DEF 14A of Neostellar Capital Corp.
Filed Apr 11, 2025 · FY20240001104659-25-034123
PROPOSAL I: ELECTION OF DIRECTORS
PROPOSAL I: ELECTION OF DIRECTORS Pursuant to the Company’s charter, the number of directors is set at five unless otherwise designated by the Board of Directors pursuant to the Company’s bylaws. In accordance with the Company’s bylaws, the Board of Directors has designated the current number of directors to be five. Directors generally are elected for a staggered term of three years each, with a term of office of one of the three classes of directors expiring each year. Each director will hold office for the term to which he or she is elected or until his or her successor is duly elected and qualified. Ronald M. Lott and Marc Mazur are currently directors and each has been nominated to continue to serve as a director of the Company for a three-year term expiring in 2028. If elected, Mr. Lott will continue to serve on the Audit Committee, the Compensation Committee, the Nominating and Corporate Governance Committee and the Valuation Committee, and will continue to serve as Chair of the Nominating and Corporate Governance Committee. If elected, Mr. Mazur will continue to serve on the Audit Committee, the Compensation Committee, the Nominating and Corporate Governance Committee and the Valuation Committee, and will continue to serve as Chair of the Audit Committee. Messrs. Lott and Mazur are not being proposed for election to the Board of Directors pursuant to any arrangement or understanding between either of themselves and the Company or any other person. A stockholder can vote for or withhold his or her vote from the director-nominees. In the absence of instructions to the contrary, it is the intention of the persons named as proxies to vote such proxy “FOR” the election of the director-nominees named above. If any of the director-nominees should decline or be unable to serve as a director, it is intended that the proxy will vote for the election of such person as is nominated by the Board of Directors as a replacement. The Board of Directors has no reason to believe that the director-nominees named above will be unable or unwilling to serve. THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” THE ELECTION OF THE DIRECTOR-NOMINEES NAMED IN THIS PROXY STATEMENT.
Information about the Director-Nominees and Directors
Information about the Director-Nominees and Directors As described below under “Corporate Governance — Committees of the Board of Directors — Nominating and Corporate Governance Committee,” the Board of Directors has identified certain desired talents and experience for the director-nominees. Each of our directors and each of the director-nominees has demonstrated high character and integrity; the knowledge, skills and experience necessary to be able to offer advice and guidance to our management in light of prevailing business conditions; familiarity with national and international business matters; experience with accounting rules and practices; appreciation of the relationship of our business to the changing needs of society; and the desire to balance the considerable benefit of continuity with the periodic injection of fresh perspective. Each of our directors and each of the director-nominees also has sufficient time available to devote to the affairs of the Company, is able to work with the other members of the Board of Directors and contribute to the success of the Company and can represent the long-term interests of the Company’s stockholders as a whole. Our directors and the director-nominees have been selected such that the Board of Directors represents a range of backgrounds and experience. Certain information as of the Record Date with respect to Messrs. Lott and Mazur, the director-nominees for election at the Annual Meeting, as well as each of the current directors, is set forth below, including their names, ages, a brief description of their recent business experience, including present occupations and employment, certain directorships that each person holds, the year in which each person became a director of the Company, and a discussion of each person’s particular experience, qualifications, attributes or skills that lead us to conclude, as of the Record Date, that such individual should serve as a director of the Company, in light of the Company’s business and structure. There were no legal proceedings of the type described in Items 401(f)(7) and (8) of Regulation S-K in the past 10 years against any of our directors, the director-nominees or our officers, and none are currently pending. The business address of the director-nominees and the directors listed below is 640 Fifth Avenue, 12th Floor, New York, New York 10019. Information regarding the Board of Directors is as follows:
Information about the Director-Nominees and Directors
| Name | Age | Position | Director Since | Expiration of Term | | Interested Directors: | | | | | | Mark D. Klein | 63 | Chief Executive Officer, President, and Chairman and Director | 2011 | 2026 | | Independent Directors: | | | | | | Ronald M. Lott | 65 | Director | 2015 | 2025 | | Marc Mazur | 65 | Director | 2017 | 2025 | | Lisa Westley | 59 | Director | 2019 | 2026 | | Leonard A. Potter | 63 | Director | 2011 | 2027 |
Interested Director
Interested Director Mr. Klein is an “interested person,” as defined in the 1940 Act, of the Company due to his position as our Chief Executive Officer and President. Mark Klein has spent the last two decades running public companies and investment firms. He has been our Chairman, President and Chief Executive Officer since August 2017 and a member of our Board of Directors since 2011. A director of our portfolio company Learneo (formerly Course Hero) since 2020, Mr. Klein has also served as a board member of certain exchange-listed special purpose acquisition companies (“SPACs”), including Churchill Capital Corp II from June 2019 to July 2021, Churchill Capital Corp III from June 2019 to October 2020, Churchill Capital Corp IV from July 2020 to February 2021, Churchill Capital Corp V from December 2020 to October 2023, Churchill Capital Corp VI from February 2021 to December 2023, and Churchill Capital Corp VII from February 2021 to August 2024. Additionally, since 2012, he has been Managing Member and Majority Partner at M. Klein & Company, LLC, an investment banking and advisory firm. Before joining the Company, Mr. Klein held positions including Chairman and CEO at several public and private companies and served on a variety of corporate boards. He earned a bachelor’s degree with high distinction in Business Administration from Emory University and an MBA from the J. L. Kellogg School of Management at Northwestern University. Our Board of Directors has concluded that Mr. Klein’s extensive familiarity with the financial and investment banking industries and experience as a director of other publicly traded companies provides our Board of Directors with valuable insight and perspective, and that therefore he is qualified to serve as a member of our Board of Directors, including as Chairman.
