8
SECTION 2.14. Interested Director Transactions		8
ARTICLE III. COMMITTEES		10
SECTION 3.1. Number; Conduct		10
ARTICLE IV. OFFICERS		11
SECTION 4.1. Enumeration		11
SECTION 4.2. Election and Appointment		11
SECTION 4.3. Chairman of the Board		11
SECTION 4.4. Chief Executive Officer		12
SECTION 4.5. President		12
SECTION 4.6. Chief Financial Officer		12
SECTION 4.7. Treasurer and Assistant Treasurers		12

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	Page
SECTION 4.8. Secretary and Assistant Secretaries		13
SECTION 4.9. Chief Operating Officer, Chief Investment Officer, Chief Legal Officer, or Chief Accounting Officer		13
SECTION 4.10. Vice Presidents and Assistant Vice Presidents		13
SECTION 4.11. Compensation		13
SECTION 4.12. Qualification		14
SECTION 4.13. Tenure		14
SECTION 4.14. Resignation		14
SECTION 4.15. Removal		14
SECTION 4.16. Absence or Disability		15
SECTION 4.17. Vacancies		15
SECTION 4.18. Other Powers and Duties		15
ARTICLE V. STOCK		15
SECTION 5.1. Certificates for Stock		15
SECTION 5.2. Transfers		16
SECTION 5.3. Legends		16
SECTION 5.4. Record Date and Closing of Transfer Books		16
SECTION 5.5. Stock Ledger		16
SECTION 5.6. Lost Stock Certificates		17
SECTION 5.7. Transfer Agents and Registrars		17
SECTION 5.8. Stockholders’ Addresses		17
SECTION 5.9. Repurchase of Shares of Stock		17
ARTICLE VI. FINANCE		17
SECTION 6.1. Annual Statement of Affairs		17
SECTION 6.2. Dividends		18
SECTION 6.3. Fiscal Year		18
ARTICLE VII. INDEMNITIES		18
SECTION 7.1. Right to Indemnification		18
SECTION 7.2. Indemnification of Employees and Agents of the Corporation		19
SECTION 7.3. Right of Indemnitee to Bring Suit		19
SECTION 7.4. Non-Exclusivity of Rights		20
SECTION 7.5. Insurance		20
ARTICLE VIII. MISCELLANEOUS		21
SECTION 8.1. Books and Records		21
SECTION 8.2. Mail		21
SECTION 8.3. Amendments		21

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CAPSTEAD MORTGAGE CORPORATION

AMENDED AND RESTATED BYLAWS

As of November 30, 2012

ARTICLE I.

STOCKHOLDERS

SECTION 1.1. Annual Meeting. The Corporation shall hold an annual meeting of its stockholders to elect directors and transact any other business as properly may come before such meeting, on such date and at such time as shall be designated annually by the Board of Directors and stated in the notice of the meeting, such meeting to occur no earlier than April 15 and no later than May 15 of each year. Failure to hold an annual meeting does not invalidate the Corporation’s existence or affect any otherwise valid corporate acts.

SECTION 1.2. Special Meeting. At any time in the interval between annual meetings, a special meeting of the stockholders may be called by the Chairman of the Board or the Chief Executive Officer or by a majority of the Board of Directors by vote at a meeting or in writing (addressed to the Secretary of the Corporation) with or without a meeting, and shall be called by any officer of the Corporation upon the written request of the holders of shares entitled to cast a majority of all votes entitled to be cast at such meeting for the purpose of removing a director or for any other lawful purpose or purposes. If a special meeting is called at the request of stockholders, such request shall state the purpose or purposes of such meeting and the matters proposed to be acted on. Upon receipt and validation of such written request, the Chief Executive Officer, President or other officer of the Corporation shall call a special meeting of stockholders for the purpose or purposes identified in such request. Business of the Corporation transacted at any special meeting of stockholders by whomever called shall be limited to the purposes stated in the notice.

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SECTION 1.3. Director Nomination by Stockholder. If a stockholder wants to nominate a person for election to the Board of Directors, notice of the proposed nomination must be given not less than one hundred twenty (120) days prior to the first anniversary of the mailing date of the notice of the preceding year’s annual meeting.

SECTION 1.4. Place of Meetings. Meetings of stockholders shall be held at such place in the United States as is set from time to time by the Board of Directors.

SECTION 1.5. Fixing of Record Date. The Board of Directors may fix, in advance, a record date not more than ninety (90), nor less than ten (10) days before the date then fixed for the holding of any meeting of the stockholders. All persons who were holders of record of shares at such time, and no others, shall be entitled to vote at such meeting and any adjournment thereof, except as provided in Section 1.8.

SECTION 1.6. Notice of Meetings; Waiver of Notice. Not more than ninety (90), nor less than ten (10) days before each stockholders’ meeting, unless a different period of notice is required by Maryland General Corporation Law, as amended (the “MGCL”), the Secretary shall give notice of the meeting.

SECTION 1.7. Quorum; Voting. Unless the MGCL, the Articles of Incorporation of the Corporation (the “Charter”), the listing standards of the New York Stock Exchange or any successor thereto, or this provision of the Bylaws provide otherwise, at a meeting of stockholders the presence in person or by proxy of stockholders entitled to cast a majority of all the votes entitled to be cast at the meeting constitutes a quorum and a majority of all the votes cast at a meeting at which a quorum is present is sufficient to approve any matter which properly comes before the meeting

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A nominee for director shall be elected to the Board of Directors if the votes cast for such nominee’s election exceed the votes cast against such nominee’s election (with “abstentions” and “broker nonvotes” not counted as a vote cast either “for” or “against” that director’s election); provided however, that in the case of a contested election, directors shall be elected by a plurality of the votes cast. For purposes of this Bylaw provision, a “contested election” shall mean any election of directors with respect to which (i) the Corporation receives notice that a stockholder has nominated an individual for election as a director in compliance with the requirements set forth in Article I, Section 1.3 of these Bylaws and (ii) such nomination has not been withdrawn by such stockholder on or prior to the date the Corporation first mails its notice of meeting for such meeting to the stockholders, and, as a result of which, there are more nominees than directorships.

SECTION 1.8. Adjournments. Whether or not a quorum is present, a meeting of stockholders convened on the date for which it was called may be adjourned from time to time by the stockholders present in person and by proxy by a majority vote. Any business which might have been transacted at the meeting as originally notified may be deferred and transacted at such adjourned meeting at which a quorum shall be present. No further notice is required of an adjourned meeting other than by announcement at the meeting; provided, however, that if the adjournment is to a date more than 120 days after the original record date, or if after the adjournment a new record date is fixed for the adjourned meeting, notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the original meeting.

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SECTION 1.9. General Right to Vote; Proxies. Unless otherwise provided in the Charter, each outstanding share of capital stock, regardless of class, is entitled to one vote on each matter submitted to a vote at a meeting of stockholders. A stockholder may vote only the shares owned by him as shown on the record of stockholders of the Corporation as of the record date established pursuant to Section 1.5 and may vote the stock either in person or by proxy as permitted under the MGCL. Unless a proxy provides otherwise, it is not valid more than eleven (11) months after the date of its execution. A proxy purporting to be executed by or on behalf of a stockholder shall be deemed valid unless challenged at or prior to its exercise, and the burden of proving invalidity shall rest on the challenger.

SECTION 1.10. List of Stockholders. The Secretary shall make, or shall cause to be made, and administer, a complete list of the stockholders entitled to vote at the meeting as required by the MGCL.

SECTION 1.11. Organization and Order of Business. At each meeting of the stockholders, the Chief Executive Officer, or in his or her absence or inability to act, the President, or in the absence or inability to act of the Chief Executive Officer and the President, the Chief Financial Officer or such other officer as designated by a majority of the Board of Directors, shall act as presiding officer of the meeting. The Secretary, or in his or her absence or inability to act, any person appointed by the presiding officer of the meeting, shall act as secretary of the meeting and keep the minutes thereof. The order of business at all meetings of the stockholders shall be as determined by the presiding officer of the meeting.

SECTION 1.12. Conduct of Voting. The presiding officer may appoint one or more inspectors, which inspector or inspectors may include individuals who serve the Corporation in other capacities, including, without limitation, as officers, employees, agents or representatives,

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to act at a meeting of stockholders and make a written report thereof. One or more persons may be designated as alternate inspectors to replace any inspector who fails to act. Each inspector, before discharging his or her duties, shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of his or her ability. The inspectors

shall have the duties prescribed by the MGCL. The presiding officer of the meeting shall fix and announce at the meeting the date and time of the opening and the closing of the polls for each matter upon which the stockholders will vote at a meeting.

