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UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
Proxy
Statement Pursuant to Section 14(a) of
the
Securities Exchange Act of 1934 (Amendment No. )
| Filed
by the Registrant ☒ |
| 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)) |
| ☒ |
Definitive
Proxy Statement |
| ☐ |
Definitive
Additional Materials |
| ☐ |
Soliciting
Material under §240.14a-12 |
| SuRo
Capital Corp. |
(Name
of Registrant as Specified In Its Charter) |
| |
| |
|
(Name
of Person(s) Filing Proxy Statement, if other than the Registrant) |
| |
| Payment
of Filing Fee (Check all boxes that apply): |
| |
| ☒ |
No
fee required. |
| ☐ |
Fee
paid previously with preliminary materials. |
| ☐ |
Fee
computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14(a)-6(i)(1) and 0-11. |
SURO
CAPITAL CORP.
640 Fifth Avenue, 12th Floor
New York, New York 10019
April
19, 2023
Dear
Stockholder:
You
are cordially invited to attend the 2023 Annual Meeting of Stockholders (the “Annual Meeting”) of SuRo Capital Corp. (the
“Company”) to be held on May 31, 2023 at 9:00 a.m., Eastern Time, at the office of Eversheds Sutherland (US) LLP, The Grace
Building, 1114 Sixth Avenue, 40th Floor, New York, New York 10036.
The
notice of annual meeting and the proxy statement (the “Proxy Statement”) accompanying this letter provide an outline of the
business to be conducted at the Annual Meeting. At the Annual Meeting, you will be asked to: (i) re-elect two members of the board of
directors of the Company (the “Board”), each of whom will serve for a term of three years and until their respective successors
are duly elected and qualified; (ii) provide an advisory vote on executive compensation; (iii) ratify the selection of Marcum LLP to
serve as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2023; and (iv) transact
such other business as may properly come before the Annual Meeting or any postponement or adjournment thereof. Details of the business
to be conducted at the Annual Meeting are set forth in the accompanying Notice of 2023 Annual Meeting of Stockholders and Proxy Statement.
The
Company’s Board unanimously recommends that you vote FOR each of the proposals to be considered and voted on at the Annual Meeting.
The
Company has elected to provide access to its proxy materials to certain of its stockholders over the internet under the U.S. Securities
and Exchange Commission’s “notice and access” rules. On or about April 5, 2023, the Company intends to mail to most
of its stockholders a Notice of Internet Availability of Proxy Materials containing instructions on how to access the Proxy Statement
and the annual report on Form 10-K for the year ended December 31, 2022 (the “Annual Report”), and how to submit proxies
by telephone or through the internet. All other stockholders will receive a copy of the Proxy Statement and the Annual Report by mail.
The Notice of Internet Availability of Proxy Materials also contains instructions on how you can elect to receive a printed copy of the
Proxy Statement and the Annual Report. The Company believes that providing its proxy materials over the internet will expedite stockholders’
receipt of proxy materials, lower the costs associated with the Annual Meeting and conserve resources.
It
is important that your shares of the Company’s common stock be represented at the Annual Meeting. If you are unable to attend the
Annual Meeting in person, I urge you to complete, date and sign the enclosed proxy card and promptly return it in the envelope provided,
vote your shares by telephone, or vote via the internet in accordance with the instructions printed on the Notice of Internet Availability
of Proxy Materials or the proxy card. You will be able to vote electronically at www.proxyvote.com or by calling 1-800-690-6903.
Your vote and participation in the governance of the Company are very important.
|
Sincerely yours, |
| |
|
| |
/s/ Mark
D. Klein |
| |
Mark D. Klein |
| |
Chairman, Chief Executive Officer and President |
SURO
CAPITAL CORP.
640 Fifth Avenue, 12th Floor
New York, New York 10019
(212)
931-6331
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 31, 2023
To
the Stockholders of SuRo Capital Corp.:
NOTICE
IS HEREBY GIVEN THAT the 2023 Annual Meeting of Stockholders (the “Annual Meeting”) of SuRo Capital Corp. (the “Company”)
will be held on May 31, 2023 at 9:00 a.m., Eastern Time, at the office of Eversheds Sutherland (US) LLP, The Grace Building, 1114 Sixth
Avenue, 40th Floor, New York, New York 10036.
The
Annual Meeting will be held for the following purposes:
| 1. | To
re-elect two members of the board of directors of the Company (the “Board”),
each of whom will serve for a term of three years or until their respective successors are
duly elected and qualified; |
| | | |
| 2. | To
provide an advisory vote on executive compensation; |
| | | |
| 3. | To
ratify the selection of Marcum LLP to serve as the Company’s independent registered
public accounting firm for the fiscal year ending December 31, 2023; and |
| | | |
| 4. | To
transact such other business as may properly come before the Annual Meeting or any postponement
or adjournment thereof. |
You
have the right to receive notice of and to vote at the Annual Meeting if you were a stockholder of record at the close of business on
April 5, 2023 (the “Record Date”). Regardless of whether you expect to be present in person at the Annual Meeting, please
sign the enclosed proxy and return it promptly in the self-addressed envelope provided, or register your vote by telephone or through
the internet. You must have your control number, found on your proxy card or Notice of Internet Availability of Proxy Materials, in order
to vote. Prior to the Annual Meeting, you may vote your shares electronically at www.proxyvote.com or by calling 1-800-690-6903.
Instructions are shown on the proxy card and the Notice of Internet Availability of Proxy Materials. In the event there are not sufficient
votes for a quorum or to approve or ratify any of the foregoing proposals at the time of the Annual Meeting, the Annual Meeting may be
adjourned in order to permit further solicitation of proxies by the Company.
Important
Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to Be Held on May 31, 2023. The proxy
statement (the “Proxy Statement”) and our annual report on Form 10-K for the fiscal year ended December 31, 2022 (the “Annual
Report”) are available on the internet at https://investors.surocap.com/financial-information/sec-filings. The Notice of
Internet Availability of Proxy Materials contains instructions on how you can elect to receive a printed copy of the Proxy Statement
and the Annual Report free of charge.
The
following information applicable to the Annual Meeting may be found in the Proxy Statement and/or accompanying proxy card:
| ● | The
date, time and location of the meeting; |
| ● | A
list of the matters intended to be acted on and our recommendations regarding those matters; |
| | | |
| ● | Any
control/identification numbers that you need to access your proxy card; and |
| | | |
| ● | Information
about attending the meeting and voting in person. |
If
you are unable to participate in the meeting, we urge you to follow the instructions printed on the Notice of Internet Availability of
Proxy Materials or the proxy card to authorize a proxy vote by telephone or through the internet, or complete, date and sign the enclosed
proxy card and promptly return it in the envelope provided.
| |
By
Order of the Board of Directors, |
| |
|
| |
/s/ Allison Green |
| |
Allison Green |
| |
Corporate Secretary |
New
York, New York
April 19, 2023
This
is an important meeting. To ensure proper representation at the Annual Meeting, Stockholders are requested to promptly authorize a proxy
vote by telephone or through the internet, or execute and return promptly the accompanying proxy card, which is being solicited by the
Board. You may authorize a proxy by telephone or through the internet by following the instructions in the Notice of Internet Availability
of Proxy Materials or the proxy card. You may execute the proxy card using the methods described in the proxy card. Executing the proxy
card is important to ensure a quorum at the Annual Meeting. Proxies may be revoked at any time before they are exercised by submitting
a written notice of revocation or a subsequently executed proxy, or by participating in the Annual Meeting and voting.
PROXY
STATEMENT FOR 2023 ANNUAL MEETING OF STOCKHOLDERS
TABLE
OF CONTENTS
SURO
CAPITAL CORP.
640 Fifth Avenue, 12th Floor
New York, New York 10019
(212)
931-6331
PROXY
STATEMENT
2023
Annual Meeting of Stockholders
To
Be Held On May 31, 2023
This
proxy statement (this “Proxy Statement”) is furnished in connection with the solicitation of proxies by the board of directors
(the “Board of Directors”) of SuRo Capital Corp. (the “Company,” “SuRo Capital,” “we,”
“us” or “our”) for use at the Company’s 2023 Annual Meeting of Stockholders (the “Annual Meeting”)
to be held on May 31, 2023 at 9:00 a.m., Eastern Time, at the offices of Eversheds Sutherland (US) LLP, The Grace Building, 1114 Sixth
Avenue, 40th Floor, New York, New York 10036, and at any postponements or adjournments thereof. This Proxy Statement and the accompanying
proxy card are first being released to stockholders on or about April 19, 2023. In addition, a Notice of Internet Availability of Proxy
Materials containing instructions on how to access this Proxy Statement and the Company’s Annual Report on Form 10-K for the fiscal
year ended December 31, 2022 (the “Annual Report”), as well as how to submit proxies by telephone or through the internet,
is being sent to stockholders on or about April 19, 2023.
We
encourage you to vote your shares either by voting in person at the Annual Meeting or by granting a proxy (i.e., authorizing someone
to vote your shares). If you properly sign and date the accompanying proxy card, or otherwise provide voting instructions either via
the internet or by telephone, and the Company receives such instructions by May 30, 2023 at 11:59 p.m. Eastern Time, the persons named
as proxies will vote the shares registered directly in your name in the manner that you specified. Prior to the Annual Meeting or prior
to any postponements or adjournments thereof, you may vote your shares electronically at www.proxyvote.com or by calling 1-800-690-6903.
Voting instructions are shown on the proxy card and the Notice of Internet Availability of Proxy Materials. If you give no instructions
on the proxy card, the shares covered by the proxy card will be voted FOR the election of each of the nominees as directors, FOR
the advisory vote on executive compensation, and FOR the ratification of the selection of Marcum LLP to serve as the Company’s
independent registered public accounting firm for the fiscal year ending December 31, 2023.
If
you are a “stockholder of record” (i.e., you hold shares directly in your name), you may revoke a proxy at any time
before it is exercised by notifying the proxy tabulator, Broadridge Financial Solutions, Inc., in writing, by submitting a properly executed,
later-dated proxy, or by voting in person at the Annual Meeting or by voting by telephone or online at www.proxyvote.com. Please
send any such notice of revocation to SuRo Capital Corp., c/o Broadridge Financial Solutions, Inc., 51 Mercedes Way, Edgewood, New York
11717. Any stockholder of record attending the Annual Meeting may vote in person regardless of whether he or she has previously voted
his or her shares. If your shares are held for your account by a broker, bank or other institution or nominee (“Broker Shares”),
you may vote such shares at the Annual Meeting only if you obtain and present proper written authority from your institution or nominee.
If
you do not vote in person at the Annual Meeting or submit voting instructions to your broker or nominee, your broker or nominee may still
be authorized to vote your shares as to routine matters, which, in the case of the Annual Meeting, only applies to the proposal to ratify
the appointment of our independent registered public accounting firm. For all other matters to be voted on at the Annual Meeting, the
broker or nominee that holds your shares will need to obtain your authorization to vote those shares and has enclosed a voting instruction
form with this Proxy Statement. Please instruct your bank or broker so your vote can be counted.
Stockholders
of record may also vote either via the internet or by telephone prior to the Annual Meeting. Specific instructions to be followed by
stockholders of record interested in voting via the internet or telephone are shown on the proxy card and the Notice of Internet Availability
of Proxy Materials. The internet and telephone voting procedures are designed to authenticate the stockholder’s identity and to
allow stockholders to vote their shares and confirm that their instructions have been properly recorded.
Important
Notice Regarding the Availability of Proxy Materials for the Annual Meeting. This Proxy Statement and the Annual Report are available
on the internet at https://investors.surocap.com/financial- information/sec-filings. The Notice of Internet Availability of Proxy
Materials contains instructions on how stockholders can elect to receive a printed copy of this Proxy Statement and the Annual Report
free of charge.