Independent Directors
Independent Directors Leonard A. Potter has served as our lead independent director since December 2020 and as a member of our Board of Directors since 2011. Mr. Potter founded Wildcat Capital Management, LLC, a registered investment advisor, in September 2011, and has served as its president and chief investment officer since inception. Mr. Potter has also served as a founder and senior managing director of Vida Ventures I and II, each a biotech venture fund, since 2017. From 2002 through 2009, Mr. Potter was managing director — private equity at Soros Fund Management LLC (“SFM”) where, from May 2005 through July 2009, he served as co-head of its private equity group and as a member of the private equity investment committee. From July 2009 until September 2011, Mr. Potter served as a consultant to SFM, and as chief investment officer of Salt Creek Hospitality, a private acquirer and owner of hospitality-related assets, which was backed by SFM. From September 1998 until joining SFM in 2002, Mr. Potter was a managing director of Alpine Consolidated LLC, a private merchant bank. From April 1996 through September 1998, Mr. Potter founded and served as a managing director of Capstone Partners LLC, a private merchant bank (“Capstone”). Prior to founding Capstone, Mr. Potter was an attorney specializing in mergers, acquisitions, corporate governance and corporation finance at Morgan, Lewis & Bockius LLP, and at Willkie Farr & Gallagher LLP. Mr. Potter has served and continues to serve as a director on a number of boards of public and private companies, including SLR Investment Corp. (NASDAQ: SLRC), SLR Private Credit BDC LLC, and SLR HC BDC LLC, each a business development company (“BDC”), and, since January 2017, as chairman of the board of directors for Hilton Grand Vacations Inc. (NYSE: HGV). Additionally, from 2009 to 2022, Mr. Potter served on the board of directors of SLR Senior Capital Ltd. (NASDAQ: SUNS), a BDC. Mr. Potter received a Bachelor of Arts degree from Brandeis University and a Juris Doctor degree from Fordham University School of Law. Our Board of Directors has concluded that Mr. Potter’s experience practicing as a corporate lawyer provides valuable insight to the Board of Directors on regulatory and risk management issues, and that his tenure in private equity investments and service as a director of both public and private companies provides industry-specific knowledge and expertise to our Board of Directors, and that therefore he is qualified to serve as a member of our Board of Directors, including as Lead Independent Director. Ronald M. Lott has served as a member of our Board of Directors since 2015. Mr. Lott, a member of the Professional and College Football Halls of Fame, has served as the managing member of Lott Auto LLC since 2018, the managing member of Lott Auto Land LLC since 2018, the Chief Executive Officer of Lott Auto Ventures, LLC since 2004 and the managing member of Tracy Auto Land, LLC since 1998. Mr. Lott was previously co-partner and owner of Mercedes-Benz of Medford, Oregon from 2003 until 2011 and Stan Morris Chrysler in Tracy, California from 1997 until 1998. Mr. Lott has also been a member of the board of directors of OneMain Holdings, Inc. (NYSE: OMF), a provider of consumer finance and credit insurance products and services, since 2013 and True Capital Management, a wealth management firm designed for professional athletes, entertainers, and high net worth individuals, since 2006. In 1999, Mr. Lott co-founded HRJ Capital, L.L.C., an investment management firm, remaining as a managing partner through 2009, until it was sold. Between 2013 and 2015, Mr. Lott served as a consultant for TVU Networks Corp., a product and service company for the television industry, and has been a consultant at H. Barton Asset Management, LLC since 2009. Mr. Lott serves on the Advisory Board for the following companies: Chegg, Inc., SportsBubble, LLC, ThoughtSpot, Inc., Uptake Technologies, Inc. and YourPeople, Inc. (d/b/a Zenefits). Mr. Lott played 14 seasons in the National Football League before retiring from professional football in 1994. Our Board of Directors has concluded that Mr. Lott’s leadership experience and his extensive business and management experience as a director of a public company and as a small business owner provide significant value to our Board of Directors, and that therefore he is qualified to serve as a member of our Board of Directors. Marc Mazur has served as a member of our Board of Directors since March 2017. Mr. Mazur has served as an Industry Advisor to Brightwood Capital Advisors, LLC, a private debt fund, since 2014, as a member of the Board of Directors of American Addiction Centers since August 2024, and as a member of the board of directors of Celularity Inc. from July 2021 to July 2024. He also served as a member of the board of directors for Fibrocell Science, Inc. (NASDAQ: FCSC), an autologous cell and gene therapy company, from April 2010 to December 2019, GX Acquisition Corp., a SPAC which was the predecessor to Celularity Inc. upon its business combination, from May 2019 to July 2021, and GX Acquisition Corp. II, a SPAC, from February 2021 to March 2023 upon the completion of its business combination. Mr. Mazur previously served as the Chief Executive Officer of Brevan Howard U.S. Asset Management, a London-based global macro hedge fund, and as a senior advisor of such company until 2010. He also previously served as a senior advisor to Tsinghua Venture Capital Company. Mr. Mazur served in management roles at Salomon Brothers, Inc., The Goldman Sachs Group, Inc. from 1987 until 1996, and served as a consultant for Goldman from 1997 to 1999. He was an executive with Careinsite/Medical Manager and has served as a director of Staywell Health, DeVilbiss Healthcare, ChanceLight Behavioral Health and other private companies in the wellness, addiction treatment, homecare and medical device fields. Mr. Mazur received his B.A. in Political Science from Columbia University and a J.D. from Villanova University School of Law. Our Board of Directors has concluded that Mr. Mazur’s senior executive-level experience in finance, healthcare consulting and business strategy, as well as his board experience, provide valuable expertise to the Board of Directors, and that therefore he is qualified to serve as a member of our Board of Directors. Lisa Westley has served as a member of our Board of Directors since July 2019. Ms. Westley is a Managing Director and Head of Strategy, Advent Tech at Advent International Corporation, a global private equity firm. From 2014 to 2018, Ms. Westley was a Partner and Chief Operating Officer of Brooklands Capital Strategies, a spin-out of TPG Capital that provides global fundraising and strategic advisory services to alternative asset managers and companies at all stages of growth. Prior to Brooklands Capital Strategies, Ms. Westley spent nine years at TPG Capital, initially as the Chief Operating Officer of TPG’s Asia-Pacific private equity business and subsequently as the Global Head of Talent Management. Before TPG, Ms. Westley spent 15 years as an investment banker, having been a Founding Partner, Co-Head of the Consumer Group and Head of the IT Services / Business Services Group at Thomas Weisel Partners and a Senior Managing Director at Montgomery Securities. Ms. Westley began her investment banking career at Goldman, Sachs & Co. and Salomon Brothers, Inc. Ms. Westley received a B.A., phi beta kappa, in Economics and Asian Studies from Amherst College and an M.B.A. from the Stanford Graduate School of Business. Our Board of Directors has concluded that Ms. Westley’s leadership experience and her extensive business, management and advisory experience with various companies provide significant value to our Board of Directors, and that therefore she is qualified to serve as a member of our Board of Directors.
COMPENSATION OF DIRECTORS
COMPENSATION OF DIRECTORS The following table sets forth the compensation that we paid during the year ended December 31, 2024 to our independent directors. Directors who are employees and therefore “interested persons” of the Company (as such term is defined in Section 2(a)(19) of the 1940 Act) do not receive compensation for their services as directors.
COMPENSATION OF DIRECTORS
| Name | Fees Earned or Paid in Cash | Stock Awards(1) | All Other Compensation | Total | | Leonard A. Potter | $135,000 | $50,000 | $— | $185,000 | | Ronald M. Lott | $115,000 | $50,000 | $— | $165,000 | | Marc Mazur | $120,000 | $50,000 | $— | $170,000 | | Lisa Westley | $115,000 | $50,000 | $— | $165,000 |
COMPENSATION OF DIRECTORS
| (1) Each of Messrs. Potter, Lott and Mazur and Ms. Westley (the “Independent Directors”) were granted 12,048 restricted shares of the Company’s common stock on June 5, 2024 under the Amended Equity Incentive Plan, which shares vest in full on the earlier of (i) the one-year anniversary of the date of grant of (ii) the date of our annual shareholder meeting. As such, these restricted shares were unvested and outstanding as of December 31, 2024. The amounts reflected in the table represent the grant date fair value of such restricted share grants in accordance with FASB ASC Topic 718 based on the closing price of our common stock on the Nasdaq Global Select Market on the grant date. Pursuant to SEC rules, the amounts shown exclude the impact of any estimated forfeitures related to service-based vesting conditions. Such amounts may not correspond to the actual value that will be recognized by such independent directors upon vesting. |
COMPENSATION OF DIRECTORS
The Compensation Committee periodically reviews the compensation of our independent directors and recommends any changes to the Board of Directors for approval. Our independent directors currently receive an annual fee of $100,000. They also receive reimbursement of reasonable out-of-pocket expenses incurred in connection with attending each Board of Directors and committee meeting in person. The Chair of the Audit Committee and the Lead Independent Director of the Board of Directors each receive an annual cash fee of $20,000, and each Chair of the other committees receives an annual fee of $15,000 for his or her additional services in these capacities. No compensation is paid to directors who are “interested persons” of the Company (as such term is defined in Section 2(a)(19) of the 1940 Act) for their service on the Board of Directors. The Amended Equity Incentive Plan provides a means through which we may attract and retain qualified independent directors to enter into and remain in service on our Board of Directors. Pursuant to the terms of the Amended Equity Incentive Plan, each of our independent directors annually receives $50,000 in restricted shares on the date of each annual meeting of stockholders, with the number of restricted shares determined by dividing such amount by the closing price of our common stock on the Nasdaq Global Select Market on the date of grant. Each grant of $50,000 in restricted shares will vest if the independent director is in continuous service with the Company through the anniversary of such grant (or, if earlier, the annual meeting of the Company’s stockholders that is closest to the anniversary of such grant).