ARTICLE II.

BOARD OF DIRECTORS

SECTION 2.1. Function of Directors. The business and affairs of the Corporation shall be managed under the direction of its Board of Directors. All powers of the Corporation may be exercised by or under authority of the Board of Directors, except as conferred on or reserved to the stockholders by the MGCL or by the Charter or these Bylaws.

SECTION 2.2. Number of Directors. The Corporation shall have the number of directors provided in the Charter until changed as herein provided. A majority of the entire Board of Directors may alter the number of directors set by the Charter to not more than twenty-five (25) nor less than the number required by the MGCL.

SECTION 2.3. Election and Tenure of Directors. At each annual meeting, the stockholders shall elect directors to hold office until the next annual meeting and until their successors are elected and qualified.

SECTION 2.4. Removal of Director. Unless the Charter provides otherwise, and subject to the MGCL, the stockholders may remove any director or directors from office at any time, with or without cause, by the affirmative vote at any meeting of stockholders, duly called and at which a quorum is present, of the holders of a majority of the outstanding shares of the Corporation entitled to be cast for the election of directors.

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SECTION 2.5. Vacancy on Board. The stockholders may, as permitted by the MGCL, elect a successor to fill a vacancy on the Board of Directors which results from the removal of a director. A director elected by the stockholders to fill a vacancy which results from the removal of a director serves for the balance of the term of the removed director. A majority of the remaining directors, whether or not sufficient to constitute a quorum, may fill a vacancy on the Board of Directors which results from any cause except an increase in the number of directors, and a majority of the entire Board of Directors may fill a vacancy which results from an increase in the number of directors. A director elected by the Board of Directors to fill a vacancy serves until the next annual meeting of stockholders and until his or her successor is elected and qualified.

SECTION 2.6. Regular Meetings. Any regular meeting of the Board of Directors shall be held on such date and place as may be designated from time to time by the Board of Directors, which may include conference telephone as provided in Section 2.8.

SECTION 2.7. Special Meetings. Special meetings of the Board of Directors may be called at any time by the Chairman of the Board or the Chief Executive Officer or by a majority of the Board of Directors by vote at a meeting, or in writing with or without a meeting. A special meeting of the Board of Directors shall be held on such date and place as may be designated from time to time by the Board of Directors, which may include conference telephone as provided in Section 2.8.

SECTION 2.8. Meeting by Conference Telephone. Members of the Board of Directors may participate in a meeting by means of a conference telephone or similar communications equipment if all persons participating in the meeting can hear each other at the same time. Participation in a meeting by these means constitutes presence in person at a meeting.

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SECTION 2.9. Notice of Meeting. The Secretary shall give notice to each director of each regular and special meeting of the Board of Directors. The notice shall state the time and place of the meeting. Notice is given to a director when it is delivered personally to him, left at his residence or usual place of business, or sent by electronic means or telephone, at least twenty-four (24)

hours before the time of the meeting or, in the alternative by mail to his address as it appears on the records of the Corporation, at least seventy-two (72) hours before the time of the meeting. Unless the Bylaws or a resolution of the Board of Directors provides otherwise, the notice need not state the business to be transacted at or the purposes of any regular or special meeting. No notice of any meeting of the Board of Directors need be given to any director who attends, or to any director who, in writing executed and filed with the records of the meeting either before or after the holding thereof, waives such notice. Any meeting of the Board of Directors, regular or special, may adjourn from time to time to reconvene at the same or some other place, and no notice need be given of any such adjourned meeting other than by announcement.

SECTION 2.10. Quorum and Action by Directors. At all meetings of the Board of Directors, a majority of the entire Board of Directors shall constitute a quorum for the transaction of business, and the action of a majority of the directors present at any meeting at which a quorum is present shall be the action of the Board of Directors unless the concurrence of a greater proportion is required for such action by the MGCL, the Charter or these Bylaws. If a quorum shall not be present at any meeting of directors, the directors present at the meeting may by a majority vote adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present.

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SECTION 2.11. Organization. The Chairman of the Board shall preside at each meeting of the Board of Directors or, in his or her absence, inability or desire not to act, the Chief Executive Officer shall preside, or in the Chief Executive Officer’s absence, inability or desire not to act, such other director chosen by the Chairman of the Board or a majority of the directors present at such meeting. The Secretary (or, in his or her absence, inability or desire not to act, any person

appointed by the chairman of the meeting) shall act as secretary of the meeting and keep the minutes thereof.

SECTION 2.12. Action by Consent. Any action required or permitted to be taken at a meeting of the Board of Directors may be taken without a meeting, if a unanimous written consent which sets forth the action is signed by each member of the Board of Directors and filed with the minutes of proceedings of the Board of Directors. Such consents may be signed by different members on separate counterparts.

SECTION 2.13. Compensation. Directors shall receive compensation for their services as shall be determined by a majority of the Board of Directors, provided that a Director who is serving the Corporation as an officer or employee and who receives compensation for his or her services as such (“Employee Director”) shall not receive any salary or other compensation for his or her services as Director of the Corporation other than reasonable expenses incurred.

SECTION 2.14. Interested Director Transactions. As set forth in MGCL Sect. 2-419:

(a) Taking into account compliance with the provisions of subsection (b) of this Section 2.14, a contract or other transaction between the Corporation and any of its directors or between the Corporation and any other corporation, firm or other entity in which any of the Corporation’s directors is a director or has a material financial interest (an “Interested Director Transaction”) is not void or voidable solely because of any one or more of the following:

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(i) the common directorship;

(ii) the presence of the director at the meeting of the Board of Directors which authorizes, approves or ratifies the contract or transaction; or

(iii) the counting of the vote of the director for the authorization, approval or ratification of the contract or transaction.

(b) An Interested Director Transaction is not void or voidable solely because of any one or more of the factors set forth in subsection (a) above if:

(i) the fact of the common directorship or interest is disclosed or known to:

1. the Board of Directors of the Corporation, and the Board of Directors authorizes, approves or ratifies the contract or transaction by the affirmative vote of a majority of disinterested directors, even if the disinterested directors constitute less than a quorum; or

2. the stockholders entitled to vote, and the contract or transaction is authorized, approved or ratified by a majority of the votes cast by the stockholders entitled to vote other than the votes of shares owned of record or beneficially by the interested director, or corporation, firm or other entity; or

(ii) a contract or transaction is fair and reasonable to the Corporation.

(c) Common or interested directors or the stock owned by them or by an interested corporation, firm or other entity may be counted in determining the presence of a quorum in a meeting of the Board of Directors of the Corporation or at a meeting of the stockholders, as the case may be, at which the contract or transaction is authorized, approved or ratified.

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(d)	(i)     If a contract or transaction is not authorized, approved or ratified in any one of the ways provided for in subsection (b)(i) of this Section 2.14, the person asserting the validity of the contract or transaction bears the burden of proving that the contract or transaction was fair and reasonable to the Corporation at the time it was authorized, approved or ratified.
	(ii)    This subsection (d) does not apply to the fixing by the Board of Directors of the Corporation of reasonable compensation, whether as a director or in any other capacity.

ARTICLE III.

COMMITTEES

SECTION 3.1. Number; Conduct. The Board of Directors, by the affirmative vote of a majority of the directors then in office may elect from its number directors to serve on one or more committees, including an Audit Committee, a Compensation Committee and a Governance & Nomination Committee, and may delegate thereto some or all of its powers except those which by the MGCL, by the Charter or by these Bylaws, may not be delegated. Except as the Board of Directors may otherwise determine or as required by the MGCL, by the Charter or these Bylaws, any such committee may make rules for conduct of its business, but unless otherwise provided by the Board of Directors or in such rules, its business shall be conducted so far as possible in the same manner as is provided by the Charter and by these Bylaws for the Board of Directors. Any committee to which the Board of Directors delegates any of its powers or duties shall keep records of its meetings and shall report its action to the Board of Directors. The Chairman of the Board or the Chief Executive Officer may submit recommendations to the Board of Directors for the establishment of such other committees and the members thereof, as necessary.

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ARTICLE IV.