Purpose
of Meeting
At
the Annual Meeting, you will be asked to vote on the following proposals:
| 1. | to
re-elect two members of the board of directors of the Company (the “Board”),
Mark D. Klein and Lisa Westley, each of whom will serve for a term of three years expiring
at the 2026 annual meeting of stockholders, and until his or her successor is duly elected
and qualified; |
| | | |
| 2. | an
advisory vote on executive compensation (the “Advisory Vote”); |
| | | |
| 3. | the
ratification of the selection of Marcum LLP to serve as the Company’s independent registered
public accounting firm for the fiscal year ending December 31, 2023; and |
| | | |
| 4. | the
transaction such other business as may properly come before the Annual Meeting or any postponement
or adjournment thereof. |
Record
Date
You
may vote your shares, in person or by proxy, at the Annual Meeting only if you were a stockholder of record at the close of business
on April 5, 2023 (the “Record Date”). Each share of common stock is entitled to one vote.
Quorum
Required
A
quorum must be present at the Annual Meeting for any business to be conducted. The presence at the Annual Meeting, in person or by proxy,
of the holders of a majority of the shares of the Company’s common stock outstanding on the Record Date will constitute a quorum.
On the Record Date, there were 28,338,580 shares of the Company’s common stock outstanding. Thus, 14,169,291 shares must be represented
by stockholders present at the Annual Meeting or by proxy to have a quorum. Abstentions, “withhold” votes and Broker Non-Votes
(as defined below) will be treated as shares present for quorum purposes.
If
a quorum is not present at the Annual Meeting, the stockholders who are represented may adjourn the Annual Meeting until a quorum is
present. The persons named as proxies will vote those proxies for such adjournment, unless marked to be voted against any proposal for
which an adjournment is sought, to permit the further solicitation of proxies.
Broker
Non-Votes
If
you are the beneficial owner of shares held through a broker or other nominee and do not vote your shares or provide voting instructions,
your broker may vote for you on routine proposals but not on non-routine proposals. Therefore, if you do not vote on the non-routine
proposals or provide voting instructions on such proposals, your broker will not be allowed to vote your shares. This will result in
a broker non-vote (“Broker Non-Votes”).
Accordingly,
at the Annual Meeting, should you not vote your shares or provide voting instructions, your broker will have discretionary
authority to vote your shares on the following proposal that is considered routine: “Proposal III: Ratification of Selection of
Independent Registered Public Accounting Firm.” At the Annual Meeting, should you not vote your shares or provide voting
instructions, your broker will not have discretionary authority to vote your shares and therefore your shares will not be voted
on the following proposals that are considered non-routine: “Proposal I: Election of Directors” and “Proposal II: Advisory
Vote on Executive Compensation.”
Vote
Required
Election
of Directors. The election of directors requires the affirmative vote of a plurality of all the votes cast at the Annual Meeting
in person or by proxy. Stockholders may not cumulate their votes. If you vote “Withhold” with respect to a nominee, your
shares will not be voted with respect to the person indicated. Broker Non-Votes will not be included in determining the number of votes
cast and will have no effect on this proposal. Stockholders have no appraisal or dissenters’ rights in connection with this proposal.
Advisory
Vote on Executive Compensation. The affirmative vote of a majority of all the votes cast at the Annual Meeting in person or by proxy
is required for the approval of the resolution in this proposal. As an advisory vote, this proposal is not binding upon the Company.
However, the Board of Directors and the Company’s compensation committee (the “Compensation Committee”) will consider
the outcome of the vote when making future decisions regarding executive compensation. Abstentions and Broker Non-Votes will not be included
in determining the number of votes cast and will have no effect on this proposal. Stockholders have no appraisal or dissenters’
rights in connection with this proposal.
Ratification
of Selection of Independent Registered Public Accounting Firm. The affirmative vote of a majority of all the votes cast at the Annual
Meeting in person or by proxy is required to ratify the appointment of Marcum LLP to serve as the Company’s independent registered
public accounting firm for the fiscal year ending December 31, 2023. Abstentions and Broker Non-Votes will not be included in determining
the number of votes cast and will have no effect on this proposal. Stockholders have no appraisal or dissenters’ rights in connection
with this proposal.
Additional
Solicitation. If there are not enough votes to approve any proposals at the Annual Meeting, the stockholders who are represented
may adjourn the Annual Meeting to permit the further solicitation of proxies. The persons named as proxies will vote those proxies for
such adjournment, unless marked to be voted against the proposal for which an adjournment is sought, to permit the further solicitation
of proxies. Also, a stockholder vote may be taken on one or more of the proposals in this Proxy Statement prior to any such adjournment
if there are sufficient votes for approval thereof.
Information
Regarding This Solicitation
The
Company will bear the expense of the solicitation of proxies for the Annual Meeting, including the cost of preparing, printing and mailing
this Proxy Statement, the accompanying Notice of Annual Meeting of Stockholders, the proxy card and the Notice of Internet Availability
of Proxy Materials.
We
have requested that brokers, nominees, fiduciaries and other persons holding shares in their names, or in the name of their nominees,
which are beneficially owned by others, forward the proxy materials to, and obtain proxies from, such beneficial owners. We will reimburse
such persons for their reasonable out-of-pocket expenses in so doing.
In
addition to the solicitation of proxies by the use of the mails, proxies may be solicited personally and by telephone, facsimile or electronic
transmission by directors, officers or employees of the Company without special compensation therefor.
Stockholders
may also provide their voting instructions by telephone or through the internet. These options require stockholders to input the control
number which is located on each proxy card and Notice of Internet Availability of Proxy Materials. After inputting this number, stockholders
will be prompted to provide their voting instructions. Stockholders will have an opportunity to review their voting instructions and
make any necessary changes before submitting their voting instructions and terminating the telephone call or internet link. Stockholders
who vote via the internet, in addition to confirming their voting instructions prior to submission, will also receive an e-mail confirming
their instructions upon request.
If
a stockholder wishes to participate in the Annual Meeting but does not wish to give a proxy by telephone or the internet, the stockholder
may still vote their proxy by submitting the proxy card originally sent with this Proxy Statement. To do so, the stockholder is required
to indicate his, her or its instructions on the proxy card, date and sign the proxy card, and mail the proxy card promptly in the envelope
provided, which requires no postage if mailed in the United States. Such stockholder must allow sufficient time for the proxy card to
be received on or before 11:59 p.m., Eastern Time, on May 30, 2023.
Any
proxy given pursuant to this solicitation may be revoked by notice from the person giving the proxy at any time before it is exercised.
Any such notice of revocation should be provided in writing and signed by the stockholder in the same manner as the proxy being revoked
and delivered to the Company’s proxy tabulator.
The
U.S. Securities and Exchange Commission (“SEC”) has adopted rules that permit companies and intermediaries (e.g.,
brokers) to satisfy the delivery requirements for proxy statements and annual reports with respect to two or more stockholders sharing
the same address by delivering a single proxy statement and annual report addressed to those stockholders. This process, which is commonly
referred to as “householding,” potentially means extra convenience for stockholders and cost savings for companies.
A
number of brokerages and other institutional holders of record have implemented householding. A single proxy statement will be delivered
to multiple stockholders sharing an address unless contrary instructions have been received from the affected stockholders. If you have
received notice from your broker that it will be householding communications to your address, householding will continue until you are
notified otherwise or until you revoke your consent. If, at any time, you no longer wish to participate in householding and would prefer
to receive a separate proxy statement, please notify your broker.
Stockholders
who currently receive multiple copies of the proxy statement at their addresses and would like to request information about householding
of their communications should contact their brokers or other intermediary holder of record. You can notify us by sending a written request
to: Allison Green, Corporate Secretary, SuRo Capital Corp., 640 Fifth Avenue, 12th Floor, New York, New York 10019, or by calling (212)
931-6331.
Notice
of Internet Availability of Proxy Materials
In
accordance with regulations promulgated by the SEC, the Company has made this Proxy Statement, the Notice of Annual Meeting of Stockholders
and the Annual Report available to stockholders on the internet. Stockholders may (i) access and review the Company’s proxy materials,
(ii) authorize their proxies, and/or (iii) elect to receive future proxy materials by electronic delivery via the internet address provided
in this Proxy Statement and the Notice of Internet Availability of Proxy Materials.
Electronic
Delivery of Proxy Materials
Pursuant
to the rules adopted by the SEC, the Company furnishes proxy materials by email to those stockholders who have elected to receive their
proxy materials electronically. While the Company encourages stockholders to take advantage of electronic delivery of proxy materials,
which helps to reduce the environmental impact of annual meetings and the cost associated with the physical printing and mailing of materials,
stockholders who have elected to receive proxy materials electronically by email, as well as beneficial owners of shares of the Company’s
common stock held by a broker or custodian, may request a printed set of proxy materials. The Notice of Internet Availability of Proxy
Materials contains instructions on how you can elect to receive a printed copy of this Proxy Statement and the Annual Report.
Security
Ownership of Certain Beneficial Owners and Management
The
following table sets forth, as of the Record Date, information with respect to the beneficial ownership of each current director, the
director-nominees, the Company’s executive officers, and each person, if any, known to us to beneficially own 5.0% or more of the
outstanding shares of our common stock.
Beneficial
ownership is determined in accordance with the rules and regulations of the SEC. These rules generally provide that a person is the beneficial
owner of securities if such person has or shares the power to vote or direct the voting thereof, or to dispose or direct the disposition
thereof or has the right to acquire such powers within 60 days. Ownership information for those persons who beneficially own 5.0% or
more of our shares of common stock pursuant to these rules is based upon reports filed by such persons with the SEC and other information
obtained from such persons, if available. The percentage of beneficial ownership in the following table is based on 28,338,580 shares
of our common stock outstanding as of April 5, 2023.
Unless
otherwise indicated, to our knowledge, each stockholder listed below has sole voting and/or investment power with respect to the shares
beneficially owned by the stockholder, except to the extent authority is shared by their spouses under applicable law.
Our
directors are divided into two groups — interest directors and independent directors. Interested directors are “interested
persons” as defined in Section 2(a)(19) of the 1940 Act, and independent directors are all other directors.
| Name and Address of Beneficial Owner | |
Type of Ownership | |
Number of
Shares Owned
Beneficially(1) | | |
Percentage
of Class | |
| Interested Directors | |
| |
| | | |
| | |
| Mark D. Klein(2) | |
Direct | |
| 957,496 | | |
| 3.38 | % |
| Independent Directors(3) | |
| |
| | | |
| | |
| Leonard A. Potter | |
Direct | |
| 67,404 | | |
| * | |
| Marc Mazur | |
Direct | |
| 30,539 | | |
| * | |
| Ronald M. Lott | |
Direct | |
| 12,248 | | |
| * | |
| Lisa Westley | |
Direct | |
| 20,420 | | |
| * | |
| Executive Officers | |
| |
| | | |
| | |
| Allison Green(4) | |
Direct | |
| 109,547 | | |
| * | |
| Executive officers and directors as a group (6 persons)(5) | |
| |
| 1,197,654 | | |
| 4.23 | % |
*
Represents less than one percent (1.0%)
| (1) | Beneficial
ownership has been determined in accordance with Rule 13d-3 under the Securities Exchange
Act of 1934, as amended (the “Exchange Act”). |
| | |
| (2) | Includes
(i) 2,659 shares owned by Mr. Klein’s spouse, which may be deemed to be beneficially
owned by Mr. Klein, and (ii) 263,316 restricted shares granted under the SuRo Capital Corp.