Independent Compensation Consultant
Independent Compensation Consultant The Compensation Committee may engage independent compensation consultants to assist the Compensation Committee and provide advice on a variety of compensation matters relating to NEO, other key employee and independent director compensation, incentive compensation plans and compensation trends, best practices and regulatory matters. Any such compensation consultants are hired by and report directly to the Compensation Committee. Although compensation consultants may work directly with management on behalf of the Compensation Committee, any such work is under the control and supervision of the Compensation Committee. The Compensation Committee retained Mercer (US) LLC (“Mercer”) as an independent compensation consultant to provide such compensation consulting services for the 2024 fiscal year, including to benchmark and opine on market competitive compensation levels and mix necessary to attract and retain quality executive officers, other key employees and independent directors. From time to time and in support of Mercer’s role as an adviser to the Compensation Committee, Mercer receives input regarding the Company’s strategic goals and the manner in which executive and independent director compensation should support these goals. The Compensation Committee evaluated Mercer’s independence from the Company and determined that Mercer is independent primarily because neither it nor its affiliates work for management of the Company, receive compensation from the Company other than its work in advising the Compensation Committee, or maintain other economic relationships with the Company or any of its affiliates.
Assessment of Market Data
Assessment of Market Data In assessing the competitiveness of executive compensation levels, the Compensation Committee analyzes market data of certain companies, including internally managed BDCs, private equity firms and other asset management and financial services companies. This analysis focuses on the compensation practices at companies and funds reasonably comparable in asset size, typical investment size and type, market capitalization and general business scope as compared to the Company. The key elements of compensation, including base salary, annual bonuses, and long-term incentives are reviewed. In regards to other internally managed BDCs like the Company, the Compensation Committee considers the compensation practices and policies pertaining to executive officers as detailed in such companies’ respective proxies, research analysts’ reports and other publicly available information. However, there are relatively few internally managed BDCs, and none that are directly comparable to the Company in regards to business strategies, assets under management, typical investment size and type and market capitalization. Moreover, regarding the compensation and retention of executive talent, the Company also competes with private equity funds, private credit funds, venture funds and other types of specialized investment funds. Since these funds are generally private companies that are not required to publicly disclose their executive compensation practices and policies, the Compensation Committee relies on third-party compensation surveys as well as other available information to compare compensation practices and policies. Items taken into account from comparable companies and funds include, but are not necessarily limited to, base compensation, bonus compensation, stock option awards, restricted stock awards, carried interest and other compensation. In addition to actual levels of cash and equity related compensation, the Compensation Committee also considers other approaches comparable companies are taking with regard to overall executive compensation practices. Such items include, but are not necessarily limited to, the use of employment agreements for certain employees, the mix of cash and equity compensation, and certain corporate and executive performance measures that are established to achieve longer term total return for stockholders. Finally, in addition to analyzing comparable companies and funds, the Compensation Committee also evaluates the relative cost structure of the Company as compared to the entire BDC sector, including internally and externally managed BDCs, as well as other private funds.
Overview
| ● | base salary; | | ● | annual cash bonuses and additional cash bonuses; | | ● | restricted shares under the Amended Equity Incentive Plan; and | | ● | other benefits. |
Annual Cash Bonuses and Additional Cash Bonuses
Annual Cash Bonuses and Additional Cash Bonuses Annual cash bonuses are intended to reward individual performance during the year and can be highly variable from year to year. As described under “1940 Act Restrictions on Company Performance Based Compensation,” because we are a BDC, cash bonus awards for the NEOs are determined by the Compensation Committee on a discretionary basis, taking into account performance criteria, particularly corporate and individual performance goals and other measures established by the Compensation Committee with the Chief Executive Officer’s input (except with respect to his own performance criteria). Should actual performance exceed expected performance criteria, the Compensation Committee may adjust individual cash bonuses to take such superior performance into account. Likewise, should actual performance fall below expected performance criteria, the Compensation Committee may adjust individual cash bonuses to take such performance into account. Under Amendment No. 1 to the Second Amended Employment Agreement (as such term is defined below), Mr. Klein is eligible to earn an annual cash bonus of up to one hundred percent (100%) of base salary. Under the Amendment No. 2 to the Second Amended Employment Agreement, Ms. Green is eligible to earn an annual cash bonus of up to one hundred and twenty five percent (125%) of base salary. Both executives are eligible for an additional cash bonus in excess of such annual cash bonus, provided that 100% of the net amount (as defined in the Second Amended Employment Agreements) of such additional cash bonus is used to purchase shares of the Company’s common stock in accordance with the Company’s policies and procedures and applicable law, as discussed under “Employment Agreements.” The Compensation Committee and the Board of Directors determined that the potential for, and use of, such additional cash bonus payments would better align the NEOs’ interests with those of the Company’s stockholders. The Compensation Committee considered a number of major outcomes as well as other factors when evaluating the cash bonuses paid to NEOs for 2024. The Compensation Committee also consulted with its independent compensation consultant and considered the NEOs’ employment agreements as amended. The net result of these considerations resulted in cash bonuses paid to the NEOs, including an annual cash bonus and an additional cash bonus. To further align the NEOs’ interests with those of stockholders, the Compensation Committee required and the NEOs agreed to not sell or otherwise dispose or transfer the shares of the Company’s common stock purchased with such additional cash bonuses for a period of (i) not less than one year for the first half of shares, and (ii) not less than two years for the remaining half of shares. In particular, cash bonuses paid to NEOs for 2024 performance included recognition of the following:
Annual Cash Bonuses and Additional Cash Bonuses
| ● | achieved a total shareholder return of 49% in 2024, calculated from the closing share price on the last trading day of fiscal year 2023 to the closing price on the last trading day of fiscal year 2024; |
Annual Cash Bonuses and Additional Cash Bonuses
| ● | successfully executed a Convertible Note Purchase Agreement and repurchase of current debt; |
Annual Cash Bonuses and Additional Cash Bonuses
| ● | successfully executed a modified “Dutch Auction” tender offer, returning $9.4 million of capital to stockholders; |
Annual Cash Bonuses and Additional Cash Bonuses
| ● | made prudent investments within the portfolio, focusing on high-quality opportunities to ensure efficiency; |
Annual Cash Bonuses and Additional Cash Bonuses
| ● | enhanced the overall investment process, enabling an increase in the number of potential investments reviewed; |
Annual Cash Bonuses and Additional Cash Bonuses
| ● | further improved the diligence process, which has allowed the review of more potential deals than any other year and judicious investment at attractive prices; |
Annual Cash Bonuses and Additional Cash Bonuses
| ● | continued efforts to reduce operating expenses, including the renegotiation of select contracts, resulting in a reduction in expenses compared to the prior year; and, |
Annual Cash Bonuses and Additional Cash Bonuses
| ● | fostered the development and internal growth of the team, which remained fully staffed throughout the year. |
Annual Cash Bonuses and Additional Cash Bonuses
The Compensation Committee did not weight these factors and used discretion in determining the cash bonus amount allocated to each executive for 2024. Overall, the Compensation Committee assessed both Company and individual performance. The Compensation Committee approved the following annual cash bonus and additional cash bonus payments to each NEO:
Annual Cash Bonuses and Additional Cash Bonuses
| ● | Mr. Klein: $850,000 annual cash bonus plus $850,000 additional bonus |
Annual Cash Bonuses and Additional Cash Bonuses
| ● | Ms. Green: $500,000 annual cash bonus plus $100,000 additional bonus |
Annual Cash Bonuses and Additional Cash Bonuses
These amounts are also presented under the caption entitled “Compensation of Executive Officers — Summary Compensation Table.” The Compensation Committee has confirmed that 100% of the net amount from additional bonuses was used by each NEO to purchase shares of the Company’s common stock.