OFFICERS

SECTION 4.1.Enumeration. The officers of the Corporation shall consist of a Chief Executive Officer, a President, a Chief Financial Officer, a Secretary and a Treasurer and such other officers, including without limitation a Chief Operating Officer, a Chief Investment Officer, a Chief Legal Officer, a Chief Accounting Officer, one or more Vice Presidents (including Executive Vice Presidents or Senior Vice Presidents), Assistant Vice Presidents, Assistant Treasurers and Assistant Secretaries, as the Board of Directors may determine. The Corporation shall have a Chairman of the Board who may serve as an officer of the Corporation.

SECTION 4.2. Election and Appointment. At the regular annual meeting of the Board of Directors following the annual meeting of stockholders, the Board of Directors shall elect the Chairman of the Board, the Chief Executive Officer, the President, the Chief Financial Officer, the Treasurer and the Secretary. Other officers may be appointed by the Board of Directors at such regular annual meeting of the Board of Directors or at any other regular or special meeting, or other officers may be appointed by the Chief Executive Officer.

SECTION 4.3. Chairman of the Board. If the Chairman of the Board is not the Chief Executive Officer, the Board of Directors shall determine annually whether the Chairman of the Board shall serve in an officer or non-officer capacity. The Chairman of the Board shall preside, when present, at meetings of the Board of Directors. The Chairman of the Board shall have such other powers and shall perform such other duties as the Board of Directors may from time to time designate.

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SECTION 4.4. Chief Executive Officer. The Chief Executive Officer shall be President, unless the Board of Directors elects another officer to be President. The Chief Executive Officer shall have the general executive responsibilities for the conduct of the business and affairs of the Corporation, subject to the supervision of the Board of Directors. The Chief Executive Officer shall preside, when present, at all meetings of stockholders, and in the absence, inability or desire not to preside of the Chairman of the Board, the Chief Executive Officer may preside at meetings of the Board.

SECTION 4.5. President. If the President is not the Chief Executive Officer, he shall have such powers and perform such duties as the Board of Directors or the Chief Executive Officer may from time to time designate.

SECTION 4.6. Chief Financial Officer. The Chief Financial Officer shall be the principal financial officer of the Corporation. The Chief Financial Officer shall have such powers and perform such duties as the Board of Directors or the Chief Executive Officer may from time to time designate. The Chief Financial Officer shall render such accounts, reports and certifications, as may be requested by the Board of Directors or the Chief Executive Officer. The financial records, books and accounts of the Corporation shall be maintained subject to the direct or indirect supervision of the Chief Financial Officer.

SECTION 4.7. Treasurer and Assistant Treasurers. The Chief Financial Officer shall be the Treasurer, unless the Board of Directors shall elect another officer to be the Treasurer. The Treasurer shall have such powers and perform such duties as the Board of Directors or the Chief Executive Officer may from time to time designate. The Treasurer shall have direct or indirect custody of all funds and securities of the Corporation and shall perform all acts incident to the position of Treasurer. In the absence of the Treasurer, an Assistant Treasurer may perform the duties and responsibilities of the Treasurer.

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SECTION 4.8. Secretary and Assistant Secretaries. The Secretary shall have such powers and shall perform such duties as the Board of Directors or the Chief Executive Officer may from time to time designate. The Secretary shall have charge of the stock ledger (which may, however, be kept by any transfer or other agent of the Corporation). The Secretary shall also have custody of the seal of the Corporation and shall have authority to affix it to any instrument requiring it, and, when so affixed, may be attested by the signature of the Secretary as to the authenticity of such

instrument. In the absence of the Secretary, any Assistant Secretary may perform the duties and responsibilities of the Secretary.

SECTION 4.9. Chief Operating Officer, Chief Investment Officer, Chief Legal Officer, or Chief Accounting Officer. Any Chief Operating Officer, Chief Investment Officer, Chief Legal Officer, or Chief Accounting Officer shall have such powers and shall perform such duties as the Board of Directors or the Chief Executive Officer may from time to time designate.

SECTION 4.10. Vice Presidents and Assistant Vice Presidents. Any Vice President (including any Executive Vice President or Senior Vice President) and Assistant Vice President shall have such powers and shall perform such duties as the Board of Directors or the Chief Executive Officer may from time to time designate.

SECTION 4.11. Compensation. The Board of Directors shall oversee the compensation programs of the Corporation, which may be delegated to a committee of the Board of Directors or the Chief Executive Officer.

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SECTION 4.12. Qualification. Any person may occupy more than one office of the Corporation at any time except the offices of President and Vice President. Any officer may be required by the Board of Directors to give bond, at the Corporation’s expense, for the faithful performance of his duties in such amount and with such sureties as the Board of Directors may determine.

SECTION 4.13. Tenure. Except as otherwise provided by the Charter or by these Bylaws, each of the officers of the Corporation shall hold office until the regular annual meeting of the Board of Directors following the next annual meeting of stockholders and until his successor is elected and qualified or until his earlier resignation or removal. Election or appointment of an officer, employee or agent shall not of itself create contract rights. The Board of Directors, or committee thereof, may, however, authorize the Corporation to enter into an employment contract with any officer in accordance with the MGCL, but no such contract right shall prohibit the right of the Board of Directors to remove any officer at any time in accordance with Section 4.15.

SECTION 4.14. Resignation. Any officer may resign by delivering his written resignation to the Corporation addressed to the Chief Executive Officer, the President or the Secretary, and such resignation shall be effective upon receipt unless it is specified to be effective at some other time or upon the happening of some other event.

SECTION 4.15. Removal. If the Board of Directors in its judgment finds that the best interests of the Corporation will be served, the Board of Directors may remove any officer by the affirmative vote of a majority of the Directors then in office. Such removal shall be without prejudice to the contract rights, if any, of the person so removed. Any subordinate officer may be removed by any superior officer in the ordinary course of business of the Corporation.

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SECTION 4.16. Absence or Disability. In the event of the absence or disability of any officer, the Board of Directors, or if the absent or disabled officer is not the Chief Executive Officer, the Chief Executive Officer, may designate another officer to act temporarily in place of such absent or disabled officer.

SECTION 4.17. Vacancies. Any vacancy in any office may be filled for the unexpired portion of the term by the Board of Directors, or if the vacancy is not that of the Chief Executive Officer, by the Chief Executive Officer.

SECTION 4.18. Other Powers and Duties. Subject to these Bylaws and to such limitations as the Board of Directors may from time to time prescribe, the officers of the Corporation shall each have such powers and duties as generally pertain to their respective offices, as well as such powers and duties as from time to time may be conferred by the Board of Directors or the Chief Executive Officer.

ARTICLE V.

STOCK

SECTION 5.1. Certificates for Stock. Shares of the Corporation’s stock may be certificated or uncertificated, as provided under the MGCL. Each stock certificate shall be numbered, entered on the books of the Corporation as issued and include on its face the name of the Corporation, the name of the stockholder or other person to whom it is issued and the class of stock and number of shares it represents. It shall be in such form, not inconsistent with the MGCL or with the Charter, as shall be approved by the Board of Directors or any officer or officers designated for such purpose by resolution of the Board of Directors. Each stock certificate shall be signed by the Chairman of the Board, the Chief Executive Officer, the President or a Vice President, and countersigned by the Secretary, an Assistant Secretary, the

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Treasurer or an Assistant Treasurer. Each certificate may be sealed with the actual corporate seal or a facsimile of it or in any other form and the signatures may be either manual or facsimile signatures. A certificate is valid and may be issued whether or not an officer who signed it is still an officer when it is issued.

SECTION 5.2. Transfers. The Board of Directors shall have power and authority to make such rules and regulations as it may deem expedient concerning the issue, transfer and registration of certificates of stock; and may appoint transfer agents and registrars thereof. The duties of transfer agent and registrar may be combined.

SECTION 5.3. Legends. Every stock certificate representing shares of stock which are restricted as to transferability by the Corporation shall contain a full statement of the restriction or state that the Corporation will furnish information about the restriction to the stockholder on request and without charge.

SECTION 5.4. Record Date and Closing of Transfer Books. The Board of Directors may set a record date or direct that the stock transfer books be closed for a stated period for the purpose of making any proper determination with respect to stockholders, including which stockholders are entitled to notice of a meeting, vote at a meeting, receive a dividend, or be allotted other rights. The record date may not be more than ninety (90), nor less than ten (10) days before the date on which the action requiring the determination will be taken; the transfer books may be closed as permitted by the MGCL.