Amended and Restated 2019 Equity Incentive Plan (the “Amended Equity Incentive Plan”)
on February 10, 2021, December 10, 2021 and February 9, 2022, including shares acquired in
connection with dividends thereon that are deemed restricted shares, all of which are subject
to certain vesting schedules. |
| | |
| (3) | Includes
6,684 restricted shares granted under the Amended Equity Incentive Plan, including shares
acquired in connection with dividends thereon that are deemed restricted shares, all of which
vest in full on the date of the Annual Meeting. |
| | |
| (4) | Includes
42,199 restricted shares granted under the Amended Equity Incentive Plan on February 10,
2021 and February 9, 2022, including shares acquired in connection with dividends thereon
that are deemed restricted shares, all of which are subject to certain vesting schedules. |
| | |
| (5) | The
address for each of the directors and officers is c/o SuRo Capital Corp., 640 Fifth Avenue,
12th Floor, New York, New York 10019. |
Set
forth below is the dollar range of equity securities beneficially owned by each of our directors as of the Record Date.
| Name
of Director | |
| Dollar Range
of Equity
Securities Owned Beneficially(1)(2) | |
| Interested Directors: | |
| | |
| Mark D. Klein | |
| Over
$100,000 | |
| Independent Directors: | |
| | |
| Leonard A. Potter | |
| Over
$100,000 | |
| Marc Mazur | |
| Over
$100,000 | |
| Ronald M. Lott | |
| $10,001
– $50,000 | |
| Lisa Westley | |
| $50,000
– $100,000 | |
| (1) | Dollar
ranges are as follows: None, $1 – $10,000, $10,001 – $50,000,
$50,001 – $100,000, or Over $100,000. |
| | |
| (2) | The
dollar range of equity securities beneficially owned in us is based on the closing price
for our common stock of $3.62 per share on the Record Date on the Nasdaq Global Select
Market. Beneficial ownership has been determined in accordance with Rule 16a-1(a)(2) of the
Exchange Act. |
Delinquent
Section 16(a) Reports
Section
16(a) of the Exchange Act requires our directors and executive officers, and any persons who own 10% or more of our voting stock, to
file reports of ownership and changes in ownership of our equity securities with the SEC. Directors, executive officers and 10% or more
holders are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file. Based solely on a review of the
copies of those forms filed with the SEC, or written representations that no such forms were required, except for (1) one transaction
reported late by Mark D. Klein, our Chief Executive Officer, President, and Chairman of our Board, and (2) one transaction reported late
by Allison Green, our Chief Financial Officer, Chief Compliance Officer, Treasurer and Corporate Secretary, each of which was due to
inadvertent third party administrative delay and each which were subsequently reported by filing a Form 4, we believe that our directors,
executive officers and 10% or more beneficial owners (if any) complied with all Section 16(a) filing requirements during the fiscal year
ended December 31, 2022.
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.
Mark
D. Klein and Lisa Westley 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 2026. If elected, Ms. Westley 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 Compensation
Committee. Mr. Klein and Ms. Westley 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 director-nominee should decline or be unable to serve as 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
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 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 Mr. Klein and Ms. Westley, 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, director-nominees or 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:
Name |
|
Age |
|
Position |
|
Director
Since |
|
Expiration
of Term |
| Interested
Directors: |
|
|
|
|
|
|
|
|
| Mark
D. Klein |
|
61 |
|
Chief
Executive Officer, President, and Chairman and Director |
|
2011 |
|
2023 |
| Independent
Directors: |
|
|
|
|
|
|
|
|
| Ronald
M. Lott |
|
63 |
|
Director |
|
2015 |
|
2025 |
| Marc
Mazur |
|
63 |
|
Director |
|
2017 |
|
2025 |
| Lisa
Westley |
|
57 |
|
Director |
|
2019 |
|
2023 |
| Leonard
A. Potter |
|
61 |
|
Director |
|
2011 |
|
2024 |
Interested
Director
Mr.
Klein is an “interested person,” as defined in the Investment Company Act of 1940, as amended (the “1940 Act”),
of the Company due to his position as our Chief Executive Officer and President.
Mark
Klein has served as Chairman of the Board of Directors since December 2020, as our President since May 2018, as our Chief Executive
Officer since August 2017 and as a member of our Board of Directors since 2011. In addition, he served as a consultant to GSV Asset Management,
LLC, the Company’s former external investment adviser, from 2012 to March 2019. Mr. Klein has served on the Board of Directors
of 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 since December 2020, Churchill Capital Corp VI since February 2021
and Churchill Capital Corp VII since February 2021, each of which is a special purpose acquisition company. Mr. Klein has also served
as a Managing Member of M. Klein & Company, LLC, an investment banking firm, since 2010. Since 2020, he has been on the Board of
Directors of Learneo (formerly Course Hero), an education technology company. In addition, Mr. Klein served as an investment adviser
at B. Riley Wealth Management (formerly MK Capital Advisors, LLC), a wealth management firm and registered investment adviser and broker-dealer,
from April 2012 to June 2019. Mr. Klein was a Director of National Holding Corporations, an investment banking and asset management firm,
from 2011 to 2014, where he served as Chief Executive Officer and Co-Chairman from March 2013 to December 2014. Mr. Klein received a
bachelor’s degree, with high distinction, in Business Administration from Emory University and an M.B.A. from the J.L. Kellogg
Graduate 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
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 Capital Ltd. (NASDAQ: SLRC), a business development company, 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 business development company. 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, and as a member of the board of directors of GX Acquisition Corp. II and Celularity
Inc. since March 2021 and July 2021, respectively. 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. 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 2014-2018, 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.
Information
about the Executive Officers Who Are Not Directors
The
following information pertains to our executive officers who are not directors of the Company, as of the Record Date.
| Name |
|
Age |
|
Position |
|
Executive
Officer Since |
| Allison
Green |
|
37 |
|
Chief
Financial Officer, Chief Compliance Officer, Treasurer, and Corporate Secretary |
|
2018 |
Allison
Green has served as our Chief Financial Officer since April 2019, as our Chief Compliance Officer since March 2020, and as our
Treasurer and Corporate Secretary since June 2018. Ms. Green served as our Controller from July 2017 to May 2019 and as our Senior Vice
President of Finance from May 2018 to April 2019. She also served as the Vice President of GSV Asset Management, LLC, the Company’s
former external investment adviser, from July 2017 to March 2019. Prior to joining the Company and GSV Asset Management, LLC, she was
the Controller and an accounting and financial consultant at Rise Companies Corp., the parent company of Fundrise, a Washington DC-based
crowdfunded real estate investment platform, from April 2016 to April 2017. Prior to Rise Companies Corp., Ms. Green was the Controller
at the Girl Scout Council of the Nation’s Capital and a ProInspire Fellow at the Council from September 2013 to April 2016. Ms.
Green was a member of the Fund Management and Coinvestment teams at The Carlyle Group, focusing on Europe and US Real Estate and Energy
Funds from June 2009 to August 2013 and began her career at Deloitte & Touche LLP in Los Angeles as an audit associate focused on
financial services clients. Ms. Green graduated with degrees in Accounting and Finance from the University of Southern California.
Board
Diversity Matrix
The
table below provides certain highlights of the composition of our Board members, including the director-nominees, as of the Record Date.
Each of the categories listed in the table below has the meaning as it is used in Nasdaq Rule 5605(f).
| Board
Diversity Matrix |
| Total
Number of Directors |
|
5 |
| |
|
Female |
|
Male |
|
Non-Binary |
|
Did
Not Disclose Gender |
| Part
I: Gender Identity |
|
|
|
|
|
|
|
|
| Directors |
|
1 |
|
4 |
|
0 |
|
0 |
| Part
II: Demographic Background |
|
|
|
|
|
|
|
|
| African
American or Black |
|
0 |
|
1 |
|
0 |
|
0 |
| Alaskan
Native or Native American |
|
0 |
|
0 |
|
0 |
|
0 |
| Asian |
|
1 |
|
0 |
|
0 |
|
0 |
| Hispanic
or Latinx |
|
0 |
|
0 |
|
0 |
|
0 |
| Native
Hawaiian or Pacific Islander |
|
0 |
|
0 |
|
0 |
|
0 |
| White |
|
0 |
|
3 |
|
0 |
|
0 |
| Two
or More Races or Ethnicities |
|
0 |
|
0 |
|
0 |
|
0 |
| LGBTQ+ |
|
0 |
| Did
Not Disclose Demographic Background |
|
0 |
CORPORATE
GOVERNANCE
Director
Independence
In
accordance with rules of the Nasdaq Global Select Market, our Board of Directors annually determines each director’s independence.
We do not consider a director independent unless the Board of Directors has determined that he or she has no material relationship with
us and that he or she satisfied the independence requirements of the 1940 Act. We monitor the relationships of our directors and officers
through a questionnaire each director completes no less frequently than annually and updates periodically as information provided in
the most recent questionnaire changes.
In
order to evaluate the materiality of any such relationship, the Board of Directors uses the definition of director independence set forth
in the rules promulgated by the Nasdaq Global Select Market. The applicable Nasdaq Global Select Market rules provide that a director
of a business development company (“BDC”) shall be considered to be independent if he or she is not an “interested
person” of SuRo Capital, as defined in Section 2(a)(19) of the 1940 Act.
The
Board of Directors has determined that each of Messrs. Potter, Lott, and Mazur and Ms. Westley is independent and has no relationship
with us, except as a director and/or stockholder. Mark D. Klein is not independent due to his position as our Chief Executive Officer
and President.
Board
Leadership Structure
Our
Board of Directors monitors and performs an oversight role with respect to the business and affairs of SuRo Capital, including with respect
to investment practices and performance, compliance with regulatory requirements and the services, expenses and performance of service
providers to SuRo Capital. Among other things, our Board of Directors approves the appointment of our executive officers, reviews and
monitors the services and activities performed by our executive officers and approves the engagement, and reviews the performance of,
our independent public accounting firm.
Under
our bylaws, our Board of Directors may designate a Chair to preside over the meetings of the Board of Directors and meetings of the stockholders
and to perform such other duties as may be assigned to him by the Board of Directors. We do not have a fixed policy as to whether the
Chair of the Board of Directors should be an independent director and believe that we should maintain the flexibility to select the Chair
and reorganize the leadership structure, from time to time, based on the criteria that is in the best interests of SuRo Capital and its
stockholders at such times.
Our
Board of Directors has appointed Mr. Klein to serve as Chair of the Board of Directors. Mr. Klein is an “interested person”
of the Company (as defined in Section 2(a)(19) of the 1940 Act) due to his position as our Chief Executive Officer and President. Our
Board of Directors believes that Mr. Klein is best situated to serve as Chair of the Board of Directors given his history with the Company,
familiarity with its business and industry, extensive knowledge of the financial and investment banking industries and experience as
a director of other publicly traded companies. The Company’s independent directors bring experience, oversight and expertise from
outside the Company and industry, while Mr. Klein brings Company-specific and industry-specific experience and expertise. We believe
that the Company is best served through the existing leadership structure of the Board of Directors, as it promotes strategy development
and execution and effective corporate governance, and Mr. Klein’s relationship with management provides an effective bridge and
encourages an open dialogue between management and the Board of Directors, ensuring that both groups act with a common purpose.
Our
Board of Directors has appointed Mr. Potter, one of our independent directors, to serve as lead independent director. The lead independent
director presides over executive sessions of the independent directors and serves as a key point person for interactions and communications
between management and the independent directors. Our corporate governance policies include regular meetings of the independent directors
in executive session without the presence of interested directors and management, the establishment of audit, valuation, compensation
and nominating and corporate governance committees comprised solely of independent directors, and the appointment of a Chief Compliance
Officer, with whom the independent directors meet regularly without the presence of interested directors and other members of management,
for administering our compliance policies and procedures.
We
recognize that different board leadership structures are appropriate for companies in different situations. We intend to re-examine our
corporate governance policies on an ongoing basis to ensure that they continue to meet the Company’s needs.
Board’s
Role in Risk Oversight
Our
Board of Directors performs its risk oversight function primarily through (a) its four standing committees, each comprised solely of
independent directors, which report to the entire Board of Directors and (b) active monitoring of our Chief Compliance Officer and our
compliance policies and procedures and performance thereunder.
As
described below in more detail under “Committees of the Board of Directors,” the Audit Committee, Nominating and Corporate
Governance Committee, Compensation Committee and Valuation Committee assist the Board of Directors in fulfilling its risk oversight responsibilities.