Long-Term Incentive Awards
Long-Term Incentive Awards On July 31, 2019, the Board of Directors approved and adopted the Amended Equity Incentive Plan, and on June 19, 2020, stockholders approved the Amended Equity Incentive Plan, which amended and restated and superseded the Company’s 2019 Equity Incentive Plan in its entirety to provide stock-based awards as long-term incentive compensation to employees, including the NEOs. The Company uses stock-based awards to (i) attract and retain key employees and officers, (ii) motivate employees and officers by means of performance-related incentives to achieve long-range performance goals, (iii) enable employees and officers to participate in the Company’s long-term growth, (iv) link employees’ compensation to the long-term interests of stockholders, (v) recognize individual contributions to corporate strategic priorities and to the long-term performance of the Company and (vi) provide competitive total direct compensation. The Compensation Committee has authority to select the persons to receive stock-based awards, and our Board of Directors may also grant awards and administer the Amended Equity Incentive Plan in its sole discretion. At the time of each award, the Compensation Committee will determine the terms of the award in its sole discretion, including any performance period (or periods) and any performance objectives relating to the award. Restricted Shares. The Company has received exemptive relief from the SEC that permits the Company to grant restricted shares in exchange for or in recognition of services by its employees, officers and directors, including non-employee directors. Pursuant to the Amended Equity Incentive Plan, the Compensation Committee may award shares of restricted stock to plan participants in such amounts and on such terms as the Compensation Committee determines in its sole discretion, provided that such awards are consistent with the conditions set forth in the exemptive order. Each grant of restricted shares will be for a fixed number of shares as set forth in an award agreement between the grantee and the Company. Award agreements will set forth time and/or performance vesting schedules and other appropriate terms and/or restrictions with respect to awards, including rights to dividends and voting rights. In 2021, the Compensation Committee began making annual grants of restricted shares to our NEOs, which generally vest in equal increments over a three-year time frame based on continued service during the vesting period. The Compensation Committee previously granted equity awards in February. In 2022, additional cash bonus payments were made in lieu of equity awards that would otherwise have been granted in February 2023. Considering that no equity grants were made in February 2023, the Compensation Committee made the decision to distribute the equity grants that would have been allocated in February 2024 during December 2023. Following this cadence, in 2024, the Compensation Committee determined to distribute equity grants during December of that year. During 2024, our NEOs were granted the following restricted shares with the following values under the Amended Equity Incentive Plan:
Long-Term Incentive Awards
| ● | Mr. Klein: 100,000 restricted shares worth $614,000 awarded in December 2024 | | ● | Ms. Green: 25,000 restricted shares worth $153,500 awarded in December 2024 |
Long-Term Incentive Awards
Restricted shares are granted under the Amended Equity Incentive Plan to recognize individual contributions to corporate strategic priorities and to align such contributions with the long-term performance of the Company. Other objectives of restricted share grants are to assist with retention, align NEO interests with stockholder interests, and to provide competitive total direct compensation. These grants recognize contributions to the future success of the Company, including expanded roles of NEOs within the Company, recruitment and development of personnel, advancement of strategic initiatives with benefits beyond the current year, development of appropriate capital structure alternatives and enhancement of the Company’s reputation with key constituents. The number of restricted shares granted to each NEO in 2024 is presented under the caption entitled “Compensation of Executive Officers — Grants of Plan-Based Awards.” Options. The Compensation Committee may in its sole discretion grant options to purchase shares of our common stock (including incentive stock options and non-qualified stock options) to the Company’s employees and officers, including employee directors. We expect that options granted by our Compensation Committee will represent a fixed number of shares of our common stock, will have an exercise, or strike, price equal to the fair market value of our common stock on the date of such grant, and will be exercisable, or “vested,” at some time at or after grant. The “fair market value” will be defined as the closing sales price of the common stock on the Nasdaq Global Select Market on the date of the grant. Some stock options granted by our Compensation Committee may vest simply by the holder remaining with us for a period of time, and some may vest based on our attaining certain performance levels. No options were granted in 2024.
Risk Management and Compensation Policies and Practices
| ● | compensation is allocated among base salaries, cash bonuses and other compensation opportunities in such a way as to not encourage excessive risk-taking; | | ● | long-term incentive compensation discourages short-term risk taking; |
Employment Agreements
Employment Agreements
Overview
Overview As described below, the Company is a party to an employment agreement with each of Mark D. Klein, the Company’s Chairman, Chief Executive Officer and President, and Allison Green, the Company’s Chief Financial Officer, Chief Compliance Officer, Treasurer and Secretary. On April 28, 2020, the Company entered into an amended and restated employment agreement with each of Mr. Klein and Ms. Green (each, an “Amended Employment Agreement and collectively, the “Amended Employment Agreements”), which amended and restated the initial employment agreements, dated April 23, 2019, with such persons (the “Initial Employment Agreements”) in their entirety and set forth such NEOs’ salaries, bonuses and benefits for 2020 until such Amended Employment Agreements were amended in April 2021 in accordance with their terms, as described below. The Amended Employment Agreements were identical in all material respects to the Initial Employment Agreements, except that the Amended Employment Agreements extended the terms of the Initial Employment Agreements by one year to December 31, 2023 and included a provision making Mr. Klein and Ms. Green eligible to receive additional bonus payments in excess of the annual bonus payments set forth in the Initial Employment Agreements, provided that they used 100% of the net amount (as defined in the Amended Employment Agreements) of such additional bonus payments to purchase shares of the Company’s common stock. On April 26, 2021, the Company entered into a second amended and restated employment agreement with each of Mr. Klein and Ms. Green (each, as may be amended from time to time, a “Second Amended Employment Agreement” and collectively, the “Second Amended Employment Agreements”), which are identical in all material respects to the Amended Employment Agreements, except that the Second Amended Employment Agreements extended the terms of the Amended Employment Agreements by one year to December 31, 2024. The Second Amended Employments Agreements set forth such NEOs’ salaries, bonuses and benefits until such Second Amended Employment Agreements are amended or terminated. On March 10, 2022, the Company executed Amendment No. 1 to the Second Amended Employment Agreement with Ms. Green, which adjusted the base salary and annual bonus terms of such agreement. On November 28, 2023, the Company executed Amendment No. 1 to the Second Amended Employment Agreement with Mr. Klein and Amendment No. 2 to the Second Amended Employment Agreement with Ms. Green, both of which extended the terms of the Second Amended Employment Agreements by two years to December 31, 2026. All references to the Second Amended Employment Agreement between the Company and each of Mr. Klein and Ms. Green contained in this Proxy Statement are inclusive of, and reflect the terms of, each of Amendment No. 1 and Amendment No. 2 to the Second Amended Employment Agreement by and between the Company and each of Mr. Klein and Ms. Green, respectively. Under the Amended Equity Incentive Plan, each of Mr. Klein and Ms. Green may receive awards of restricted shares and stock options pursuant to his or her employment agreement, as amended and restated.