SECTION 5.5. Stock Ledger. The Corporation shall maintain a stock ledger which contains the name and address of each stockholder and the number of shares of stock of each class which the stockholder holds. The stock ledger may be in written form or in any other form which can be converted within a reasonable time into written form for visual inspection. The original or a duplicate of the stock ledger shall be kept at the offices of a transfer agent for the particular class of stock, within or without the State of Maryland, or, if none, at the principal office or the principal executive offices of the Corporation.

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SECTION 5.6. Lost Stock Certificates. In case of the alleged loss, destruction or mutilation of a certificate of stock, a duplicate certificate may be issued in place thereof upon such terms as the Corporation or its transfer agent may prescribe.

SECTION 5.7. Transfer Agents and Registrars. The Corporation may serve as the transfer agent and registrar of the shares of stock, or the Board of Directors may, in its discretion, appoint one or more responsible banks, trust companies or other entity as the Board of Directors may deem advisable, from time to time, to act as transfer agents and registrars of shares of stock. No certificate for shares of stock shall be valid until countersigned by the transfer agent and registered by the registrar.

SECTION 5.8. Stockholders’ Addresses. Every stockholder or transferee shall furnish the Secretary or a transfer agent with the address to which notice of meetings and all other notices may be served upon or mailed to such stockholder or transferee, and in default thereof, such stockholder or transferee shall not be entitled to service or mailing of any such notice.

SECTION 5.9. Repurchase of Shares of Stock. Subject to the provisions of the MGCL and the Charter, the Corporation may purchase its shares of stock and invest its assets in its own shares of stock.

ARTICLE VI.

FINANCE

SECTION 6.1. Annual Statement of Affairs. The Chairman of the Board, the Chief Executive Officer, the President, a Vice President or the Treasurer shall prepare or cause to be

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prepared annually a full and correct statement of the affairs of the Corporation, including a balance sheet and a financial statement of operations for the preceding fiscal year, which shall be certified by the Corporation’s independent registered public accounting firm and distributed to shareholders pursuant to the MGCL. Such annual statement shall also be submitted at the annual meeting of stockholders and shall be placed on file within twenty (20) days thereafter at the principal office of the Corporation.

SECTION 6.2. Dividends. Dividends upon the capital stock of the Corporation, subject to the provisions of the Charter, if any, may be declared by the Board of Directors at any regular or special meeting, pursuant to the MGCL. Dividends may be paid in cash, in property or in its own shares, subject to the provisions of the MGCL and of the Charter.

SECTION 6.3. Fiscal Year. The fiscal year of the Corporation for purposes of preparing its tax returns shall be from January 1 to December 31 unless otherwise provided by the Board of Directors.

ARTICLE VII.

INDEMNITIES

SECTION 7.1. Right to Indemnification. The Corporation shall, to the maximum extent permitted by the MGCL in effect from time to time, indemnify, and, without a preliminary determination of the ultimate entitlement to indemnification, pay or reimburse reasonable expenses in advance of final disposition of a proceeding to (a) any individual who is a present or former director or officer of the Corporation or (b) any individual who, while a director or officer of the Corporation and at the request of the Corporation, serves or has served another corporation, real estate investment trust, partnership, joint venture, trust, employee benefit plan or any other enterprise as a director, officer, partner or trustee from and against any claim or

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liability to which such person may become subject or which such person may incur by reason of his or her status as a present or former director or officer of the Corporation or director, officer, partner or trustee of such other entity (each, an “Indemnitee”). The Corporation shall, to the maximum extent permitted by the MGCL in effect from time to time, provide such indemnification and advancement of expenses to a person who served a predecessor of the Corporation in any of the capacities described above (any such person shall also be deemed to be an “Indemnitee”).

SECTION 7.2. Indemnification of Employees and Agents of the Corporation. With the approval of the Board of Directors, the Corporation shall, to the maximum extent permitted by the MGCL in effect from time to time, and to such further extent as it shall deem appropriate under the circumstances, provide such indemnification and advancement of expenses as described in Section 7.1 above, to any employee or agent of the Corporation or a predecessor of the Corporation (each such person shall also be deemed to be an “Indemnitee”).

SECTION 7.3. Right of Indemnitee to Bring Suit. If a claim under this Article VII is not paid in full by the Corporation within sixty days after a written claim has been received by the Corporation, except in the case of a claim for an advancement of expenses, in which case the applicable period shall be twenty days, the Indemnitee may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim. If the Indemnitee is successful in whole or in part in any such suit, or in a suit brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the Indemnitee shall also be entitled to be paid the expense of prosecuting or defending such suit. In any suit brought by an Indemnitee who is a present or former director to enforce a right to indemnification hereunder (but not in a suit brought by the Indemnitee to enforce a right to an advancement of expenses), it

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shall be a defense that such Indemnitee has not met the applicable standard of conduct set forth in the MGCL. In addition, in any suit by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the Corporation shall be entitled to recover such expenses upon a final adjudication that the Indemnitee who is a present or former director has not met the applicable standard of conduct set forth in the MGCL. Neither the failure of the Corporation (including its Board of Directors, independent legal counsel, or stockholders) to have made a determination prior to the commencement of such suit that indemnification of the Indemnitee is proper in the circumstances because the Indemnitee has met the applicable standard of conduct set forth in the MGCL, nor an actual determination by the Corporation (including its Board of Directors, independent legal counsel, or stockholders) that the Indemnitee has not met such applicable standard of conduct, shall create a presumption that the Indemnitee has not met the applicable standard of conduct. In any suit brought by the Indemnitee to enforce a right to indemnification or to an advancement of expenses hereunder, or by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the burden of proving that the Indemnitee is not entitled to be indemnified, or to such advancement of expenses, under this Article VII or otherwise shall be on the Corporation.

SECTION 7.4. Non-Exclusivity of Rights. The rights to indemnification and to advancement of expenses conferred in this Article VII shall not be exclusive of any other right which any person may have or hereafter acquire under these Bylaws, the Charter or the MGCL, agreement, vote of stockholders or disinterested directors or otherwise.

SECTION 7.5. Insurance. The Corporation may maintain insurance, at its expense, to protect itself and any director, officer, employee or agent of the Corporation or any director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any expense, liability or loss, whether or not the Corporation would have the power to indemnify such person against such expense, liability or loss under the MGCL.

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ARTICLE VIII.

MISCELLANEOUS

SECTION 8.1. Books and Records. The original or attested copies of the Charter, Bylaws and records of all meetings of the incorporators, stockholders and the Board of Directors and the stock transfer books, which shall contain the names of all stockholders, their record addresses and the amount of stock held by each, may be kept outside the State of Maryland and shall be kept at the principal office of the Corporation, at the office of its counsel or at an office of its transfer agent.

SECTION 8.2. Mail. Any notice or other document which is required by these Bylaws to be mailed shall be deposited in the United States mails, postage prepaid.

SECTION 8.3. Amendments.

(a) The Board of Directors shall have the power, at any annual or regular meeting, or at any special meeting if notice thereof is included in the notice of such special meeting, to alter or repeal any Bylaws of the Corporation and to make new Bylaws.

(b) Subject to the MGCL, the stockholders, by affirmative vote of a majority of the shares of common stock of the Corporation, shall have the power, at any annual meeting called pursuant to Section 1.1, or at any special meeting if notice thereof is included in the notice of such special meeting, to alter or repeal any Bylaws of the Corporation and to make new Bylaws.

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EX-99.2

Exhibit 99.2

CODE OF BUSINESS CONDUCT AND ETHICS

of

CAPSTEAD MORTGAGE CORPORATION

Purpose and Scope

This Code of Business Conduct and Ethics (the “Code”) embodies the commitment of Capstead Mortgage Corporation (“Capstead” or the “Company”) and its subsidiaries in maintaining the highest standards of ethics and conduct in all of our business relationships. It is intended to document the principles of conduct and ethics to be followed by the Company’s employees, officers and directors. This Code covers a wide range of business practices and procedures and applies to all employees, officers and directors of the Company. It does not cover every issue that may arise, but it sets out basic principles to guide all employees, officers and directors of the Company.

This Code is intended to meet the New York Stock Exchange (“NYSE”) listing standards and rules adopted by the Securities and Exchange Commission (the “SEC”) for a code of business conduct and ethics. In addition, this Code is intended to provide the basis for and enhance an effective corporate compliance and ethics program at the Company.