The Audit Committee’s risk oversight responsibilities include overseeing our accounting and financial reporting processes, our
systems of internal controls regarding finance and accounting, and audits of our financial statements. The Nominating and Corporate Governance
Committee’s risk oversight responsibilities include selecting, researching and nominating directors for election by our stockholders,
developing and recommending to the Board of Directors a set of corporate governance principles and overseeing the evaluation of the Board
of Directors and our management. The Compensation Committee’s risk oversight responsibilities include assisting the Board of Directors
with matters related to compensation generally, including director and executive officer compensation. The Valuation Committee’s
risk oversight responsibilities include establishing guidelines and making recommendations to our Board of Directors regarding the valuation
of our investments.
Our
Board of Directors also performs its risk oversight responsibilities with the assistance of the Chief Compliance Officer. The Board of
Directors annually reviews a written report from the Chief Compliance Officer discussing the adequacy and effectiveness of our compliance
policies and procedures and those of our service providers. The Chief Compliance Officer’s annual report addresses, at a minimum,
(a) the operation of our compliance policies and procedures and those of our service providers since the last report; (b) any material
changes to such policies and procedures since the last report; (c) any recommendations for material changes to such policies and procedures
as a result of the Chief Compliance Officer’s annual review; and (d) any compliance matter that has occurred since the date of
the last report about which the Board of Directors would reasonably need to know to oversee our compliance activities and risks. In addition,
the Chief Compliance Officer meets separately in executive session with the independent directors at least once each year.
Our
Board of Directors’ role in risk oversight is effective and appropriate given the extensive regulation to which we are already
subject as a BDC. As a BDC, we are required to comply with certain regulatory requirements that control the levels of risk in our business
and operations. For example, our ability to incur indebtedness is limited such that our asset coverage must equal at least 200% (or 150%
if certain requirements under the 1940 Act are met) immediately after each time we incur indebtedness, we generally have to invest at
least 70% of our gross assets in “qualifying assets,” and we are not generally permitted to invest in any portfolio company
in which one of our affiliates currently has an investment.
We
recognize that different board roles in risk oversight are appropriate for companies in different situations. We intend to re-examine
the manners in which our Board of Directors administers its oversight function on an ongoing basis to ensure that they continue to meet
our needs.
Committees
of the Board of Directors
Our
Board of Directors has established an Audit Committee, Nominating and Corporate Governance Committee, a Valuation Committee and a Compensation
Committee. During the fiscal year ended December 31, 2022, our Board of Directors held six meetings, our Audit Committee held four meetings,
our Nominating and Corporate Governance Committee held one meeting, our Valuation Committee held five meetings and our Compensation Committee
held six meetings. All incumbent directors attended at least 75% of the aggregate number of meetings of the Board of Directors and of
the respective committees on which they serve. We require each director to make a diligent effort to attend all board and committee meetings,
as well as each annual meeting of stockholders. In 2022, all of our directors attended the annual meeting of stockholders.
Audit
Committee
The
Audit Committee operates pursuant to a charter approved by our Board of Directors, which sets forth the responsibilities of the Audit
Committee and which is made available on our website at https://investors.surocap.com/corporate-governance. The Audit Committee’s
responsibilities include selecting our independent registered public accounting firm, reviewing with such independent registered public
accounting firm the planning, scope and results of its audit of our financial statements, pre-approving the fees for services performed,
reviewing with the independent registered public accounting firm the adequacy of our internal control systems, reviewing our annual financial
statements and periodic filings and receiving our audit reports and financial statements.
The
Audit Committee is currently composed of Ms. Westley and Messrs. Lott, Mazur and Potter, each of whom is considered independent under
the rules of the Nasdaq Global Select Market and is not an “interested person” of SuRo Capital as that term is defined in
Section 2(a)(19) of the 1940 Act. Mr. Mazur serves as Chair of the Audit Committee. Our Board of Directors has determined that Mr. Potter
is an “audit committee financial expert” as that term is defined under Item 407 of Regulation S-K, as promulgated under the
Exchange Act. Each of Ms. Westley and Messrs. Lott, Mazur and Potter meets the current independence and experience requirements of Rule
10A-3 of the Exchange Act.
Nominating
and Corporate Governance Committee
The
Nominating and Corporate Governance Committee operates pursuant to a charter approved by our Board of Directors, which is made available
on our website at https://investors.surocap.com/corporate-governance. The members of the Nominating and Corporate Governance Committee
are Ms. Westley and Messrs. Potter, Lott and Mazur, each of whom is considered independent under the rules of the Nasdaq Capital Market
and is not an “interested person” of SuRo Capital as that term is defined in Section 2(a)(19) of the 1940 Act. Mr. Lott serves
as Chair of the Nominating and Corporate Governance Committee.
The
Nominating and Corporate Governance Committee is responsible for selecting, researching and nominating directors for election by our
stockholders, selecting nominees to fill vacancies on the Board of Directors or a committee thereof, developing and recommending to the
Board of Directors a set of corporate governance principles and overseeing the evaluation of the Board of Directors and our management.
The Nominating and Corporate Governance Committee’s policy is to consider nominees properly recommended by our stockholders in
accordance with our charter, bylaws and applicable law. See “Submission of Stockholder Proposals” in this Proxy Statement
for more information.
The
Nominating and Corporate Governance Committee seeks candidates who possess the background, skills and expertise to make a significant
contribution to us, our stockholders and our Board of Directors. In considering possible candidates for election as a director, the Nominating
and Corporate Governance Committee takes into account, in addition to such other factors as it deems relevant, the desirability of selecting
directors who:
| ● | are
of the highest character and integrity and have an inquiring mind, vision, a willingness
to ask hard questions and the ability to work well with others; |
| | | |
| ● | are
free of any conflict of interest that would violate any applicable law or regulation or interfere
with the proper performance of the responsibilities of a director; |
| | | |
| ● | are
willing and able to devote sufficient time to the affairs of SuRo Capital and are diligent
in fulfilling the responsibilities of a member of the Board of Directors and a member of
any committees thereof (including developing and maintaining sufficient knowledge
of SuRo Capital and the specialty finance industry in general; reviewing and analyzing reports
and other information important to responsibilities of the Board of Directors and any committee
thereof; preparing for, attending and participating in meetings of the Board of Directors
and meetings of any committee thereof; and satisfying appropriate orientation and continuing
education guidelines); and |
| | | |
| ● | have
the capacity and desire to represent the balanced, best interests of the stockholders of
SuRo Capital as a whole and not primarily a special interest group or constituency. |
The
Nominating and Corporate Governance Committee has not adopted a formal policy with regard to the consideration of diversity in identifying
director-nominees. In determining whether to recommend a director-nominee, the Nominating and Corporate Governance Committee considers
and discusses diversity, among other factors, with a view toward the needs of the Board of Directors as a whole. When identifying and
recommending director-nominees, the Nominating and Corporate Governance Committee generally conceptualizes diversity expansively to include,
without limitation, concepts such as race, gender, national origin, differences of viewpoint, professional experience, education, skill
and other qualities that contribute to the Board of Directors. The Nominating and Corporate Governance Committee believes that the inclusion
of diversity as one of many factors considered in selecting director-nominees is consistent with the Nominating and Corporate Governance
Committee’s goal of creating a Board of Directors that best serves our needs and the interests of our stockholders.
Valuation
Committee
The
Valuation Committee establishes guidelines and makes recommendations to our Board of Directors regarding the valuation of our investments.
The Board of Directors and Valuation Committee utilize the services of nationally recognized third-party valuation firms to help determine
the fair value of our securities that are not publicly traded and for which there are no readily available market quotations including
securities that, while listed on a private securities exchange, have not actively traded. The Valuation Committee is presently composed
of Ms. Westley and Messrs. Lott, Mazur and Potter, each of whom is considered independent under the rules of the Nasdaq Global Select
Market and is not an “interested person” of SuRo Capital as that term is defined in Section 2(a)(19) of the 1940 Act. Mr.
Potter serves as Chair of the Valuation Committee.
Compensation
Committee
The
Compensation Committee operates pursuant to a charter approved by our Board of Directors, which is made available on our website at https://investors.surocap.com/corporate-governance.
The Compensation Committee is responsible for reviewing and approving compensation and reviewing and making recommendations to the Board
of Directors regarding incentive compensation and equity-based plans. In connection with reviewing and approving compensation of our
executive officers, the Compensation Committee, among other things, (i) considers the Company’s goals and objectives relevant to
executive officer compensation; (ii) evaluates each executive officer’s performance in light of such goals and objectives and set
each executive officer’s compensation based on such evaluation and such other factors as the Compensation Committee deems appropriate
and in the best interests of the Company (including the cost to the Company of such compensation); and (iii) determines any long-term
incentive component of each executive officer’s compensation based on awards given to such executive officer in past years (if
any), the Company’s performance, stockholder return and the value of similar incentive awards relative to such targets at comparable
companies and such other factors as the Compensation Committee deems appropriate and in the best interests of the Company (including
the cost to the Company of such compensation). In addition, the Compensation Committee is responsible for assisting the Board of Directors
with matters related to compensation generally, including director and executive officer compensation. The Compensation Committee has
the authority to engage compensation consultants and to delegate their duties and responsibilities to a member or to a subcommittee of
the Compensation Committee.
The
Compensation Committee is presently composed of Ms. Westley and Messrs. Lott, Potter and Mazur, each of whom is considered independent
under the rules of the Nasdaq Global Select Market and is not an “interested person” of SuRo Capital as that term is defined
in Section 2(a)(19) of the 1940 Act. Ms. Westley serves as Chair of the Compensation Committee.
Compensation
Committee Interlocks and Insider Participation
During
the fiscal year ended December 31, 2022, no member of the Compensation Committee was an officer, former officer or employee of ours or
had any relationship with the Company requiring disclosure under Item 404 of Regulation S-K. Each member of the Compensation Committee
is independent for purposes of the applicable listing standards of the Nasdaq Global Select Market. In addition, no Compensation Committee
interlocking relationships, as set forth under Item 407(e) of Regulation S-K, existed during the fiscal year ended December 31, 2022
between any member of the Board of Directors, the Compensation Committee or our executive officers.
Communication
with the Board of Directors
Stockholders
with questions about us are encouraged to contact our Investor Relations Department. However, if stockholders believe that their questions
have not been addressed, they may communicate with our Board of Directors by sending their communications to SuRo Capital Corp., Board
of Directors, 640 Fifth Avenue, 12th Floor, New York, New York 10019. Stockholders should indicate clearly the director or directors
to whom the communication is being sent so that each communication may be forwarded directly to the appropriate director(s).
All
communications involving accounting, internal accounting controls and auditing matters, possible violations of or non-compliance with
applicable legal and regulatory requirements or policies, or retaliatory acts against anyone who makes such a complaint or assists in
the investigation of such a complaint, will be referred to the Audit Committee.
The
acceptance and forwarding of a communication to any director does not imply that the director owes or assumes any fiduciary duty to the
person submitting the communication, all such duties being only as prescribed by applicable law.
Hedging,
Speculative Trading and Pledging of Securities
Our
insider trading policy prohibits our directors, executive officers and employees from engaging in any short-term trading, short sales
and other speculative transactions involving our securities, including buying or selling puts or calls or other derivative securities
based on our securities. In addition, such persons are prohibited under our insider trading policy from (i) entering into hedging or
monetization transactions (such as zero-cost collars and forward-sale contracts) or similar arrangements, except in circumstances that
are pre-approved by our Chief Compliance Officer, and (ii) pledging our securities in a margin account or as collateral for a loan, except
that our securities may be pledged as collateral for a loan (not including margin debt) if such person clearly demonstrates the financial
capacity to repay the loan without resort to the pledged securities and such transaction is pre-approved by our Chief Compliance Officer.