Second Amended Employment Agreements, dated April 26, 2021, with Mark D. Klein and Allison Green
Second Amended Employment Agreements, dated April 26, 2021, with Mark D. Klein and Allison Green The Second Amended Employment Agreements became effective as of April 26, 2021 and, as amended, have terms ending on December 31, 2026, unless sooner terminated or amended pursuant to their terms. The Second Amended Employment Agreements are subject to automatic renewal upon completion of the term unless the respective parties thereto elect to terminate such agreement at least thirty (30) days prior to the expiration of the then current term. Under the terms of the Second Amended Employment Agreements, as may be amended from time to time, Mr. Klein and Ms. Green are entitled to receive an annual base salary equal to eight hundred fifty thousand dollars ($850,000) and five hundred thousand dollars ($500,000), respectively (subject to annual review and increase by the Board of Directors at its sole discretion), and are eligible to earn annual bonus payments of up to one hundred percent (100%) and one hundred and twenty-five percent (125%), respectively, of his or her then-effective base salary. Such annual bonus payments, if any, shall be payable at the discretion of the Board of Directors if certain Company performance objectives, performance goals and other objectives, as mutually agreed upon by the Board of Directors and Mr. Klein and Ms. Green, as applicable, are achieved. In addition, Mr. Klein and Ms. Green are eligible to receive additional bonus payments in excess of such annual bonus payments, as determined by the Compensation Committee, provided that Mr. Klein and Ms. Green use one hundred percent (100%) of the net amount (as defined in the applicable Second Amended Employment Agreement) to purchase shares of the Company’s common stock in accordance with the Company’s policies and procedures and applicable law. The Compensation Committee and the Board of Directors determined that the potential for, and use of, such additional bonus payments would better align the NEOs’ interests with those of the Company’s stockholders. Under the terms of the Second Amended Employment Agreements, in the event of termination of such executive’s employment due to such executive’s death or disability (as defined in the applicable Second Amended Employment Agreement), such executive, or such executive’s legal representatives or named beneficiaries, will be entitled to receive (i) earned but unpaid base salary, (ii) any accrued but unpaid paid time off or vacation payable in accordance with applicable Company policy, (iii) any reimbursable business expenses incurred, but not yet reimbursed to such executive, and (iv) any benefits earned through the date of such executive’s termination in accordance with the terms of the applicable benefit plans (collectively, the “Accrued Benefits”). The Company shall also pay such executive or such executive’s legal representatives or named beneficiaries, as applicable, (i) any unpaid annual bonus for the preceding fiscal year and (ii) a pro-rated portion of the annual bonus for the then-current fiscal year based on the number of days of the then-current fiscal year that such executive was employed by the Company. Additionally, notwithstanding the terms of the applicable equity incentive plan or award agreement, any unvested portion of any equity awards held by such executive shall immediately vest in full and become exercisable and free from forfeiture or repurchase, as applicable, as of the date of such executive’s termination. Under the terms of the Second Amended Employment Agreements, in the event of the termination of such executive’s employment for cause (as defined in the applicable Second Amended Employment Agreement), the Company shall pay to such executive accrued benefits that had been earned but unpaid as of the date of the termination and such executive shall receive no further payments of any kind. Under the terms of the Second Amended Employment Agreements, in the event of the termination of such executive’s employment by the Company without cause or by such executive for good reason (as defined in the applicable Second Amended Employment Agreement), the Company shall pay to such executive all Accrued Benefits through the date of such termination, and the following severance benefits:
Second Amended Employment Agreements, dated April 26, 2021, with Mark D. Klein and Allison Green
| ● | The Company shall pay such executive a lump sum amount of severance equal to the product of: (A) the multiplier, and (B) the sum of (i) such executive’s then-current base salary, plus (ii) the annual bonus earned by such executive for the preceding fiscal year. The multiplier shall equal two (2) for Mr. Klein and one (1) for Ms. Green; provided however, that the multiplier shall equal three (3) for Mr. Klein and two (2) for Ms. Green if (x) the termination occurs within the first anniversary of a change in control event (as defined in the applicable Second Amended Employment Agreement), (y) such executive did not vote in favor of such change in control, and (z) the Company’s net assets are greater than $100.0 million, as determined by the Board of Directors in good faith. If the termination occurred in 2024, the annual bonus for purposes of the severance calculation would equal the annualized rate of the annual bonus such executive earned for the 2023 fiscal year. |
Second Amended Employment Agreements, dated April 26, 2021, with Mark D. Klein and Allison Green
| ● | Notwithstanding the terms of the applicable equity incentive plan or award agreement, any unvested portion of any equity awards held by such executive shall immediately vest in full and become exercisable and free from forfeiture or repurchase, as applicable, as of the date of such executive’s termination. |
Second Amended Employment Agreements, dated April 26, 2021, with Mark D. Klein and Allison Green
| ● | The Company shall provide, at the Company’s cost, continuation health insurance coverage under COBRA during the twelve (12) months following the date of termination for Ms. Green and the eighteen (18) months following the date of termination for Mr. Klein (each, “COBRA Coverage Period”), provided that these payments for continuation coverage under COBRA shall cease prior to the end of the COBRA Coverage Period if such executive becomes eligible for other group health insurance coverage from a new employer, and provided further that such coverage provided during the COBRA Coverage Period shall be included in (and not in addition to) the continuation period under COBRA. |
Second Amended Employment Agreements, dated April 26, 2021, with Mark D. Klein and Allison Green
| ● | Such executive shall be eligible to receive any unpaid annual bonus for the preceding fiscal year, and a pro-rated portion of the annual bonus for the then current fiscal year based on the number of days of the then-current fiscal year that such executive was employed by the Company. |
Second Amended Employment Agreements, dated April 26, 2021, with Mark D. Klein and Allison Green
Payment of any amounts and benefits in addition to the base salary, including any severance benefit, shall be conditioned on such executive’s execution and non-revocation, where applicable, of a release of claims in favor of the Company. The severance amount, with the exception of the pro-rated bonus for the then-current fiscal year, shall be paid to such executive within thirty (30) days following the effective date of such release. The pro-rated bonus for the then-current fiscal year will be paid in accordance with the Company’s regular payment schedule for the annual bonus for that calendar year. The rationale behind providing a severance package in certain events is to attract talented executives who are assured that they will not be financially injured if they physically relocate and/or leave another job to join us but are forced out through no fault of their own, and to ensure that our business is operated and governed for our stockholders by a management team, and under the direction of a board of directors, who are not financially motivated to frustrate the execution of a change in control transaction. Each Second Amended Employment Agreement contains a provision for the protection of our confidential information, trade secrets, and intellectual property during such executive’s employment with the Company or its affiliates and following termination of such executive’s employment. Except as required by law, such executive will not, directly or indirectly, at any time, disclose to any third person or use in any way any non-public information or confidential information. Each Second Amended Employment Agreement also contains a mutual non-disparagement provision that provides that neither party to such Second Amended Employment Agreement will disparage the other, and an arbitration clause that mandates arbitration in the event of a dispute.