Honest and Ethical Conduct

Each employee, officer and director will at all times promote high standards of integrity by conducting its affairs honestly and ethically. Each employee, officer and director must act with integrity and observe the highest ethical standards of business conduct in dealings with the Company’s customers, suppliers, competitors and employees and anyone else with whom such employee, officer or director has contact in the course of performing his or her job.

Fair Dealing

Each employee, officer and director will at all times deal fairly with the Company’s customers, suppliers, competitors and employees. While we expect our employees, officers and directors to advance the interests of the Company, we expect them to do so in a manner that is consistent with the highest standards of integrity and ethical dealings. No employee, officer or director shall take unfair advantage of anyone through manipulation, concealment, abuse of privileged information, misrepresentation of facts, or any other unfair-dealing practice.

No gift or entertainment shall be offered, given, provided or accepted by any employee, officer or director or any of their family members, unless it: (a) is consistent with customary business practices, (b) is not excessive in value, (c) is infrequent, (d) cannot be construed as a bribe, payoff or kickback and (e) does not violate any laws or regulations. A gift of cash is not acceptable in any circumstance. The purpose of business entertainment and gifts in a commercial setting is to create goodwill and sound working relationships, not to gain unfair advantage.

Compliance with Laws, Rules and Regulations

The Company expects its employees, officers and directors to comply with all laws, rules and regulations applicable to the Company’s operations and business. As a public company with its stock trading on the NYSE, these include securities laws, rules and regulations established by the SEC and the NYSE, including insider trading laws. The Company insists on strict compliance with the spirit and the letter of these laws, rules and regulations. Employees, officers and directors shall seek guidance whenever they are in doubt as to the applicability of any law, rule or regulation or regarding any contemplated course of action.

All employees, officers and directors shall pay particular attention to potential violations of insider trading laws. Insider trading is both unethical and illegal and will be dealt with decisively if it occurs. Employees, officers and directors who have access to confidential information are not permitted to use or share that information for stock trading purposes or for any other purpose except the conduct of the Company’s business. All non-public information about the Company should be considered confidential information. To use non-public information for personal financial benefit or to tip others who might make an investment decision on the basis of this information is not only unethical but also illegal.

Conflicts of Interest

All employees, officers and directors of the Company shall be scrupulous in avoiding any action or interest that conflicts, or gives the appearance of conflict, with the Company’s interests. A conflict situation can arise when an employee, officer or director takes actions or has interests that may make it difficult to perform his or her duties objectively and effectively. Conflicts of interest also arise when an employee, officer or director, or a member of his or her family, receives improper benefits as a result of his or her position in the Company, whether received from the Company or a third party. The Company requires its employees, officers and directors to do everything they reasonably can to avoid conflicts of interest, or even the appearance of such.

If a conflict of interest becomes unavoidable and includes a director or an executive officer, the director or executive officer shall promptly report the conflict of interest to the Board of Directors. If a conflict of interest becomes unavoidable and includes an employee or officer, other than an executive officer, the employee or officer will promptly report the conflict of interest to the Chief Executive Officer. Any conflict of interest that arises in a specific situation or transaction must be resolved before taking any action. Conflicts of interest may not always be evident, and employees, officers and directors should consult with higher levels of management or the Company’s legal counsel if they are uncertain about any situation.

Corporate Opportunities

Employees, officers and directors are prohibited from (a) taking for themselves personally opportunities that are discovered through the use of corporate property, information or position, (b) using corporate property, information or position for personal gain, and (c) competing with the Company either directly or indirectly. Employees, officers and directors owe a duty to the Company to advance its legitimate interests when the opportunity to do so arises. It

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is also the Company’s policy that employees, officers and directors are prohibited from diverting to others any business opportunities that are discovered through the use of corporate property, information or position in which he or she has reason to believe the Company would be interested, without authorization from the Chief Executive Officer. Opportunities may not always be evident; employees, officers and directors should consult with higher levels of management or the Company’s legal counsel if they are uncertain about any situation.

Confidentiality

Employees, officers and directors must maintain the confidentiality of all information entrusted to them by the Company or its customers, except when disclosure is authorized by the Company or legally mandated. Confidential information includes all information that may be of use to the Company’s competitors, or that could be harmful to the Company or its customers, if disclosed.

Employees, officers and directors will comply with all confidentiality policies adopted from time to time by the Company, and with confidentiality provisions in agreements to which they or the Company are parties.

Protection and Proper Use of Company Assets

All employees, officers and directors shall protect the Company’s assets and ensure their efficient use. Theft, carelessness and waste have a direct impact on the Company’s profitability and are prohibited. Any suspected incident of theft, carelessness and waste should be immediately reported for investigation. Company assets should be used only for legitimate business purposes.

Employment Practices

The Company will enforce a policy of equal employment opportunity for all qualified present and potential employees. The Company will also promote a non-threatening work environment where physical, sexual and verbal harassment are not tolerated in any aspect of work relationships. Employees are encouraged to report any acts of harassment or discrimination to appropriate personnel. Employees who do not believe it appropriate or are not comfortable approaching their supervisors about their concerns may utilize the Company’s toll-free Sarbanes-Oxley Confidential Employee Hotline at 866-639-5856 (the “SOX Hotline”), maintained by an independent third-party service provider. Confidentiality of the person making the report will be protected, subject to applicable law, regulation or legal proceedings. The Company will not permit retaliation of any kind by or on behalf of the Company and its employees, officers and directors against good faith reports.

The Company recognizes that circumstances may arise where it may be in the best interest of the Company to employ an immediate family member or corresponding in-law of a current employee. The Company, however, will not hire such person if such hiring violates or otherwise interferes with the system of internal control.

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Encouraging the Reporting of any Illegal or Unethical Behavior

The Company encourages employees to communicate with supervisors, managers or other appropriate personnel about observed illegal or unethical behavior (especially when in doubt about the best course of action in a particular situation). Employees should report actual and suspected violations of laws, rules, regulations or this Code to appropriate personnel. Employees who do not believe it appropriate or are not comfortable approaching their supervisors about their concerns may utilize the Company’s SOX Hotline to report actual and suspected violations. Confidentiality will be protected, subject to applicable law, regulation or legal proceedings. The Company will not permit retaliation of any kind by or on behalf of the Company and its employees, officers and directors against good faith reports or complaints of violations of this Code or other illegal or unethical conduct.

Compliance, Waiver or Amendment of the Code

Employees, officers and directors must promptly report any violation of this Code to the Chief Executive Officer for corrective and/or disciplinary action; except that if the violation involves a director or executive officer, it must be reported promptly to the Governance & Nomination Committee. Violations of this Code can be submitted anonymously by calling our toll-free Sarbanes-Oxley Confidential Employee Hotline at (866) 639-5856, which is maintained by an independent third-party service provider.

Disciplinary actions for violations of this Code can include oral or written reprimands, suspension or termination of employment or a potential civil lawsuit. Any action resulting in a waiver of any provision of this Code must be approved. With regard to any director or executive officer, such waiver shall be approved by the Board of Directors and promptly disclosed by means of filing a current report on Form 8-K with the SEC and by posting on the Company’s website at www.capstead.com. With regard to any other employee, the Chief Executive Officer of the Company shall approve such waiver.

This Code may be amended or modified at any time by the Board of Directors. Any such amendments will be immediately posted on the Company’s website at www.capstead.com.

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EX-99.3

Exhibit 99.3

BOARD OF DIRECTORS’ GUIDELINES

of

CAPSTEAD MORTGAGE CORPORATION

General Overview

These amended and restated guidelines (the “Guidelines”) are intended to facilitate each director’s performance on Capstead Mortgage Corporation’s (“Capstead” or “Company”) Board of Directors (the “Board”) and thereby improve the overall effectiveness of the Board in discharging its fundamental duty of serving the best interests of Capstead and its stockholders, potential stockholders and the investment community. The Guidelines are offered in the conviction that the quality of the Company is importantly affected by the quality of its Board’s performance, that the efforts of each director make a difference and that the standards of behavior here set forth will enable each director to improve his or her effectiveness.

These Guidelines are also intended to help protect individual directors and the Company by outlining certain standards of business conduct to which the directors are expected to aspire.

Selection of Board Members and Chairman of the Board

All directors are elected annually by the Company’s stockholders, except as noted below with respect to vacancies. The Board is currently comprised of nine directors. Each year the Board recommends a slate of directors for election by stockholders at the Company’s annual meeting of stockholders. The Board’s recommendations are based on its determination (using advice and information supplied by the Governance & Nomination Committee) as to the suitability of each individual, and the slate as a whole, to serve as directors of the Company, taking into account the criteria for qualifications for membership discussed below. The Board’s recommendations must be approved by a majority of the independent directors, as defined below.