Code
of Business Conduct and Ethics
We
have adopted a code of business conduct and ethics which applies to, among others, our senior officers, including our Chief Executive
Officer and President and our Chief Financial Officer, as well as any of our directors and employees. Our code of business conduct and
ethics is available on our website at https://investors.surocap.com/corporate-governance. We will report any material amendments
to or waivers of a required provision of our code of conduct and/or corporate governance guidelines on our website and/or in a Current
Report on Form 8-K filed with the SEC.
COMPENSATION
OF DIRECTORS
The
following table sets forth the compensation that we paid during the year ended December 31, 2022 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.
| Name | |
Fees
Earned or Paid in Cash | | |
Stock
Awards(1) | | |
All
Other Compensation(2) | | |
Total | |
| Leonard A. Potter | |
$ | 110,000 | | |
$ | 50,000 | | |
$ | 556 | | |
$ | 160,556 | |
| Ronald M. Lott | |
$ | 110,000 | | |
$ | 50,000 | | |
$ | 556 | | |
$ | 160,556 | |
| Marc Mazur | |
$ | 115,000 | | |
$ | 50,000 | | |
$ | 556 | | |
$ | 165,556 | |
| Lisa Westley | |
$ | 110,000 | | |
$ | 50,000 | | |
$ | 556 | | |
$ | 165,556 | |
| (1) | Each
of Messrs. Potter, Lott and Mazur and Ms. Westley (the “Independent Directors”)
were granted 6,684 restricted shares of the Company’s common stock on June 1, 2022
under the Amended Equity Incentive Plan, which shares vest in full on the date of the Annual
Meeting. As such, these restricted shares were unvested and outstanding as of December 31,
2022. 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. |
| (2) | During
the fiscal year ended December 31, 2022, each of the Independent Directors accrued and/or
received cash dividends on restricted shares granted and accrued under the Amended Equity
Incentive Plan. One such dividend, comprised of cash and declared on March 8, 2022, accrued
on 5,052 restricted shares of the Company’s common stock, of which 3,770 restricted
shares were granted to each of the Independent Directors on July 9, 2021 and generated an
additional 1,282 shares in stock dividends during the fiscal year ended December 31, 2021.
The accrued cash dividends were paid to the Independent Directors upon vest on June 1, 2022. |
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 receives an annual cash fee of $15,000 and each Chair of the other committees receives an annual fee of $10,000
for his or her additional services in these capacities. No compensation is paid to directors who are “interested persons”
of SuRo Capital (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).
COMPENSATION
DISCUSSION AND ANALYSIS
The
following Compensation Discussion and Analysis, or CD&A, provides information relating to the compensation of SuRo Capital’s
Named Executive Officers, or NEOs, for 2022, who were:
| ● | Mark
D. Klein, Chairman and Member of the Board of Directors, Chief Executive Officer and President;
and |
| ● | Allison
Green, Chief Financial Officer, Chief Compliance Officer, Treasurer, and Corporate Secretary. |
We
are an internally managed BDC and our senior management team consists of Mark D. Klein and Allison Green. These executive officers have
entered into employment agreements with us and are compensated according to the terms of such agreements, which are described below under
“Employment Agreements.”
Compensation
Philosophy and Objectives
Our
executive compensation program is designed to attract and retain key executives, motivate them to achieve our business objectives, reward
them for performance, encourage them to think and act like our stockholders and align their interests with those of our stockholders.
The structure of the NEOs’ employment agreements and our incentive compensation programs are designed to encourage and reward the
following, among other things:
| ● | sourcing
and pursuing attractively priced investment opportunities in the securities of rapidly growing
venture-capital-backed emerging companies; |
| | | |
| ● | accomplishing
our investment objectives; |
| | | |
| ● | ensuring
we allocate capital in the most effective manner possible; and |
| | | |
| ● | creating
stockholder value. |
The
compensation program for our NEOs is structured to reflect what we believe to be appropriate practices in corporate governance and executive
compensation. The Compensation Committee has the primary authority to establish compensation for the NEOs and administers all executive
compensation arrangements and policies. SuRo Capital’s Chief Executive Officer assists the Compensation Committee by providing
recommendations regarding the compensation of NEOs, excluding himself. The Compensation Committee exercises its discretion by modifying
or accepting these recommendations. The Chief Executive Officer and other members of management routinely attend a portion of the Compensation
Committee meetings. However, the Compensation Committee often meets in executive session without the Chief Executive Officer or other
members of management when discussing compensation matters and on other occasions as determined by the Compensation Committee.
The
Compensation Committee takes into account competitive market practices with respect to the salaries and total direct compensation of
the NEOs and other key employees. Members of the Compensation Committee consider market practices by reviewing public and non-public
information for executives at comparable companies and funds. The Compensation Committee also has the authority to utilize compensation
consultants to better understand competitive pay practices and has retained such expertise in the past.
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 LLC (“Mercer”) as an independent compensation consultant to provide such compensation
consulting services for the 2022 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
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 SuRo Capital, 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.
Assessment
of Company Performance
The
Compensation Committee believes that sustained financial performance, consistent stockholder returns and proportional employee compensation
are essential components for the Company’s long-term business success. The Company typically makes multiple year investments in
its portfolio companies. However, the Company’s business plan involves taking on investment risks over a range of time periods.
Accordingly, much emphasis is focused on maintaining the stability of net asset values as well as the continuity of earnings to pass
through to stockholders in the form of increased net asset value per share and dividends. The maintenance and growth of net asset value
and overall operating performance of the Company are key metrics in the Compensation Committee’s assessment of financial performance.
SuRo
Capital’s primary strategy is to maximize our investment portfolio’s total return, principally by realizing capital gains
from equity and equity-related investments and generating current income from debt and equity-related investments. Such capital gains
and current income are key drivers to stockholder returns and value. Achieving this strategy requires a methodical asset acquisition
approach and active monitoring and management of our investment portfolio over time. A meaningful part of the Company’s employee
base is dedicated to the maintenance of asset values, the generation of new investment opportunities and the expansion of capital gains
and recurring income to sustain and grow our net asset value and dividends, and thus stockholder returns and value. The Compensation
Committee believes that stability of the management team is critical to achieving successful implementation of the Company’s strategies.
Further, in establishing and assessing executive salary and performance incentives, the Compensation Committee is more focused on the
Company’s results as compared to its business objectives, rather than the performance of the Company relative to other comparable
companies or industry metrics.
Stockholder
Advisory Vote on Executive Compensation
At
our 2019 Annual Meeting of Stockholders, our stockholders voted, on an advisory basis, to conduct an advisory vote on executive compensation
annually. In accordance with the results of this vote, our Board of Directors determined to implement an advisory vote on executive compensation
annually (beginning with the 2020 Annual Meeting of Stockholders) until the next required vote on the frequency of stockholder votes
on the compensation of executives, which is scheduled to occur at the 2025 Annual Meeting of Stockholders.
At
our 2022 Annual Meeting of Stockholders, our stockholders approved the advisory vote on executive compensation for the 2021 fiscal year
with approximately 70% of the votes cast voting for approval. However, only 8,586,147 votes were cast on such proposal and there were
10,761,978 broker non-votes. We have reviewed and continue to review our executive compensation program such that it recognizes the business
environment in which we operate, attracts and incentivizes qualified executives and other key employees, and is aligned with stockholder
interests.
Executive
Compensation Components
Overview
For
2022, the components of SuRo Capital’s direct compensation for NEOs included:
| ● | annual
cash bonuses and additional cash bonuses; |
| ● | restricted
shares under the Amended Equity Incentive Plan; and |
| ● | other
benefits. |
The
Compensation Committee designs each NEO’s direct compensation package to appropriately reward the NEO for his or her contribution
to the Company. The judgment and experience of the Compensation Committee are weighed with individual and Company performance metrics
and in consultation with the Compensation Committee’s independent third-party compensation consultant and the Company’s Chief
Executive Officer (except with respect to himself) to determine the appropriate mix of compensation for each individual. The Compensation
Committee does not target a specific level of compensation relative to market practice, and only uses such data as a reference point
when establishing compensation levels for NEOs. Cash compensation consisting of base salary and discretionary bonuses tied to achievement
of individual performance goals that are reviewed and approved by the Compensation Committee, as well as corporate objectives, are intended
to motivate NEOs to remain with the Company and work to achieve expected business objectives. Stock-based compensation is awarded based
on performance expectations approved by the Compensation Committee for each NEO. The blend of short-term and long- term compensation
may be adjusted from time to time to balance the Compensation Committee’s views regarding the benefits of current cash compensation
and appropriate retention incentives.
For
additional information regarding the compensation of the NEOs for 2022, please refer to “Compensation of Executive Officers.”
Base
Salary
Base
salary is used to recognize the experience, skills, knowledge, and responsibilities required of the NEOs in their roles. The Compensation
Committee’s goal in setting the base salary levels for the NEOs is to adequately compensate the NEOs for expected base levels of
performance and provide for the adequate retention of the NEOs. In connection with establishing the base salary of each NEO, the Compensation
Committee and management consider a number of factors, including the seniority and experience level of the individual, the functional
role of the position, the level of the individual’s responsibility, the ability to replace the individual, the past base salary
of the individual, the relative number of well-qualified candidates available in our area, and the NEO’s employment agreement.
In addition, the Compensation Committee considers the base salaries paid to comparably situated executive officers and other competitive
market practices. This data is provided to the Compensation Committee by its independent compensation consultant.
Salaries
are reviewed on an annual basis, as well as at the time of promotion or any substantial change in responsibilities. The leading factors
in determining increases in salary level are individual performance and competitive pressures.
In
2022, the Compensation Committee adjusted Ms. Green’s base salary, as stated in the Amendment No. 1 to the Second Amended and Restated
Employment Agreement by and between SuRo Capital and Ms. Green, effective as of March 10, 2022. Ms. Green’s base salary increased
to five hundred thousand dollars ($500,000) to account for increased scope of responsibilities as the chief compliance officer for the
Company. In the event that Ms. Green ceases to act as the chief compliance officer for the Company, the base salary may be reduced accordingly
but not below four hundred and fifty thousand dollars ($450,000) (the base salary in effect immediately prior to Amendment No. 1).
The
amount of annual base salary paid to each NEO for 2022 is presented under the caption entitled “Compensation of Executive Officers — Summary
Compensation Table.” The Compensation Committee believes that the base salaries were competitive in the marketplace and appropriate
for SuRo Capital executives as a key component of an overall compensation package.
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
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. 1 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
2022. 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 not less than one year. In particular, cash bonuses paid to NEOs for 2022 performance included recognition
of the following:
| ● | Dividends
declared and paid by the Company of $3.4 million ($0.11 per share); |
| ● | Net
asset value (“NAV”) of over $7.15 per share as of September 30, 2022; |
| ● | Prudent
investments within the portfolio; |
| ● | Strength
and success of SuRo Capital Sports pipeline; |
| ● | Enhancements
to the overall investment process, including more active public markets monitoring; |
| ● | Maintenance
of strong balance sheet; |
| ● | Maintaining
liquidity and capital flexibility to accomplish the Company’s business objectives; |
| ● | Execution
of Share Repurchase Program and Modified “Dutch Auction” Tender Offer; |
| ● | Continued
efforts to reduce operating expenses, including renegotiation of select contracts; and |
| ● | Expansion
and development of team. |
The
Compensation Committee did not weight these factors and used discretion in determining the cash bonus amount allocated to each executive
for 2022. Overall, the Compensation Committee assessed both Company and individual performance in what was deemed a very challenging
year.
The
Compensation Committee approved the following annual cash bonus and additional cash bonus payments to each NEO:
| ● | Mr.
Klein: $550,000 annual cash bonus plus $600,000 additional bonus |
| ● | Ms.
Green: $315,000 annual cash bonus plus $100,000 additional bonus |
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.
