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