The Bylaws provide that the Board may, from time to time, by vote of a majority of the entire Board, fix the number of directors constituting the entire Board, such number not to be more than twenty-five directors or less than the number required by Maryland General Corporation Law. The Board may fill vacancies in existing or new director positions. Such directors elected by the Board serve only until the next election of directors unless elected by the stockholders to a further term at that time.

Following the annual meeting of stockholders, the newly elected Board will convene the Annual Meeting of the Board and elect a chairman (the “Chairman of the Board”) to serve until the next annual meeting of stockholders, unless removed by an affirmative vote of the majority of the Board.

Qualifications for Membership

1. Independent Directors. A majority of the directors shall be persons who are independent of the Company and its senior management (each such director being herein referred to as an “Independent Director”). To be considered independent under the New York Stock Exchange Corporate Governance Rules (the “NYSE Rules”), the Board must

affirmatively determine that a director does not have any direct or indirect material relationship with the Company. The Board has established the following guidelines in determining director independence in accordance with the NYSE Rules:

(a) A person may be deemed independent of the Company and its senior management for purposes of this section if such person does not have a significant relationship with the Company or any of its senior management, for example, by reason of family, professional, business or personal relationship, such that the judgment of such person might be affected by such relationship in a manner adverse to the Company.

(b) A director will not be independent if, within the preceding three years: (i) the director was employed by the Company; (ii) an immediate family member of the director was employed by the Company as an executive officer; (iii) the director received, or the director’s immediate family member received, more than $100,000.00 per year in direct compensation from the Company, other than Board and committee fees, (iv) the director was employed by or affiliated with the Company’s independent auditor; (v) an immediate family member of the director was employed by the Company’s independent auditor as a partner, principal or manager; (vi) a member of senior management serves on the compensation committee of a board of directors of a company which employed the Company director, or which employed as an officer an immediate family member of the director; or (vii) the director who is an executive officer or an employee, or whose immediate family is an executive officer, of a company that makes payments to, or receives payments from, the Company for property or services in an amount which, in any single fiscal year, exceeds the greater of $1.0 million, or 2% of such company’s consolidated gross revenues.

The determination of independence shall be made in every case by the Board, in its sole judgment. Each director is responsible for bringing to the attention of the chairman of the Board’s Governance & Nomination Committee the existence of any relationship, which may be considered a significant relationship. In case of any doubt regarding the status of a particular relationship, the director should discuss the matter with the chairman of the Governance & Nomination Committee and a report thereon should be made to the Board. Any such relationships that are considered by the Board in assessing a director’s independence shall be disclosed in the Company’s Annual Report on Form 10-K and proxy statement.

2. General Qualifications. Directors will be selected on the basis of talent and experience relevant to the business of the Company, without regard to race, religion, gender or national origin.

3. Specific Qualifications. Each candidate for a director position should, in the sole judgment of the Board:

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(a) Possess fundamental qualities of intelligence, honesty, perceptiveness, good judgment, maturity, high ethics and standards, integrity, fairness and responsibility.

(b) Have a genuine interest in the Company and a recognition that as a member of the Board one is accountable to the stockholders of the Company, not to any particular interest group.

(c) Have a background that demonstrates an understanding of business and financial affairs and the complexities of a large business organization.

(d) Have no conflict of interest or legal impediment which would interfere in a fundamental way with the duty of loyalty owed to the Company and its stockholders.

(e) Have the ability and willingness to spend the time required to function effectively as a director.

(f) Have independent opinions and be willing to state them in a constructive manner.

4. Age. The Board has not established minimum or maximum age guidelines for serving on the Board. However, the Governance & Nomination Committee, in evaluating the suitability of individual directors and making its recommendations for inclusion in the slate of directors to be submitted to stockholders for election at the next annual meeting of stockholders, will take into account a director’s ability to contribute to the Board in a capacity consistent with these guidelines, taken as a whole.

5. Stock Ownership Guideline. The Board has adopted a standard for ownership of our common stock by its members for purposes of improving the alignment of interests of these individuals and those of our stockholders. Each member is expected to own shares of our common stock equal to three times the annual cash retainer. Members are required to achieve the minimum equity investment, or threshold, within five years from the date he or she first becomes subject to the guidelines.

6. Limitation on other Board Service. The Board limits its members from serving on boards of other public companies to 4 (four) and recommends Audit Committee members limit serving on audit committees of other public companies to 2 (two), unless the Board has determined that such simultaneous service would not impair the ability of such member to effectively serve. The Board limits the Chief Executive Officer from serving on boards of other public companies to 2 (two). Regardless of the number of other public company boards a member serves, the Governance & Nomination Committee and the Board will take into account the nature of and time involved in a director’s service on other boards in evaluating the suitability of individual directors and making its recommendations for inclusion in the slate of directors to be submitted to stockholders for election at the next annual meeting of stockholders. Service on boards and/or committees of other organizations should be consistent with the Company’s conflict of interest policies.

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7. Change of Position. Any Independent Director whose affiliation or position of principal employment changes substantially after election to the Board, for any reason other than retirement or retirement planning, shall promptly submit a letter of resignation to the Company’s Governance & Nomination Committee. The Governance & Nomination Committee will then consider the resignation submission and make its recommendation to the full Board on whether to accept or reject the resignation. The Board in its sole judgment shall then decide whether such event requires the Board to accept such resignation in the best interests of the Company and its stockholders.

8. Bankruptcy. Any director who, while serving in that capacity, declares or is otherwise involved in a personal bankruptcy or the bankruptcy of a business in which he or she is a principal (e.g., as partner, proprietor or major stockholder), shall promptly submit a letter of resignation to the Company’s Governance & Nomination Committee. The Governance & Nomination Committee will then consider the resignation submission and make its recommendation to the full Board on whether to accept or reject the resignation. The Board in its sole judgment shall then decide whether such event requires the Board to accept such resignation in the best interests of the Company and its stockholders.

9. Lawsuits. Any director who is named as a party in a material legal proceeding, becomes the target of a material state or federal investigation, or receives a request of a material nature for the production of records or testimony from any state or federal agency shall promptly submit a letter of resignation to the Company’s Governance & Nomination Committee. The Governance & Nomination Committee will then consider the resignation submission and make its recommendation to the full Board on whether to accept or reject the resignation. The Board in its sole judgment shall then decide whether such event requires the Board to accept such resignation in the best interests of the Company and its stockholders.

10. Criminal Record. No person shall be eligible to serve as a director who has been convicted of any felony criminal offense or any criminal offense involving moral turpitude, dishonesty or a breach of trust. Any person who is so convicted after becoming a director shall immediately resign from the Board.

11. Director Elections. If, in any election of directors of the Company which is not a contested election, an incumbent director does not receive a majority of the votes cast and therefore is not re-elected, such incumbent director shall promptly tender his or her resignation as a director, for consideration by the Governance & Nomination Committee of the Board and ultimate decision by the Board. The Governance & Nomination Committee will promptly consider any such tendered resignation and will make a recommendation to the Board as to whether such tendered resignation should be accepted or rejected, or whether other action should be taken with respect to such offer to resign. Any incumbent director whose tendered resignation is under consideration may not participate in any deliberation or vote of the Governance & Nomination Committee or the Board regarding such tendered resignation. The Governance & Nomination Committee and the Board may consider any factors they deem relevant in deciding whether to accept, reject or take other action with respect to any such tendered resignation. Within ninety (90) days after the date on which certification of the stockholder vote on the

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election of directors is made, the Board will publicly disclose its decision and rationale regarding whether to accept, reject or take other action with respect to the tendered resignation in a press release, a periodic or current report filed with the Securities and Exchange Commission or by other public announcement. If any director’s tendered resignation is not accepted by the Board, such director will continue to serve until the next annual meeting of stockholders and until his or her successor is elected and qualified or his or her earlier death, resignation.

Meetings

1. Schedule. Generally, four regular Board meetings and four special meetings (to approve quarterly dividends) are held during the calendar year and the dates for these meetings will be provided to directors prior to the end of the preceding year. Other special Board meetings may be called by the Chairman of the Board, the Chief Executive Officer or a majority of the directors, by vote at a meeting or in writing, from time to time as necessary upon at least 24 hours prior notice.