The
Compensation Committee has typically granted equity awards in February, as noted below for 2022. The additional bonuses described above
are in lieu of equity awards that would otherwise have been granted in February 2023. These awards were made in cash considering the
limited shares available under the Amended Equity Incentive Plan and that the net amount from additional bonuses were used to purchase
the Company’s stock. Mr. Klein’s additional bonus of $600,000 was $1.7 million less than the corresponding equity award in
2022, and Ms. Green’s additional bonus of $100,000 was $485,000 less than the corresponding equity award in 2022.
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 SEC’s 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.
During
2022, our NEOs were granted the following restricted shares with the following values under the Amended Equity Incentive Plan:
| ● | Mr.
Klein: $2.3 million awarded in February 2022 |
| ● | Ms.
Green: $585,000 awarded in February 2022 |
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 2022 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 2022.
Risk
Management and Compensation Policies and Practices
We
believe that risks arising from our compensation policies and practices for our employees are not reasonably likely to have a material
adverse effect on the Company. In addition, the Compensation Committee believes that the mix and design of the elements of executive
compensation do not encourage management to assume excessive risks.
The
Compensation Committee has reviewed the elements of executive compensation to determine whether any portion of executive compensation
encourages excessive risk taking and concluded:
| ● | 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; |
| ● | executive
goals are appropriately established across several key metrics and criteria in order to avoid
an outcome where the failure to achieve any individual target would result in a large percentage
loss of compensation; and |
| ● | executives
are encouraged to buy the Company’s common stock and are eligible to receive equity-based
compensation, with multi-year vesting of equity-based awards under the Amended Equity Incentive
Plan accounting for the time horizon of risk. |
Finally,
in addition to the factors described above, discretionary compensation decisions that are under the exclusive purview of the Compensation
Committee include subjective considerations that restrain the influence of formulae or objective-driven determinations that might lead
to excessive risk taking.
Other
Benefits
SuRo
Capital’s NEOs generally participate in the same benefit plans and programs as the Company’s other employees, including comprehensive
medical, dental and vision insurance, short term and long term disability insurance and life insurance.
SuRo
Capital maintains a 401(k) plan for all full-time employees who are at least 21 years of age through which the Company makes non-discretionary
matching contributions to each participant’s plan account on the participant’s behalf. For each participating employee, the
Company’s contribution is a 50% match of the employee’s contributions up to a 6% contribution level, with a maximum annual
regular matching contribution of $12,500 during 2022. All contributions to the plan, including those made by the Company, vest immediately.
The Board of Directors may also, at its sole discretion, provide that the Company will make additional contributions to employee 401(k)
plan accounts, which would also vest immediately. The Company provides no other material benefits, deferred compensation, perquisites
or retirement benefits to the NEOs.
Employment
Agreements
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 and 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 amended and restated the Amended Employment Agreements in their entirety. The Second Amended Employment
Agreements 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. All references to the Second Amended Employment Agreement between the Company and Ms.
Green contained in this proxy statement on Schedule 14A are inclusive of, and reflect the terms of, this Amendment No. 1 to the Second
Amended Employment Agreement by and between the Company and Ms. Green.
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
The
Second Amended Employment Agreements became effective as of April 26, 2021 and have initial terms ending on December 31, 2024, unless
sooner terminated or amended pursuant to their terms. The Second Amended Employment Agreements are subject to automatic renewal upon
completion of the initial 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:
| ● | 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 in good faith. If the termination occurred in 2022, the annual bonus for purposes
of the severance calculation would equal the annualized rate of the annual bonus such executive
earned for the 2021 fiscal year. |
| ● | 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. |
| ● | 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. |
| ● | 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. |
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
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:
| (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); |
| (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; |
| (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 |
| (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. |
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.
1940
Act Restrictions on Company Performance Based Compensation
The
1940 Act provides that a BDC such as SuRo Capital may maintain either an equity incentive plan or a “profit-sharing plan,”
but not both, for its NEOs and other employees. The Compensation Committee believes that equity incentives closely align the interests
of NEOs and employees with those of the Company’s stockholders. Accordingly, SuRo Capital has adopted and maintained an equity
incentive plan for its NEOs and employees since 2019. As a result, the 1940 Act prohibits SuRo Capital from having a “profit-sharing
plan.”
The
term “profit-sharing plan” is very broadly defined in the 1940 Act but in this context is generally viewed as referring to
incentive and other compensation being directly tied to a company’s gross or net income or any other indicia of the company’s
overall financial performance, such as realized gains or losses and unrealized appreciation or depreciation on investments. In this regard,
the SEC has indicated that a compensation program possesses profit-sharing characteristics if a company is obligated to make payments
under the program based on company performance metrics.
Due
to these restrictions imposed by the 1940 Act, the Compensation Committee is not permitted to use nondiscretionary or formulaic Company
performance goals or criteria to determine executive incentive compensation. Instead, the Compensation Committee considers overall Company
performance along with other factors, including individual performance criteria, and uses its discretion in determining the appropriate
compensation for NEOs and other key employees. The Compensation Committee’s objective is to work within the 1940 Act regulatory
framework to establish appropriate compensation levels, maintain pay-for-performance alignment and implement compensation best practices.
Tax
Deductibility of Compensation
Section
162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), generally disallows a tax deduction to public companies
to the extent compensation paid to any “covered employee” exceeds $1.0 million in a given year. To the extent any of our
“covered employees” receives compensation in excess of $1.0 million for any year, SuRo Capital generally cannot deduct such
excess compensation for U.S. federal income tax purposes. For purposes of Section 162(m), a “covered employee” includes our
CEO and our CFO and each of our other NEOs; in addition, once a person is determined to be a covered employee, such person continues
to be a covered employee regardless of whether such person remains an NEO.
While
the Compensation Committee considers the deductibility of compensation as one factor in determining executive compensation, the Compensation
Committee also considers other factors in making compensation decisions as noted herein and retains the flexibility to authorize amounts
and forms of compensation that it determines to be consistent with the goals of our executive compensation program even if such compensation
is not deductible by the Company for tax purposes.
Conclusion
We
believe that our compensation policies and objectives are designed to fairly compensate, retain and motivate our NEOs and to ultimately
reward them for outstanding performance. The retention and motivation of our NEOs should enable us to grow strategically and position
ourselves competitively in the market in which we operate.
COMPENSATION
COMMITTEE REPORT
We
have reviewed and discussed the Compensation Discussion and Analysis included in this Proxy Statement with SuRo Capital’s management
and, based on our review and discussions, we recommended to the Board of Directors of SuRo Capital that the Compensation Discussion and
Analysis be included in this Proxy Statement.
|
Respectfully
Submitted, |
| |
|
| |
The
Compensation Committee |
| |
|
| |
Lisa Westley, Chair |
| |
Ronald M. Lott |
| |
Marc Mazur |
| |
Leonard A. Potter |
COMPENSATION
OF EXECUTIVE OFFICERS
The
following table summarizes the compensation of the NEOs for the fiscal years ended December 31, 2022, 2021, and 2020.
Summary
Compensation Table
| Name
and Principal Position |
|
Year |
|
|
Salary(1) |
|
|
Bonus(2) |
|
|
Stock
Awards(3) |
|
|
All
Other Compensation(4) |
|
|
Total |
|
| Mark D. Klein |
|
2022 |
|
|
$ |
850,000 |
|
|
$ |
1,150,000 |
|
|
$ |
2,300,000 |
|
|
$ |
53,439 |
|
|
$ |
4,353,439 |
|
| Chairman
and Member of the Board of Directors, Chief Executive Officer, and President |
|
2021 |
|
|
$ |
850,000 |
|
|
$ |
1,350,000 |
|
|
$ |
3,800,000 |
|
|
$ |
1,546,083 |
|
|
$ |
7,546,083 |
|
| |
|
2020 |
|
|
$ |
850,000 |
|
|
$ |
3,150,000 |
|
|
$ |
-- |
|
|
$ |
425 |
|
|
$ |
4,000,425 |
|
| Allison Green |
|
2022 |
|
|
$ |
490,340 |
|
|
$ |
415,000 |
|
|
$ |
585,000 |
|
|
$ |
27,740 |
|
|
$ |
1,518,080 |
|
| Chief
Financial Officer, Chief Compliance Officer,(5)
Treasurer, and Corporate
Secretary |
|
2021 |
|
|
$ |
450,000 |
|
|
$ |
465,000 |
|
|
$ |
425,000 |
|
|
$ |
285,652 |
|
|
$ |
1,625,652 |
|
| |
|
2020 |
|
|
$ |
450,000 |
|
|
$ |
740,000 |
|
|
$ |
-- |
|
|
$ |
16,467 |
|
|
$ |
1,206,467 |
|
| (1) | The
salaries of Mr. Klein and Ms. Green were paid pursuant to the applicable Amended Employment
Agreement of such individuals with the Company. |
| (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: |
| Name |
|
Year |
|
|
Annual
Cash Bonus |
|
|
Additional
Bonus for Stock Purchase |
|
|
Total
Bonus |
|
| Mark D. Klein |
|
|
2022 |
|
|
$ |
550,000 |
|
|
$ |
600,000 |
|
|
$ |
1,150,000 |
|
| |
|
|
2021 |
|
|
$ |
850,000 |
|
|
$ |
500,000 |
|
|
$ |
1,350,000 |
|
| |
|
|
2020 |
|
|
$ |
850,000 |
|
|
$ |
2,300,000 |
|
|
$ |
3,150,000 |
|
| Allison Green |
|
|
2022 |
|
|
$ |
315,000 |
|
|
$ |
100,000 |
|
|
$ |
415,000 |
|
| |
|
|
2021 |
|
|
$ |
315,000 |
|
|
$ |
150,000 |
|
|
$ |
465,000 |
|
| |
|
|
2020 |
|
|
$ |
315,000 |
|
|
$ |
425,000 |
|
|
$ |
740,000 |
|
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 NEOs
are required to hold this stock for a period of not less than one year.
| (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, 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. |
| (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: |
| Name | |
Year | | |
Accrued
Restricted Stock Dividends on Restricted Stock | | |
Accrued
Cash Dividends on Restricted Stock | | |
Other
Benefits | | |
All
Other Compensation Total | |
| Mark D. Klein | |
| 2022 | | |
$ | - | | |
$ | 53,030 | | |
$ | 409 | | |
$ | 53,439 | |
| | |
| 2021 | | |
$ | 1,228,482 | | |
$ | 317,192 | | |
$ | 409 | | |
$ | 1,546,083 | |
| | |
| 2020 | | |
$ | - | | |
$ | - | | |
$ | 425 | | |
$ | 425 | |
| Allison Green | |
| 2022 | | |
$ | - | | |
$ | 8,733 | | |
$ | 19,006 | | |
$ | 27,740 | |
| | |
| 2021 | | |
$ | 226,974 | | |
$ | 41,307 | | |
$ | 17,371 | | |
$ | 285,652 | |
| | |
| 2020 | | |
$ | - | | |
$ | - | | |
$ | 16,467 | | |
$ | 16,467 | |
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. As such, during the year ended 2022, the NEOs accrued cash dividends on their unvested 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.
| (5) | Effective
as of March 15, 2020, Ms. Green was appointed as the Company’s Chief Compliance Officer. |
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, 2022:
| Name | |
Grant
Date | | |
Stock
Awards; Number of Shares of Stock(1) | | |
Grant
Date Fair Value of Stock Awards(2) | |
| Mark D. Klein | |
| February
9, 2022 | | |
| 192,791 | | |
$ | 2,300,000 | |
| Allison Green | |
| February
9, 2022 | | |
| 49,036 | | |
$ | 585,000 | |
| (1) | Restricted
stock grants to NEOs under the Amended Incentive Plan in 2022 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. |
| (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
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, 2022:
| | |
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 | |
| 379,033 | (2) | |
| 61,392 | | |
$ | 1,440,325 | | |
$ | 233,290 | |
| Allison Green | |
| 68,052 | (3) | |
| 11,343 | | |
$ | 258,598 | | |
$ | 43,103 | |
|
(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 30, 2022 of $3.80.