Change in Control and Severance
Change in Control and Severance Amended Equity Incentive Plan. Except as otherwise provided in the NEO’s award agreement, in the event of a change in control (as defined in the Amended Equity Incentive Plan), the Compensation Committee may provide for (i) the assumption of some or all of the outstanding equity awards, or for the grant of new equity awards in substitution therefor, by the acquiring or surviving entity, (ii) acceleration of the equity awards, (iii) the cancellation of any outstanding equity awards and cause to be paid to the NEO holding vested equity awards (including equity awards that would vest as result of a change in control) the fair value of such equity awards, if any, as determined by the Compensation Committee, or (iv) any other adjustments in such manner as it may deem equitable, in each case in accordance with the terms of the Amended Equity Incentive Plan. A “change in control” is defined in the Amended Equity Incentive Plan as:
Change in Control and Severance
| (i) the acquisition (whether by purchase, merger, consolidation, combination or other similar transaction) by any person of beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act) of more than fifty percent (50%) (on a fully diluted basis) of either (A) the then-outstanding shares of our common stock, taking into account as outstanding for this purpose such common stock issuable upon the exercise of options or warrants, the conversion of convertible stock or debt, and the exercise of any similar right to acquire such common stock, or (B) the combined voting power of the then-outstanding voting securities of the Company entitled to vote generally in the election of directors; provided, however, that for purposes of the Amended Equity Incentive Plan, the following acquisitions shall not constitute a change in control: (I) any acquisition by the Company or any affiliate; (II) any acquisition by any employee benefit plan sponsored or maintained by the Company or any affiliate; or (III) in respect of a Plan Award held by a particular participant, any acquisition by the participant or any group of persons including the participant (or any entity controlled by the participant or any group of persons including the participant); |
Change in Control and Severance
| (ii) during any period of twenty-four (24) months, individuals who, at the beginning of such period, constitute the Board of Directors (the “Incumbent Directors”), cease for any reason to constitute at least a majority of the Board of Directors provided that any person becoming a director subsequent to the date hereof, whose election or nomination for election was approved by a vote of at least two-thirds (2/3rds) of the Incumbent Directors then on the Board of Directors (either by a specific vote or by approval of the proxy statement of the Company in which such person is named as a nominee for director, without written objection to such nomination) shall be an Incumbent Director; provided, however, that no individual initially elected or nominated as a director of the Company, as a result of an actual or threatened election contest, as such terms are used in Rule 14a-12 of Regulation 14A promulgated under the Exchange Act, with respect to directors or as a result of any other actual or threatened solicitation of proxies or consents by or on behalf of any person other than the Board of Directors shall be deemed to be an Incumbent Director; |
Change in Control and Severance
| (iii) | the sale, transfer or other disposition of all or substantially all of the assets of the Company to any person that is not an affiliate of the Company; or |
Change in Control and Severance
| (iv) a change in the management structure of the Company from an internally managed BDC to an externally managed BDC pursuant to which the Company enters into an investment advisory agreement with a third-party adviser. |
Change in Control and Severance
Severance. Under specified covered transactions involving a change in control (as defined in the NEO’s Second Amended Employment Agreement), an NEO may be entitled to receive certain severance payments and benefits as discussed above under “Employment Agreements.” In addition, under the Second Amended Employment Agreements, if an NEO’s employment is terminated as a result of death or disability, or without cause or for good reason (as defined in the NEO’s Second Amended Employment Agreement), any unvested portion of any equity awards held by the NEO will immediately vest in full and become exercisable and free from forfeiture or repurchase, as applicable, as of the effective date of any such event of employment termination. If the NEO’s employment is terminated for any other reason, including for cause (as defined in the NEO’s Second Amended Employment Agreement), any unvested portion of any equity awards held by the NEO will be forfeited immediately as of the effective of date of any such event of employment termination. See “Employment Agreements” and “Potential Payments Upon Change in Control or Termination of Employment” for additional information.
Summary Compensation Table
Summary Compensation Table
Summary Compensation Table
| Name and Principal Position | Year | Salary(1) | Bonus(2) | Stock Awards(3) | All Other Compensation(4) | Total | | Mark D. Klein | 2024 | $850,000 | $1,700,000 | $614,000 | $407 | $3,164,407 | | Chairman and Member of the Board of Directors, Chief Executive Officer, and President | 2023 | $850,000 | $1,700,000 | $426,000 | $409 | $2,976,409 | | | 2022 | $850,000 | $1,150,000 | $2,300,000 | $53,439 | $4,353,439 | | Allison Green | 2024 | $500,000 | $600,000 | $153,500 | $33,598 | $1,287,098 | | Chief Financial Officer, Chief Compliance Officer, Treasurer, and Corporate Secretary | 2023 | $500,000 | $600,000 | $106,500 | $25,974 | $1,232,474 | | | 2022 | $490,340 | $415,000 | $585,000 | $27,739 | $1,518,079 |
Summary Compensation Table
| (1) The salaries of Mr. Klein and Ms. Green were paid pursuant to the applicable Second Amended Employment Agreement of such individuals with the Company. |
Summary Compensation Table
| (2) Reflects annual and additional cash bonuses based on individual and corporate performance, as determined by the Compensation Committee in accordance with the NEO’s Second Amended Employment Agreements, as follows: |
Summary Compensation Table
| Name | Year | Annual Cash Bonus | Additional Bonus for Stock Purchase | Total Bonus | | Mark D. Klein | 2024 | $850,000 | $850,000 | $1,700,000 | | | 2023 | $850,000 | $850,000 | $1,700,000 | | | 2022 | $550,000 | $600,000 | $1,150,000 | | Allison Green | 2024 | $500,000 | $100,000 | $600,000 | | | 2023 | $500,000 | $100,000 | $600,000 | | | 2022 | $315,000 | $100,000 | $415,000 |
Summary Compensation Table
100% of the net amount (as defined in the applicable Second Amended Employment Agreement) of such additional cash bonuses were used to purchase shares of the Company’s common stock in accordance with the Company’s policies and procedures and applicable law. The terms of the 2023 and 2024 additional cash bonus grants require the NEOs to hold such stock for a period of not less than (1) one year, for the first half of such stock, and (2) two years, for the second half of such stock. The terms of the 2022 additional cash bonus grants require the NEOs to hold such stock for a period of not less than one year.
Summary Compensation Table
| (3) Unless otherwise noted, restricted stock grants to the NEOs under the Amended Equity Incentive Plan vest ratably over three years from the grant date, and all underlying shares are entitled to dividends and voting rights beginning on the grant date. The amounts reflected in the table represent the grant date fair value of such restricted stock awards in accordance with FASB ASC Topic 718 (“ASC 718”) based on the closing price of our common stock on the Nasdaq Global Select Market on the grant date. Such amounts may not correspond to the actual value that will be recognized by the NEOs upon vesting. |
Summary Compensation Table
| (4) Includes (i) value of benefits in the form of employer-funded costs of medical, dental, and vision health plan premiums and other insurance plan premiums and employer matching contributions made to each NEO’s account in our 401(k) plan (“Other Benefits”) and (ii) value of dividends received or earned for the year in respect of each executive officer’s unvested restricted stock awards, as follows: |
Summary Compensation Table
| Name | Year | Accrued Restricted Stock Dividends on Restricted Stock | Accrued Cash Dividends on Restricted Stock | Other Benefits | All Other Compensation Total | | Mark D. Klein | 2024 | $— | $— | $407 | $407 | | | 2023 | $— | $— | $409 | $409 | | | 2022 | $— | $53,030 | $409 | $53,439 | | Allison Green | 2024 | $— | $— | $33,598 | $33,598 | | | 2023 | $— | $— | $25,974 | $25,974 | | | 2022 | $— | $8,733 | $19,006 | $27,739 |
Summary Compensation Table
To best align the NEOs’ interests with those of the Company’s stockholders, the Amended Equity Incentive Plan provides for dividend rights on the restricted stock grants. Pursuant to the Amended Equity Incentive Plan, any accrued cash and/or restricted stock dividends on the unvested restricted share grants retain the same vesting schedule as the underlying shares. Such amounts may not correspond to the actual value recognized by the NEOs upon vesting.