2. Attendance. Attendance at and throughout each Board meeting by each director is of the utmost importance. Attendance in person is encouraged at the four regular Board meetings, but the Board recognizes that conflicts may be unavoidable, in which case, attendance telephonically is acceptable. If a director is absent from all or any part of two or more regular Board meetings in a single year, the Governance & Nomination Committee shall take that fact into consideration in the nominating process.

Attendance at meetings of committees of the Board is also a priority for directors. Each committee should establish its own meeting schedule. The committee chairperson will monitor and report to the Board on attendance by the directors on that committee.

Directors are also expected to attend in-person the annual meeting of stockholders, which normally is held between April 15 and May 15.

Directors will receive attendance compensation only if they are present, either in person or telephonically, throughout the meeting of the Board or of any committee of the Board.

3. Presiding Officer. The Chairman of the Board or the Chief Executive Officer will preside at meetings of the Board. The Chairman of the Board or the Chief Executive Officer will designate one or more directors to preside at meetings in their absence or when abstention is required.

4. Meeting Materials. Documents and other materials for the meetings will be organized and presented to the directors in a manner to emphasize, and to cover first, matters which are of the greatest importance to the Company and its stockholders. Senior management of the Company will coordinate with the Chairman of the Board and/or the Chief Executive Officer in an effort to include such memoranda and other material in the package as are necessary to inform directors adequately to make decisions. To the extent feasible, senior management will distribute complete materials to directors at least one day prior to the meeting date. Directors should carefully review all such materials prior to the Board meeting.

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5. Quorum and Voting. At all meetings, a majority of the entire Board shall constitute a quorum for the transaction of business. If a quorum is present, the action of a majority of directors present at the meeting shall be the action of the Board, unless a greater proportion is required by statute, the Articles of Incorporation or the Bylaws. An action may be taken without a meeting if a unanimous written consent is signed by each member of the Board.

Tenure and Compensation

1. Term. The Board does not limit the number of terms for which an individual may serve as a director. Directors who have served on the Board for an extended period of time are able to provide valuable insight into the operations and future of the Company based on their experience with and understanding of the Company’s history, policies and objectives. All directors shall be elected at the annual meeting of stockholders and shall serve until the next annual meeting and until their successors have been elected and qualified.

2. Termination of Employment. A director who is also an officer of the Company shall, unless a majority of the Board determines otherwise, resign from the Board at any time he or she ceases to be employed by the Company, whether due to retirement or otherwise.

3. Compensation. The Company strives to compensate its directors in an amount that fairly compensates directors for work required in a company of Capstead’s size and scope. The Company’s senior management will report to the Board’s compensation committee (the “Compensation Committee”) on an annual basis as to how the Company’s director compensation practices compare with those of other public companies considered its peers. The Board will make changes in its director compensation practices only upon the recommendation of the Compensation Committee, and following discussion and concurrence by the Board.

Operation of the Board

1. Primary Functions. The primary functions of the Board are:

(a) To act always in the best interest of the Company and its stockholders.

(b) To provide policy direction and governance for the Company.

(c) To review and, where appropriate, approve the major financial objectives, strategies and plans of the Company.

(d) To provide advice and counsel to the Chief Executive Officer and other senior management.

(e) To select and regularly evaluate the performance of the Chief Executive Officer and determine his or her base salary and annual incentive compensation. As part of the evaluation process, the Compensation Committee shall work with the Chief Executive Officer to plan for Chief Executive Officer and other key employee succession, as well as to develop plans for interim succession for the Chief Executive Officer in the event of an unexpected occurrence.

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(f) To select and recommend to stockholders an appropriate slate of candidates for election to the Board.

(g) To oversee the integrity of the Company’s financial statements and the financial reporting process, including the systems of internal accounting and financial control and disclosure controls and procedures.

(h) To maintain effective risk oversight, including considerations within the design of the Company’s compensation programs to ensure such programs do not encourage excessive risk taking.

(i) To review with management and the independent auditors the financial statements and disclosures under Management’s Discussion and Analysis of Financial Condition and Results of Operations to be included in the Company’s Annual Report on Form 10-K, including their judgment about the quality, not just the acceptability, of accounting principles, the reasonableness of significant judgments, and the clarity of the disclosures in the financial statements.

(j) To review and discuss with management the disclosures under Compensation Discussion and Analysis (“CDA”) to be included in the Company’s Annual Report on Form 10-K and proxy statement, including their judgment about the quality of the requisite principles-based disclosure required therein and, based on such review and discussion, make a recommendation as to inclusion of the CDA in the Company’s Annual Report on Form 10-K and proxy statement.

(k) To evaluate Board processes and performance on an annual basis.

The Board has delegated certain of the above responsibilities to committees whose purposes are set forth in the section titled “Committees” in these Guidelines. The Board may delegate additional responsibilities to committees as the Board deems appropriate in its sole discretion.

2. Meetings of Non-Management Directors. The Board will have four regularly scheduled meetings per year for the non-management directors without management present. At these sessions, the non-management directors will review strategic issues for Board consideration; future Board agendas; the flow of information to directors; management progression and succession; and the Board’s corporate governance guidelines. The non-management directors have determined that the Chairman of the Board will preside at such meetings. The presiding director is responsible for advising the Chief Executive Officer of decisions reached and suggestions made at these sessions. The presiding director may have other duties as determined by the directors. If non-management directors include a director that is not an Independent Director, then at least one of the scheduled executive sessions should include only Independent Directors.

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Duty of Care

1. General. A director shall, to the best of his or her ability, perform the duties of a director, including the duties as a member of a committee of the Board:

(a) In good faith.

(b) In the best interests of the Company and its stockholders.

(c) With the care that an ordinarily prudent person in a like position would use under similar circumstances.

This duty of care includes the obligation to make, or cause to be made, an inquiry when, but only when, the circumstances would alert a reasonable director to the need thereof. The extent of such inquiry shall be such as the director reasonably believes to be necessary.

2. Compliance with Laws, Rules and Regulations. The Company expects its directors to comply with all laws, rules and regulations applicable to the Company’s operations and business. As a public company with its stock trading on the New York Stock Exchange (“NYSE”), these include securities laws, rules and regulations established by the Securities and Exchange Commission and the NYSE, including insider trading laws. The Company insists on strict compliance with the spirit and the letter of these laws, rules and regulations.

3. Access to Employees. The Board should have access to Company employees in order to ensure that directors can ask all questions and glean all information necessary to fulfill their duties. The Board may specify a protocol for making such inquiries. Senior management is encouraged to invite Company personnel to any Board meeting at which their presence and expertise would help the Board have a full understanding of matters being considered.

4. Adequate Information. Receipt of adequate information is essential if a director is to fulfill his or her duty of care. The Chairman of the Board and senior management are responsible for providing an effective and timely flow of information to the directors, including internal financial statements, periodic reports on various matters, copies of all publicly-filed documents and press releases, and periodic briefings concerning developments affecting the business and affairs of the Company.

5. Reliance on Third Parties. In performing the duties of a director of the Company, a director is entitled to rely on any information, opinion, report or statement prepared or presented by:

(a) An officer or employee of the Company whom a director reasonably believes to be reliable and competent in the matters presented.

(b) A lawyer, accountant or other person, as to a matter that the director reasonably believes to be within the person’s professional or expert competence.

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(c) A committee of the Board on which the director does not serve, as to a matter within its designated authority, if the director reasonably believes the committee to merit confidence.

6. Independent Professionals. The Board is entitled to retain legal counsel, accountants, or other experts, at the Company’s expense, to advise the Board on the performance of its duties. In addition, the directors who are not officers or employees of the Company are entitled, acting as a body by a majority vote of such directors, to retain independent outside experts, at the Company’s expense, to advise them on problems arising in the exercise of their functions and powers, provided that the Board authorizes payment of such expenses.

7. Director Orientation and Continuing Education. The Board and senior management will conduct a comprehensive orientation process for new directors to become familiar with the Company’s vision, strategic direction, core values (including ethics) financial matters, corporate governance practices and other key policies and practices through a review of background material and meetings with senior management. The Board also recognizes the importance of continuing education for its directors and is committed to provide such education in order to improve both Board and Board committee performance. Senior management will assist in identifying and advising the directors about opportunities for continuing education, including conferences provided by independent third parties.

Duty of Loyalty

1. General. A director, by becoming such, acknowledges that he or she has a duty of loyalty to the Company and to the stockholders.