Such amounts may not correspond to the actual value recognized by the NEOs upon vesting. |
| (2) | Includes
102,908 restricted shares granted on February 10, 2021, 83,334 restricted shares granted
on December 10, 2021, and 192,791 restricted shares granted on February 9, 2022. Such restricted
shares, including the dividends declared thereon, vest ratably over three years from the
grant date, subject in each case to the NEO still being employed by the Company on the respective
vesting date. |
| (3) | Includes
19,016 restricted shares granted on February 10, 2021, and 49,036 restricted shares granted
on February 9, 2022. Such restricted shares, including the dividends declared thereon, vest
ratably over three years from the grant date, subject in each case to the NEO still being
employed by the Company on the respective vesting date. |
Equity
Awards Vested in Fiscal Year
During
the fiscal year ended December 31, 2022, restricted shares granted to our NEOs under the Amended Equity Incentive Plan vested as follows:
| | |
Stock
Awards | |
| Name | |
Number
of Shares Acquired on Vesting (#) | | |
Value
Realized on Vesting ($)(1) | |
| Mark D. Klein | |
| 123,815 | (2) | |
$ | 1,132,594 | |
| Allison Green | |
| 15,178 | (3) | |
$ | 180,314 | |
| (1) | The
aggregate dollar amount realized upon vesting is determined based on the closing price of
our common stock on the Nasdaq Global Select Market on the respective vesting date. |
| (2) | Includes
(1) 82,149 shares vested on February 10, 2022, and (2) 41,666 shares vested on December 12,
2022. |
| (3) | Such
shares vested on February 10, 2022. |
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, 2022.
| 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) | | |
| — | | |
| — | | |
| — | | |
$ | 1,100,000 | (6) | |
$ | 1,650,000 | (6) |
| | |
| Accelerated
Equity Award Vesting(7) | | |
$ | 1,933,523 | | |
| — | | |
| — | | |
$ | 1,933,523 | | |
$ | 1,933,523 | |
| | |
| Other(8) | | |
| — | | |
| — | | |
| — | | |
$ | 54,000 | | |
$ | 54,000 | |
| | |
| Total | | |
$ | 1,933,523 | | |
$ | — | | |
$ | — | | |
$ | 4,787,523 | | |
$ | 6,187,523 | |
| Allison Green | |
| Salary(3) | | |
$ | — | | |
$ | — | | |
$ | — | | |
$ | 500,000 | (4) | |
$ | 1,000,000 | (4) |
| | |
| Bonus(5) | | |
| — | | |
| — | | |
| — | | |
$ | 315,000 | (6) | |
$ | 630,000 | (6) |
| | |
| Accelerated
Equity Award Vesting(7) | | |
$ | 337,972 | | |
| — | | |
| — | | |
$ | 337,972 | | |
$ | 337,972 | |
| | |
| Other(8) | | |
| — | | |
| — | | |
| — | | |
$ | 36,000 | | |
$ | 36,000 | |
| | |
| Total | | |
$ | 337,972 | | |
$ | — | | |
$ | — | | |
$ | 1,188,972 | | |
$ | 2,003,972 | |
| (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. |
| (2) | Voluntary
resignation by the NEO other than for good reason (as such terms are defined in the applicable
Second Amended Employment Agreement). |
| (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. |
| (4) | Amount
calculated based on 2022 base salary and applicable multiplier pursuant to NEO’s Second
Amended Employment Agreement. |
| (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. |
| (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.” |
| (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 30, 2022. |
| (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
For
2022, 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 $358,757, and the annual total compensation of our CEO, as reported in the Summary
Compensation Table, was $4,353,439. Based on this information, our CEO’s 2022 annual total compensation was approximately 12.13
times that of the median of the 2022 annual total compensation of all of our employees.
We
selected December 31, 2022 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 2022. As of December 31, 2022, 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. In making this determination, we annualized the compensation of nine employees
who were hired in 2022 but did not work for us during the entire fiscal year.
Pay
Versus Performance
The
following table shows the total compensation for our NEOs for the past three 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 (“TSR”), the TSR 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.
| 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) | | |
Total
Shareholder Return(4) | | |
Nasdaq
Stock Index Total Shareholder Return | | |
Net
Increase/ (Decrease) in Net Assets Resulting from Operations(5) | | |
NAV
per Share | |
| | |
| | |
| | |
| | |
| | |
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) | | |
Total
Shareholder Return(4) | | |
Nasdaq
Stock Index Total Shareholder Return | | |
Net
Increase/ (Decrease) in Net Assets Resulting from Operations(5) | | |
NAV
per Share | |
| 2022 | |
$ | 4,353,439 | | |
$ | 643,964 | | |
$ | 1,518,080 | | |
$ | 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 | | |
$ | 15.17 | |
| (1) | Mr.
Klein was the sole PEO for each of 2022, 2021 and 2020. |
| (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, computed through the addition to the SCT Total of
the values provided for each year 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,” “Change in Fair Value of Cancelled
Option Awards from Prior Years,” and “Change in Fair Value of Stock Awards that
Vested in the Covered Year”: |
| 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 Cancelled Option Awards from Prior Years | | |
Change
in Fair Value of Stock Awards that Vested in the Covered Year | | |
Compensation
Actually Paid | |
| PEO | |
| 2022 | | |
$ | 4,353,439 | | |
$ | (2,300,000 | ) | |
$ | 732,606 | | |
$ | (1,704,114 | ) | |
| — | | |
$ | (437,966 | ) | |
$ | 643,964 | |
| | |
| 2021 | | |
$ | 7,546,084 | | |
$ | (3,800,000 | ) | |
$ | 3,617,738 | | |
| — | | |
| — | | |
| — | | |
$ | 7,363,821 | |
| | |
| 2020 | | |
$ | 4,000,425 | | |
| — | | |
| — | | |
| — | | |
$ | (2,260,222 | ) | |
| — | | |
$ | 1,740,203 | |
| Non-PEO NEO Average | |
| 2022 | | |
$ | 1,518,080 | | |
$ | (585,000 | ) | |
$ | 186,337 | | |
$ | (173,996 | ) | |
| — | | |
$ | (10,172 | ) | |
$ | 935,248 | |
| | |
| 2021 | | |
$ | 1,625,652 | | |
$ | (425,000 | ) | |
$ | 369,373 | | |
| — | | |
| — | | |
| — | | |
$ | 1,570,025 | |
| | |
| 2020 | | |
$ | 1,206,467 | | |
| — | | |
| — | | |
| — | | |
$ | (416,357 | ) | |
| — | | |
$ | 790,110 | |
| (3) | Ms.
Green was our only non-PEO NEO for each of 2022, 2021 and 2020. |
| (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. |
| (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. |
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 restrict 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:
| ● | Dividends declared and paid by the Company; |
| ● | Prudent
investments within the portfolio; |
| | | |
| | ● | Enhancements
to the overall investment process, and expansion and development of team; |
| ● | Maintenance
of a strong balance sheet, including maintaining liquidity and capital flexibility to
accomplish the Company's business objectives; and |
| ● | Execution of the Company’s Share Repurchase Program and Modified “Dutch Auction”
Tender Offer. |
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.
RELATED
PARTY TRANSACTIONS
The
Company’s executive officers and directors serve or may serve as officers, directors, or managers of entities that operate in a
line of business similar to the Company’s, including new entities that may be formed in the future. Accordingly, they may have
obligations to investors in those entities, the fulfillment of which might not be in the best interests of the Company or the Company’s
stockholders.
The
1940 Act prohibits the Company from participating in certain negotiated co-investments with certain affiliates unless it receives an
order from the SEC permitting it to do so. As a BDC, the Company is prohibited under the 1940 Act from participating in certain transactions
with certain of its affiliates without the prior approval of the Board of Directors, including its independent directors, and, in some
cases, the SEC. The affiliates with which the Company may be prohibited from transacting include its officers, directors, and employees
and any person controlling or under common control with the Company, subject to certain exceptions.
In
the ordinary course of business, the Company may enter into transactions with portfolio companies that may be considered related party
transactions. To ensure that the Company does not engage in any prohibited transactions with any persons affiliated with the Company,
the Company has implemented certain written policies and procedures whereby the Company’s executive officers screen each of the
Company’s transactions for any possible affiliations between the proposed portfolio investment, the Company, companies controlled
by the Company and the Company’s executive officers and directors. If such affiliations are found to exist, we seek Board of Directors
and/or appropriate Board of Directors committee review and approval or exemptive relief for such transactions, as appropriate.
In
the ordinary course of business, the Company may enter into transactions with portfolio companies that may be considered related party
transactions. To ensure that the Company does not engage in any prohibited transactions with any persons affiliated with the Company,
the Company has implemented certain written policies and procedures whereby the Company’s executive officers screen each of the
Company’s transactions for any possible affiliations between the proposed portfolio investment, the Company, companies controlled
by the Company, and the Company’s executive officers and directors.
We
have adopted a code of ethics which applies to, among others, our senior officers, including our Chief Executive Officer and Chief Financial
Officer, as well as all of our officers, directors and employees. Our officers and directors also remain subject to the fiduciary obligations
imposed by both the 1940 Act and applicable state corporate law. Our code of ethics requires that all employees and directors avoid any
conflict, or the appearance of a conflict, between an individual’s personal interests and our interests. Pursuant to our code of
ethics, each employee and director must disclose any conflicts of interest, or actions or relationships that might give rise to a conflict,
to our Chief Compliance Officer. Our Board of Directors is charged with approving any waivers under our code of ethics. As required by
the Nasdaq corporate governance listing standards, the Audit Committee of our Board of Directors is also required to review and approve
any transactions with related parties (as such term is defined in Item 404 of Regulation S-K).
PROPOSAL
II: ADVISORY VOTE ON EXECUTIVE COMPENSATION
We
currently provide our stockholders with an annual vote (on an advisory and non-binding basis) on NEO compensation. More detailed discussion
regarding the compensation of our NEOs is provided under the sections “Compensation Discussion and Analysis” and “Executive
Compensation” above.
Our
Board of Directors recognizes that executive compensation is an important matter for our stockholders. As described in detail in the
“Compensation Discussion and Analysis” section of this Proxy Statement, the Compensation Committee is tasked with the implementation
of our executive compensation philosophy and objectives, and the core of which are to pay our executives, including NEOs, based on our
and their performance. Specifically, the Compensation Committee strives to attract, retain and motivate exceptional executives, to reward
past performance and provide incentives for future performance, to encourage our executive officers to think and act like our stockholders
and to align executives’ long-term interests with the interests of our stockholders. To do so, the Compensation Committee uses
compensation programs designed to reward excellent performance and encourage executives’ commitment to our business goals. It is
the intention of the Compensation Committee that our executive officers be compensated competitively and consistently with our strategy,
sound corporate governance principles, and stockholder interests and concerns.
We
are asking our stockholders to indicate their support for the compensation of our NEOs as set forth in this Proxy Statement. Accordingly,
we recommend our stockholders vote “FOR” the following advisory resolution at the Annual Meeting:
“RESOLVED,
that the stockholders of SuRo Capital Corp. approve, on an advisory basis, the compensation of the named executive officers of SuRo Capital
Corp., as disclosed in SuRo Capital Corp.’s Proxy Statement for the 2023 Annual Meeting of Stockholders pursuant to the compensation
disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the executive compensation
tables and the other related disclosure contained in such Proxy Statement.”
The
vote for this Proposal II is advisory, and is therefore not binding upon the Compensation Committee, our Board of Directors or the Company.
Our Compensation Committee and our Board of Directors value the opinions of our stockholders and, to the extent there is any significant
vote against the compensation of our NEOs as disclosed in this Proxy Statement, we will carefully consider our stockholders’ concerns,
and the Compensation Committee and our Board of Directors will evaluate whether any actions are necessary to address such concerns.
In
the absence of instructions to the contrary, it is the intention of the persons named as proxies to vote “FOR” the advisory
resolution to approve the compensation of the Company’s named executive officers.