Grants of Plan-Based Awards
Grants of Plan-Based Awards The following table sets forth information regarding restricted stock awards granted to our NEOs under the Amended Equity Incentive Plan during the fiscal year ended December 31, 2024:
Grants of Plan-Based Awards
| Name | Grant Date | Stock Awards; Number of Shares of Stock(1) | Grant Date Fair Value of Stock Awards(2) | | Mark D. Klein | December 10, 2024 | 100,000 | $614,000 | | Allison Green | December 10, 2024 | 25,000 | $153,500 |
Grants of Plan-Based Awards
| (1) Restricted stock grants to NEOs under the Amended Incentive Plan in 2024 vest ratably over three years from the grant date, and all underlying shares are entitled to dividends and voting rights beginning on the grant date. |
Grants of Plan-Based Awards
| (2) Amounts represent the grant date fair value of restricted stock awards determined in accordance with ASC 718 based on the closing price of our common stock on the date of grant. Such amounts may not correspond to the actual value that will be recognized by the NEOs upon vesting. |
Outstanding Equity Awards at Fiscal Year End
Outstanding Equity Awards at Fiscal Year End The following table sets forth the awards of restricted stock for which vesting and forfeiture provisions have not lapsed and remained outstanding at December 31, 2024:
Outstanding Equity Awards at Fiscal Year End
| | Stock Awards | | | | | Name | Number of Shares of Stock That Have Not Vested (#) | | Market Value of Shares of Stock That Have Not Vested(1) | | | | Shares of Granted Restricted Stock Awards Not Yet Vested | Accrued Dividend Shares of Restricted Stock | Market Value of Shares of Granted Restricted Stock Awards Not Yet Vested | Market Value of Accrued Dividend Shares of Restricted Stock | | Mark D. Klein | 230,931(2) | — | $1,364,943 | $— | | Allison Green | 58,013(3) | — | $342,914 | $— |
Outstanding Equity Awards at Fiscal Year End
| (1) The market value of shares of stock that have not vested was determined based on the closing price of our common stock on the Nasdaq Global Select Market on December 31, 2024 of $5.88. Such amounts may not correspond to the actual value recognized by the NEOs upon vesting. |
Outstanding Equity Awards at Fiscal Year End
| (2) Includes 64,264 restricted shares granted on February 9, 2022, 66,667 restricted shares granted on December 15, 2023, and 100,000 restricted shares granted on December 10, 2024. Such restricted shares, including any dividends declared thereon, vest ratably over three years from the grant date, subject in each case to the NEO still being employed by the Company on the respective vesting date. |
Outstanding Equity Awards at Fiscal Year End
| (3) Includes 16,346 restricted shares granted on February 9, 2022, 16,667 restricted shares granted on December 15, 2023, and 25,000 restricted shares granted on December 10, 2024. Such restricted shares, including any dividends declared thereon, vest ratably over three years from the grant date, subject in each case to the NEO still being employed by the Company on the respective vesting date. |
Potential Payments Upon Change in Control or Termination of Employment
Potential Payments Upon Change in Control or Termination of Employment As described under “Employment Agreements,” upon the termination of an NEO’s employment with the Company, whether due to death or disability, as a result of a change in control, for cause or without cause, voluntarily or for good reason (as such terms are defined in the NEO’s Second Amended Employment Agreement), certain payments and benefits will be paid and made available to such NEOs. Under the Second Amended Employment Agreements, if an NEO’s employment is terminated as a result of death or disability, without cause or for good reason, any unvested portion of any equity awards held by the NEO will immediately vest in full and become exercisable and free from forfeiture or repurchase, as applicable, as of the effective date of any such event of employment termination. If the NEO’s employment is terminated for any other reason, including for cause, any unvested portion of any equity awards held by the NEO will be forfeited immediately as of the effective of date of any such event of employment termination. See “Employment Agreements” for additional information. The following table provides estimates of the potential payments and benefits such NEOs would receive pursuant to his or her Second Amended Employment Agreement, assuming his or her employment was terminated on December 31, 2024.
Potential Payments Upon Change in Control or Termination of Employment
| Name | Benefit | Upon Death or Disability (1) | Voluntary Resignation (1)(2) | Termination for Cause (1) | Termination without Cause or Resignation for Good Reason Prior to a Change in Control (1) | Termination without Cause or Resignation for Good Reason After a Change in Control (1) | | Mark D. Klein | Salary(3) | $— | $— | $— | $1,700,000(4) | $2,550,000(4) | | | Bonus(5) | — | — | — | $1,700,000(6) | $2,550,000(6) | | | Accelerated Equity Award Vesting(7) | $1,364,943 | — | — | $1,364,943 | $1,364,943 | | | Other(8) | — | — | — | $54,000 | $54,000 | | | Total | $1,364,943 | $— | $— | $4,818,943 | $6,518,943 | | Allison Green | Salary(3) | $— | $— | $— | $500,000(4) | $1,000,000(4) | | | Bonus(5) | — | — | — | $500,000(6) | $1,000,000(6) | | | Accelerated Equity Award Vesting(7) | $342,914 | — | — | $342,914 | $342,914 | | | Other(8) | — | — | — | $36,000 | $36,000 | | | Total | $342,914 | $— | $— | $1,378,914 | $2,378,914 |
Potential Payments Upon Change in Control or Termination of Employment
| (1) Amounts reflect compensation and benefits Mr. Klein and Ms. Green would be entitled to receive pursuant to their respective Second Amended Employment Agreements. See “Employment Agreements” for additional information. |
Potential Payments Upon Change in Control or Termination of Employment
| (2) Voluntary resignation by the NEO other than for good reason (as such terms are defined in the applicable Second Amended Employment Agreement). |
Potential Payments Upon Change in Control or Termination of Employment
| (3) The Second Amended Employment Agreements provide for payment of any earned but unpaid base salary if employment terminated for any reason. Assumes no earned but unpaid base salary, as calculations are based on full fiscal year of employment. |
Potential Payments Upon Change in Control or Termination of Employment
| (4) Amount calculated based on 2024 base salary and applicable multiplier pursuant to NEO’s Second Amended Employment Agreement. |
Potential Payments Upon Change in Control or Termination of Employment
| (5) The Second Amended Employment Agreements provide for payment of (i) any unpaid annual bonuses and (ii) pro-rated portion of annual bonuses for then-current fiscal year based on number of days employed during the year of termination. NEOs terminated for cause (as such term is defined in the applicable Second Amended Employment Agreement) or that voluntarily resign forfeit any unpaid bonuses and are not entitled to receive pro-rated bonuses. Assumes no unpaid annual bonuses and pro-rated portion of annual bonuses as calculations are based on full fiscal year of employment. |
Potential Payments Upon Change in Control or Termination of Employment
| (6) Bonus amount calculated based on actual amount of annual bonus for preceding fiscal year, multiplied by the applicable multiplier pursuant to NEO’s Second Amended Employment Agreement. See “Employment Agreements.” |
Potential Payments Upon Change in Control or Termination of Employment
| (7) In the event of termination as a result of death or disability, without cause or for good reason (as such terms are defined in the applicable Second Amended Employment Agreement), any unvested portion of any equity awards held by the NEO immediately vest in full and become exercisable and free from forfeiture or repurchase, as applicable, as of the effective date of any such event of employment termination. If the NEO’s employment is terminated for any other reason, including for cause (as such term is defined in the applicable Second Amended Employment Agreement), any unvested portion of any equity awards held by the NEO are forfeited immediately as of the effective date of any such event of employment termination. If a change in control occurs and any equity awards are not assumed or substituted by the successor entity, assumes such equity awards immediately vest and become exercisable. Such amounts may not correspond to the actual value that will be recognized by the NEOs upon vesting. The amounts provided here include the value of all unvested shares and cash and restricted stock dividends paid thereon based on the closing price of our common stock on the Nasdaq Global Select Market as of December 31, 2024. |
Potential Payments Upon Change in Control or Termination of Employment
| (8) For purposes of termination without cause and voluntary resignation, this row also includes reimbursement of the full amount of COBRA premiums for the NEOs and his or her eligible dependents for 18 months for Mr. Klein and 12 months for Ms. Green following termination of employment, estimated at $3,000 per month for each of Mr. Klein and Ms. Green, respectively. |
Chief Executive Officer Pay Ratio
Chief Executive Officer Pay Ratio For 2024, our last completed fiscal year, the median of the annual total compensation of all of our employees (other than Mr. Klein, our Chief Executive Officer (our “CEO”)) was $526,791, and the annual total compensation of our CEO, as reported in the Summary Compensation Table, was $3,164,407. Based on this information, our CEO’s 2024 annual total compensation was approximately 6.0 times that of the median of the 2024 annual total compensation of all of our employees. We selected December 31, 2024 as the date used to identify our “median employee” whose annual total compensation was the median of the annual total compensation of all our employees (other than our CEO) for 2024. As of December 31, 2024, our employee population consisted of ten individuals, all based in the United States, including at our headquarters in New York, New York and our additional office in San Francisco, California. We compared the annual total compensation for our employee population in accordance with the requirements of Item 402(e)(2)(x) of Regulation S-K, which included salary, bonus, restricted stock awards (including cash and restricted stock dividends thereon), employer-funded costs of medical, dental, and vision health plan premiums and other insurance plan premiums, and employer matching contributions to employee accounts in our 401(k) plan.