2. Conflicts of Interest. It is the Company’s policy that all directors should be scrupulous in avoiding any action or interest that conflicts, or gives the appearance of conflict, with the Company’s interests. A conflict situation can arise when a director takes actions or has interests that may make it difficult to perform his or her duties objectively and effectively. Conflicts of interest also arise when a director, or a member of his or her family, receives improper benefits as a result of his or her position in the Company, whether received from the Company or a third party. The Company requires its directors to do everything they reasonably can to avoid conflicts of interest, or even the appearance of such.

3. In Case of Conflict. If a conflicting interest develops (as, for example, where a banking, investment banking, law or accounting firm with an officer or partner serving as a director of the Company seeks to be retained by the Company), the director involved should promptly report the conflict, or potential conflict, to the Board of Directors whereupon the Company, after due consideration, can only proceed to retain such firm if either (i) such director resigns from the Board before such retention takes place or (ii) the Board determines that retaining such firm does not impair the independent judgment of such director.

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4. Corporate Opportunities. Directors are prohibited from (a) taking for themselves personally opportunities that are discovered through the use of corporate property, information or position (b) using corporate property, information or position for personal gain, and (c) competing with the Company either directly or indirectly. Directors owe a duty to the Company to advance its legitimate interests when the opportunity to do so arises. It is also the Company’s policy that directors are prohibited from diverting to others any business opportunities that are discovered through the use of corporate property, information or position in which he or she has reason to believe the Company would be interested, without authorization from the Chief Executive Officer. The purpose of this policy is to prevent a situation wherein a director would fail to offer to the Company a business opportunity that comes to the attention of the director and that the Company may wish to exploit.

The Chief Executive Officer, after review of all material facts, has authority to determine the Company’s interest in a business opportunity that has come to the attention of any director. The fact that a particular business opportunity is closely related to an existing line of business for the Company or represents a desirable avenue of expansion of the Company’s activities is a strong indication that the Company would have an interest in the opportunity.

5. Conduct on Behalf of Associates of Directors. A director shall not knowingly advance the pecuniary interest of an “associate” of the director in a manner that would fail to comply with the foregoing provisions in paragraph 2 of this section, had the director acted for himself or herself. As used in this paragraph “associate” of a director would include spouses, relatives, trusts or estates of which the director is a substantial beneficiary or fiduciary and, generally, any person with respect to whom the director has a business, financial or similar relationship which would reasonably be expected to affect the director’s judgment with respect to the transaction in question in a manner adverse to the Company.

Committees

1. General. As authorized by the Bylaws, the Board has adopted a committee structure in order to assist in carrying out its functions in a timely and efficient manner. The committees of the Board will consist of the following:

(a) Audit Committee. The Audit Committee shall consist of not less than three directors, all of whom shall be Independent Directors. The Audit Committee shall establish and maintain a committee charter which sets out its purpose and responsibilities to include, at a minimum, the assistance in the oversight of (i) the integrity of the Company’s financial statements; (ii) the performance of the Company’s internal audit function and independent auditors; (iii) the independent auditor’s qualifications and independence; and (iv) the Company’s compliance with legal and regulatory requirements. The committee shall be directly responsible for the appointment, compensation, retention and oversight of the Company’s independent auditors.

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(b) Compensation Committee. The Compensation Committee shall consist of not less than two directors, all of whom shall be Independent Directors. The Compensation Committee shall establish and maintain a committee charter which sets out its purpose and responsibilities to include, at a minimum, (i) the review and approval of corporate goals and objectives relevant to the Chief Executive Officer’s compensation; (ii) the evaluation of the Chief Executive Officer’s performance in light of those goals and the approval of compensation consistent with such performance; (iii) the approval of base salaries, annual incentives and other programs and benefits for senior management other than the Chief Executive Officer; (iv) approval of compensation programs and benefits for other employees; (v) the review and coordination of succession planning for the CEO and other members of senior management; (vi) the review and assessment, on an annual basis, of the potential risk associated with the Company’s compensation programs; (vii) the review and discussion with management of the CDA and recommendation to the Board for its inclusion in the Company’s Annual Report on Form 10-K and proxy statement; (viii) the review and consideration of the results of non-binding advisory votes on executive compensation submitted to stockholders pursuant to Section 14A of the Securities Exchange Act; and (ix) the review and consideration of other regulatory considerations related to executive compensation as appropriate.

(c) Executive Committee. The Executive Committee shall consist of not less than two directors. The Executive Committee shall establish and maintain a committee charter which sets out its purpose and responsibilities to include, at a minimum, its functioning on behalf of the Board during intervals between meetings of the Board and the authority, to the fullest extent necessary or appropriate, to discharge such functions during such intervals.

(d) Governance & Nomination Committee. The Governance & Nomination Committee shall consist of not less than two directors, all of whom shall be Independent Directors. The Governance & Nomination Committee shall establish and maintain a committee charter which sets out its purpose and responsibilities to include, at a minimum, (i) the identification of qualified individuals to serve as Board members; (ii) the recommendation to the Board of nominees for director for the next annual meeting of stockholders; (iii) the oversight of the Company’s governance policies and guidelines; and (iv) to oversee the evaluation of the Board and management.

In addition to the committees provided above, the Board may establish such other committees as it deems desirable, each consisting of two or more directors, and name the members and any alternates of such committees. Each such committee shall have such powers and functions as may be provided in the resolution of the Board. No committee of the Board shall have authority, however, as to the taking of action, which is expressly required by statute, the Articles of Incorporation or the Bylaws to be taken at a meeting of the Board or by a specific proportion of the directors.

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Each of these committees serves an important function in the management and supervision of the Company; therefore, the committees are a critical factor in the ability of the Board to satisfy its responsibilities to the Company and the stockholders. On an annual basis, each committee will review its charter with the Board and modify as appropriate. All committee charters are available on the Company’s website at www.capstead.com.

2. Rules of Procedure. Unless provided otherwise by resolution of the Board, each committee shall fix its own rules of procedure and meet at such places and times as it shall determine. Each committee shall keep a written record of all its proceedings. At any meeting of a committee, a majority of the members of the entire committee shall constitute a quorum. The vote of a majority of those present at a meeting at which a quorum is present shall be the act of the committee. Action may also be taken by a written consent signed by each member of the committee. Each committee and the members thereof, including alternates, if any, shall serve at the pleasure of the Board.

The Board shall appoint the chair for each committee on an annual basis, as well as designate directors who will preside in the absence of the chair. Each committee chair will preside at its committee meetings and will assist in identifying issues which should be considered by the committee. Each committee chair will coordinate with the Chief Executive Officer on issues that may require further information. Each committees’ chair will report the committee’s recommendations at the regular Board meetings.

3. Independent Professionals. There may be instances when a committee finds that the assistance of independent outside professionals is needed in order to effectively perform its function. Each committee chair is authorized to engage outside professional assistance, at the expense of the Company, when a majority of the members of the committee have determined that such outside assistance is necessary. The committee chair shall report at each regular Board meeting as to the status of work being performed by such outside professionals and the expenses incurred in connection therewith.

4. Legal Counsel. There may be instances when a committee finds it needs the advice of outside legal counsel. Each committee chair is authorized to engage outside counsel, at the expense of the Company, when a majority of the members of the committee have determined that such outside assistance is necessary. Any communications between the Committee and outside legal counsel in the course of obtaining legal advice will be considered privileged communications of the Company and the Committee will take all necessary steps to preserve the privileged nature of those communications. The committee chair shall report at each regular Board meeting as to the status of work being performed by such outside professionals and the expenses incurred in connection therewith.

Confidentiality

Directors owe a duty to the Company to maintain the confidentiality of non-public information obtained as a result of being a director. In addition, it is each director’s duty not to use this confidential information for his or her own benefit.

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In observance of this duty, directors should avoid sharing proprietary, non-public Company information with persons outside the Company or with persons inside the Company who do not have a need to know the information. Proprietary, non-public information includes, by way of example, investment research, investment decisions, information relating to new services, and financial report information. Directors should exercise caution when engaging in conversations regarding non-public Company information in public places. Directors should exercise similar care in the handling of confidential documents. Confidential information should not be taken away from Company premises, except where necessary for the director to perform his duties or otherwise for the benefit of the Company and then only with appropriate care for the security of that information.

If non-public information is inadvertently disclosed, the person making or discovering that disclosure should immediately report the facts to the Chief Executive Officer.

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