THE
BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” THE ADVISORY RESOLUTION TO APPROVE THE COMPENSATION OF THE COMPANY’S
NAMED EXECUTIVE OFFICERS.
PROPOSAL
III: RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
At
meetings held on March 6, 2023, our Board of Directors and the Audit Committee selected Marcum LLP (“Marcum”) to serve as
our independent registered public accounting firm for the fiscal year ending December 31, 2023. Marcum also will serve as the independent
registered public accounting firm for all of our wholly-owned subsidiaries. Marcum has advised us that neither the firm nor any present
member or associate of it has any material financial interest, direct or indirect, in us or our affiliates. It is expected that a representative
of Marcum will be present at the Annual Meeting and will have an opportunity to make a statement if he or she chooses and will be available
to answer questions.
The
reports of Marcum on our financial statements for the fiscal years ended December 31, 2022, 2021 and 2020 contained no adverse opinion
or disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope or accounting principles.
The
following table presents fees billed to the Company for professional services rendered by Marcum for the fiscal years ended December
31, 2022 and 2021:
| | |
Fiscal
Year Ended December 31, 2022 | | |
Fiscal
Year Ended December 31, 2021 | |
| Audit Fees(1) | |
$ | 707,615 | | |
$ | 537,145 | |
| Audit-Related Fees(2) | |
| — | | |
| 128,750 | |
| Tax Fees(3) | |
$ | 34,826 | | |
| 44,248 | |
| All
Other Fees(4) | |
| — | | |
| — | |
| Total
Fees | |
$ | 737,441 | | |
$ | 710,143 | |
| (1) | Audit
Fees. Audit fees consist of fees billed for professional services rendered for the audit
of our year-end financial statements and services that were normally provided by our independent
registered public accountants in connection with statutory and regulatory filings. |
| (2) | Audit-Related
Fees. Audit-related services consist of fees billed for assurance and related services
that are reasonably related to the performance of the audit or review of our financial statements
and are not reported under “Audit Fees.” These services include attest services
that are not required by statute or regulation and consultations concerning financial accounting
and reporting standards. |
| (3) | Tax
Fees. Tax fees consist of fees billed for professional services for tax compliance. These
services include assistance regarding federal, state, and local tax compliance. |
| (4) | All
Other Fees. All other fees would include fees for products and services other than the
services reported above. |
AUDIT
COMMITTEE REPORT
The
Audit Committee of the Board of Directors of the Company operates under a written charter adopted by the Board of Directors. The Audit
Committee is currently composed of Ms. Westley and Messrs. Mazur, Potter, and Lott.
Management
is responsible for the Company’s internal controls and the financial reporting process. The Company’s independent registered
public accounting firm is responsible for performing an independent audit of the Company’s financial statements in accordance with
auditing standards generally accepted in the United States and expressing an opinion on the conformity of those audited financial statements
in accordance with accounting principles generally accepted in the United States. The Audit Committee’s responsibility is to monitor
and oversee these processes. The Audit Committee is also directly responsible for the appointment, compensation and oversight of the
Company’s independent registered public accounting firm.
Pre-Approval
Policies and Procedures
The
Audit Committee has established a pre-approval policy that describes the permitted audit, audit-related, tax and other services to be
provided by the Company’s independent registered public accounting firm. The policy requires that the Audit Committee pre-approve
the audit and non-audit services performed by the Company’s independent registered public accounting firm in order to assure that
the provision of such service does not impair such auditor’s independence.
Any
requests for audit, audit-related, tax and other services that have not received general pre-approval must be submitted to the Audit
Committee for specific pre-approval, irrespective of the amount, and cannot commence until such approval has been granted. Normally,
pre-approval is provided at regularly scheduled meetings of the Audit Committee. However, the Audit Committee may delegate pre-approval
authority to subcommittees consisting of one or more of its members. The member or members to whom such authority is delegated shall
report any pre-approval decisions to the Audit Committee at its next scheduled meeting. The Audit Committee does not delegate its responsibilities
to pre-approve services performed by the independent registered public accounting firm to management.
Review
with Management
The
Audit Committee has reviewed the audited financial statements and met and held discussions with management regarding the audited financial
statements. Management has represented to the Audit Committee that the Company’s financial statements were prepared in accordance
with accounting principles generally accepted in the United States.
Review
and Discussion with Independent Registered Public Accounting Firm
The
Audit Committee has discussed with Marcum LLP, the Company’s independent registered public accounting firm during the fiscal year
ended December 31, 2022, the matters an independent auditor is required to discuss with the Audit Committee under the rules adopted by
the Public Company Accounting Oversight Board (“PCAOB”). The Audit Committee has received and reviewed the written disclosures
and the letter from Marcum LLP required by the applicable requirements of the PCAOB and has discussed with Marcum LLP its independence.
The Audit Committee has also considered whether the provision of non- audit services, and the fees charged for such services, by Marcum
LLP are compatible with Marcum LLP maintaining its independence from the Company.
Conclusion
Based
on the Audit Committee’s discussion with management and Marcum LLP, the Audit Committee’s review of the audited financial
statements, the representations of management and the report of Marcum LLP to the Audit Committee, the Audit Committee recommended that
the Company’s Board of Directors include the audited financial statements in the Company’s annual report on Form 10-K for
the fiscal year ended December 31, 2022 for filing with the SEC. The Audit Committee also recommended the selection of Marcum LLP to
serve as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2023.
| |
Respectfully Submitted, |
| |
|
| |
The Audit
Committee |
| |
|
| |
Marc Mazur, Chair |
| |
Ronald M. Lott |
| |
Leonard A. Potter |
| |
Lisa Westley |
The
foregoing report shall not be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement
into any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except to the extent
that we specifically incorporate this information by reference, and shall not otherwise be deemed filed under such Securities Act and/or
Exchange Act.
Unless
marked to the contrary, the shares represented by the enclosed proxy card will be voted for ratification of the appointment of Marcum
LLP as the independent registered public accounting firm of the Company for the fiscal year ending December 31, 2023.
THE
BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” THE RATIFICATION OF THE SELECTION OF MARCUM LLP AS INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM FOR THE COMPANY FOR THE FISCAL YEAR ENDING DECEMBER 31, 2023.
OTHER
BUSINESS
The
Board of Directors knows of no other business to be presented for action at the Annual Meeting. If any matters do come before the Annual
Meeting on which action can properly be taken, it is intended that the proxies shall vote in accordance with the judgment of the person
or persons exercising the authority conferred by the proxy at the Annual Meeting. The submission of a proposal does not guarantee its
inclusion in the Company’s proxy statement or presentation at the Annual Meeting unless certain securities law requirements are
met.
SUBMISSION
OF STOCKHOLDER PROPOSALS
The
Company expects that the 2024 Annual Meeting of Stockholders will be held in June 2024, but the exact date, time, and location of such
meeting have yet to be determined. A stockholder who intends to present a proposal at the 2024 Annual Meeting of Stockholders pursuant
to the SEC’s Rule 14a-8 must submit the proposal in writing to the Corporate Secretary of SuRo Capital Corp. at 640 Fifth Avenue,
12th Floor, New York, New York 10019 or the Company’s then current business address. The Company must receive the proposal no earlier
than November 20, 2023 and no later than December 20, 2023, as described below, in order for the proposal to be considered for inclusion
in the Company’s proxy statement for that meeting. The submission of a proposal does not guarantee its inclusion in the Company’s
proxy statement or presentation at the meeting.
Stockholder
proposals or director nominations to be presented at the 2024 Annual Meeting of Stockholders, other than stockholder proposals submitted
pursuant to the SEC’s Rule 14a-8, must be submitted in accordance with the advance notice procedures and other requirements set
forth in our bylaws. These requirements are separate from the requirements discussed above to have the stockholder nomination or other
proposal included in our proxy statement and form of proxy/voting instruction card pursuant to the SEC’s rules. The item to be
brought before the meeting must be a proper subject for stockholder action. Our bylaws require that to be timely, a stockholder’s
notice must set forth all information required and must be delivered to the Corporate Secretary at the principal executive office of
the Company at the above address not earlier than the 150th day prior to the first anniversary of the date of this Proxy Statement nor
later than 5:00 p.m., Eastern Time, on the 120th day prior to the first anniversary of the date of this Proxy Statement. As a result,
for the Company’s 2024 Annual Meeting of Stockholders, a stockholder’s notice submitted pursuant to the provisions of our
bylaws must be received no earlier than November 20, 2023, and no later than 5:00 p.m., Eastern Time, on December 20, 2023; provided,
however, that in the event that the date of the 2024 Annual Meeting of Stockholders is advanced or delayed by more than 30 days from
the first anniversary of this Annual Meeting, notice by the stockholder to be timely must be delivered not earlier than the 150th day
prior to the date of the 2024 Annual Meeting of Stockholders and not later than 5:00 p.m., Eastern Time, on the later of the 120th day
prior to the date of the 2024 Annual Meeting of Stockholders or the tenth day following the day on which public announcement of the date
of the 2024 Annual Meeting of Stockholders is first made. The public announcement of a postponement or adjournment of an annual meeting
shall not commence a new time period for the giving of a stockholder’s notice. The submission of a proposal pursuant to the provisions
of the Company’s bylaws does not guarantee its presentation at any meeting of stockholders. We advise you to review our bylaws,
a copy of which is on file with the SEC, and which contain additional requirements about advance notice of stockholder proposals and
director nominations. In accordance with our bylaws, the Chair of the 2024 Annual Meeting of Stockholders may determine, if the facts
warrant, that a matter has not been properly brought before the meeting and, therefore, may not be considered at the meeting.
Notices
of intention to present proposals at the 2024 Annual Meeting of Stockholders should be addressed to the Corporate Secretary of SuRo Capital
Corp. at 640 Fifth Avenue, 12th Floor, New York, New York 10019. The Company reserves the right to reject, rule out of order, or take
other appropriate action with respect to any proposal that does not comply with these and other applicable requirements.
You
are cordially invited to attend the Annual Meeting of stockholders in person. Regardless of whether you plan to attend the Annual Meeting,
you are requested to complete, date, sign and promptly return the accompanying proxy card in the enclosed postage-paid envelope, or to
vote by telephone or through the internet.
| |
By Order of the Board
of Directors, |
| |
|
|
/s/ Allison Green |
| |
Allison Green |
| |
Corporate Secretary |
New
York, New York
April 19, 2023
PRIVACY
NOTICE
We
are committed to protecting your privacy. This Privacy Notice sets forth our policies with respect to non-public personal information
about our stockholders and prospective and former stockholders. These policies apply to stockholders in the Company and may be changed
at any time, provided a notice of such change is given to you.
You
provide us with personal information, such as your address, social security number, assets and/or income information, (i) in correspondence
and conversations with us and our representatives and (ii) through transactions in the Company.
We
do not disclose any of this non-public personal information about our stockholders, or prospective or former stockholders to anyone,
other than to our affiliates, such as our investment adviser and administrator, and except as permitted by law, such as to our accountants,
attorneys, auditors, brokers, regulators and certain service providers, in each such case, only as necessary to facilitate the acceptance
and management of your investment or account and our relationship with you. We will comply with all federal and state laws regarding
the protection of consumer information.
We
will also release information about you if you direct us to do so, if compelled to do so by law, or in connection with any government
or self-regulatory organization request or investigation. For example, it may be necessary, under anti-money laundering and similar laws,
to disclose information about stockholders in order to accept investments from them and provide reports to them.
We
seek to carefully safeguard your private information and, to that end, restrict access to non-public personal information about you to
those employees and other persons who need to know the information to enable us to provide services to you. We maintain physical, electronic
and procedural safeguards to protect your non-public personal information.
If
you have any questions regarding this policy or the treatment of your non-public personal information, please contact our Chief Compliance
Officer:
SuRo
Capital Corp.
640
Fifth Avenue, 12th Floor
New
York, New York 10019
ATTN:
Chief Compliance Officer
SuRo Capital (NASDAQ:SSSS)
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