Pay Versus Performance
Pay Versus Performance The following table shows the total compensation for our NEOs for the past five fiscal years as set forth in the Summary Compensation Table, the “compensation actually paid” to our principal executive officer (“PEO”) and non-PEO NEO (in each case, as determined under SEC rules), our total shareholder return (or “TSR”), the total shareholder return of the Nasdaq Stock Index over the same period, our Net Increase/(Decrease) in Net Assets Resulting from Operations, and our financial performance measure for compensatory purposes, net asset value (“NAV”) per share of our common stock (“Share”).
Pay Versus Performance
| | | | | | Value of Initial Fixed $100 Investment Based On: | | | | | Year | Summary Compensation Table Total for PEO(1) | Compensation Actually Paid to PEO(2) | Average Summary Compensation Table Total for Non-PEO NEOs(3) | Average Compensation Actually Paid to Non-PEO NEOs(2)(3) | Total Shareholder Return(4) | Nasdaq Stock Index Total Shareholder Return | Net Increase/ (Decrease) in Net Assets Resulting from Operations(5) | NAV per Share | | 2024 | $3,164,407 | $3,497,486 | $1,287,098 | $1,349,183 | $171.82 | $215.22 | $(38,124,247) | $6.68 | | 2023 | $2,976,409 | $3,000,039 | $1,232,474 | $1,231,442 | $115.13 | $167.30 | $5,066,822 | $7.99 | | 2022 | $4,353,439 | $643,964 | $1,518,079 | $935,248 | $111.04 | $116.65 | $(132,177,053) | $7.39 | | 2021 | $7,546,084 | $7,363,821 | $1,625,652 | $1,570,025 | $373.93 | $174.36 | $147,071,721 | $11.72 | | 2020 | $4,000,425 | $1,740,203 | $1,206,467 | $790,110 | $216.63 | $143.64 | $75,337,438 | $15.14 |
Pay Versus Performance
| (1) Mr. Klein was the sole PEO for each of 2024, 2023, 2022, 2021 and 2020. |
Pay Versus Performance
| (2) “Compensation actually paid” (“CAP”) is a calculation that begins with the Summary Compensation Table (“SCT”) total compensation in the given year with certain adjustments prescribed by the SEC rules. The following table provides a reconciliation of SCT total compensation (the “SCT Total”) with CAP for 2024, computed through the addition to the SCT Total of the values provided in the columns labeled “SCT Stock Awards,” “Fair Value of Stock Awards Granted in the Covered Year,” “Change in Fair Value of Unvested Stock Awards from Prior Years,” and “Change in Fair Value of Stock Awards that Vested in the Covered Year”: |
Pay Versus Performance
| Name | Year | SCT Total | SCT Stock Awards | Fair Value of Stock Awards Granted in the Covered Year | Change in Fair Value of Unvested Stock Awards from Prior Years | Change in Fair Value of Stock Awards that Vested in the Covered Year | Compensation Actually Paid | | PEO | 2024 | $3,164,407 | $(614,000) | $588,000 | $254,006 | $105,073 | $3,497,486 | | Non-PEO NEO Average | 2024 | $1,287,098 | $(153,500) | $147,000 | $64,045 | $4,540 | $1,349,183 |
Pay Versus Performance
| (3) Ms. Green was our only non-PEO NEO for each of 2024, 2023, 2022, 2021 and 2020. |
Pay Versus Performance
| (4) Total Shareholder Return represents the value of a hypothetical $100 investment beginning at market close on the last trading day of 2019, assuming reinvestment of all dividends. |
Pay Versus Performance
| (5) Given the nature of the Company’s operations, the Company calculates “Net Income” as the Net Increase/(Decrease) in Net Assets Resulting from Operations. |
Pay Versus Performance
The graph below reflects the relationship between “compensation actually paid” to our PEO and non-PEO NEO and Total Shareholder Return for the Company and the Nasdaq Stock Index. The graph below reflects the relationship between “compensation actually paid” to our PEO and non-PEO NEO and our Net Increase/(Decrease) in Net Assets Resulting from Operations, which is the Company’s calculation of “Net Income” given the nature of the Company’s operations: The graph below reflects the relationship between “compensation actually paid” to our PEO and non-PEO NEO and our NAV per Share: Restrictions imposed by the 1940 Act limit the Compensation Committee’s ability to use nondiscretionary or formulaic Company performance goals or criteria to determine executive incentive compensation. However, the Compensation Committee considers several financial performance metrics, along with other factors including operational goals and individual performance criteria, in determining the appropriate compensation for the Company’s NEOs. Subject to the foregoing restrictions imposed by the 1940 Act, in the Company’s assessment, the following list of performance measures represent the most important performance measures used to link compensation actually paid to our NEOs, for the most recently completed fiscal year, to Company performance:
Pay Versus Performance
| ● | NAV per Share; |
Pay Versus Performance
| ● | dividends declared and paid by the Company; |
Pay Versus Performance
| ● | prudent investments within the portfolio, focusing on high-quality opportunities to ensure efficiency; |
Pay Versus Performance
| ● | enhancements to the overall investment process, to the valuation process, and to financial reporting; |
Pay Versus Performance
| ● | maintenance of a strong balance sheet, including maintaining liquidity and capital flexibility to accomplish the Company’s business objectives; and |
Pay Versus Performance
| ● | execution of the Company’s Share Repurchase Program and Modified “Dutch Auction” Tender Offer. |
Pay Versus Performance
Other key metrics considered by the Compensation Committee when determining the appropriate compensation for NEOs include investment activity, growth and performance of the Company’s business, maintenance of liquidity and capital flexibility, growth and development of human capital, and individual contributions to corporate objectives.