def14a
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [ x ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[ x ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Allied Capital Corporation
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ x ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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Allied Capital
Corporation
Notice of Annual
Meeting of Stockholders
To the Stockholders:
The 2005 Annual Meeting of Stockholders of Allied Capital
Corporation (the Company) will be held at the Four
Seasons Hotel, 2800 Pennsylvania Avenue, NW, Washington, DC on
May 17, 2005, at 10:00 a.m. (Eastern Time) for the
following purposes:
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1. To elect five directors of the Company who will serve
for three years, or until their successors are elected and
qualified; |
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2. To ratify the selection of KPMG LLP to serve as the
independent registered public accounting firm for the Company
for the year ending December 31, 2005; and |
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3. To transact such other business as may properly come
before the meeting. |
You have the right to receive notice and to vote at the meeting
if you were a stockholder of record at the close of business on
February 25, 2005. Whether or not you expect to be present
in person at the Meeting, please sign the enclosed proxy and
return it promptly in the envelope provided, or register your
vote by telephone or through the Internet. Instructions are
shown on the proxy card. 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 the
proxies by the Company.
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By order of the Board of Directors, |
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![(-s- Suzanne V. Sparrow)](w05078suspars1.gif) |
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Suzanne V. Sparrow |
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Executive Vice President and |
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Corporate Secretary |
Washington, DC
April 6, 2005
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This is an important meeting. To ensure proper representation at
the Meeting, please complete, sign, date and return the proxy
card in the enclosed, self-addressed envelope, vote your shares
by telephone, or vote via the Internet. Even if you vote
your shares prior to the Meeting, you still may attend the
Meeting and vote your shares in person. |
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Allied Capital
Corporation
1919 Pennsylvania Avenue, NW
Washington, DC 20006
PROXY STATEMENT
General
This Proxy Statement is furnished in connection with the
solicitation of proxies by the Board of Directors of Allied
Capital Corporation (the Company or Allied
Capital) for use at the Companys 2005 Annual Meeting
of Stockholders (the Meeting) to be held on
May 17, 2005, at 10:00 a.m. (Eastern Time) at the Four
Seasons Hotel, 2800 Pennsylvania Avenue, NW,
Washington, DC and at any adjournments thereof. This Proxy
Statement, the accompanying proxy card, and the Companys
Annual Report to Stockholders for the year ended
December 31, 2004, are first being sent to stockholders on
or about April 6, 2005.
We encourage you to vote your shares, either by voting in person
at the 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 the telephone, and the
Company receives it in time for the Meeting, the persons named
as proxies will vote the shares registered directly in your name
in the manner that you specified. If you give no instructions
on the proxy card, the shares covered by the proxy card will be
voted FOR the election of the nominees as directors and FOR the
other matters listed in the accompanying Notice of Annual
Meeting of Stockholders.
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, Automatic Data Processing, Inc., in writing. Please
send your notification to Allied Capital Corporation,
c/o ADP, 51 Mercedes Way, Edgewood, NY 11717, and
submit a properly executed, later-dated proxy or vote in person
at the Meeting. Any stockholder of record attending the Meeting
may vote in person whether or not 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 Meeting only if
you obtain proper written authority from your institution or
nominee and present it at the Meeting.
Stockholders of record may also vote either via the Internet or
by telephone. Specific instructions to be followed by
stockholders of record interested in voting via the Internet or
the telephone are shown on the enclosed proxy card. The Internet
and telephone voting procedures are designed to authenticate the
stockholders identity and to allow stockholders to vote
their shares and confirm that their instructions have been
properly recorded.
Annual Meeting Admission
If you plan to attend the Meeting, an admission ticket will be
required for admission to the Meeting. If you are a stockholder
of record, your ticket is attached to your proxy card. If your
shares are held in the name of a broker or other nominee and you
do not have an admission ticket, please bring with you a legal
proxy or letter from the broker, trustee, bank, or nominee
confirming your beneficial ownership of the shares as of the
record date, February 25, 2005.
Purpose of Meeting
At the Meeting, you will be asked to vote on the following
proposals:
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1. To elect five directors of the Company who will serve
for three years, or until their successors are elected and
qualified; |
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2. To ratify the selection of KPMG LLP to serve as the
independent registered public accounting firm for the Company
for the year ending December 31, 2005; and |
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3. To transact such other business as may properly come
before the Meeting. |
Voting Securities
You may vote your shares at the Meeting only if you were a
stockholder of record at the close of business on
February 25, 2005 (the Record Date). On
February 25, 2005, there were 133,404,292 shares of
the Companys common stock outstanding. Each share of
common stock is entitled to one vote.
The Companys 401(k) Plan owns a total of 196,403 shares,
representing less than 1% of the Companys total
outstanding shares. The sub-trustees of the fund holding Company
shares within the 401(k) Plan, who are executive officers of the
Company, will vote the shares on behalf of the participants
pursuant to their instructions.
Quorum Required
A quorum must be present at the Meeting for any business to be
conducted. The presence at the Meeting, in person or by proxy,
of the holders of a majority of the shares of common stock
outstanding on the record date will constitute a quorum.
Abstentions will be treated as shares present for quorum
purposes. Broker Shares for which the nominee has not received
voting instructions from the record holder and does not have
discretionary authority to vote the shares on certain proposals
(which are considered Broker Non-Votes with respect
to such proposals) will be treated as shares present for quorum
purposes.
If a quorum is not present at the Meeting, the stockholders who
are represented may adjourn the 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.
Vote Required
Election of Nominee Directors.
The affirmative vote of a plurality of the votes cast at the
Meeting is required to elect the five nominees as directors.
This means that the five nominees will be elected if they
receive more affirmative votes than any other person.
Abstentions will not be included in determining the number of
votes cast and, as a result, will have no effect on this
proposal.
Ratification of Independent
Registered Public Accounting Firm. The affirmative vote of a
majority of the votes cast at the Meeting in person or by proxy
is required to ratify the appointment of KPMG LLP to serve as
the Companys independent registered public accounting
firm. Abstentions will not be included in determining the number
of votes cast and, as a result, will have no effect on this
proposal.
2
Additional Solicitation. If
there are not enough votes to approve any proposals at the
Meeting, the stockholders who are represented may adjourn the
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 any 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 of such proposal(s).
Information Regarding This Solicitation
The Company will bear the expense of the solicitation of proxies
for the Meeting, including the cost of preparing, printing, and
mailing this Proxy Statement, the accompanying Notice of Annual
Meeting of Stockholders, the proxy card, and admission tickets.
The Company has 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. The Company will reimburse such persons for
their reasonable expenses in so doing.
In addition to the solicitation of proxies by mail, proxies may
be solicited in person and by telephone, facsimile transmission,
or telegram by directors, officers, or regular employees of the
Company (without special compensation therefor). The Company has
also retained Georgeson Shareholder Communications, Inc. to
assist in the solicitation of proxies for a fee of approximately
$7,000, plus out-of-pocket expenses. 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 Companys proxy tabulator.
Security Ownership of Management and Certain Beneficial
Owners
The following table sets forth, as of March 21, 2005, each
stockholder who owned more than 5% of the Companys
outstanding shares of common stock, each current director, each
nominee for director, the Chief Executive Officer, the
Companys executive officers, and the directors and
executive officers as a group. Unless otherwise indicated, the
Company believes that each beneficial owner set forth in the
table has sole voting and investment power.
The Companys directors are divided into two
groups interested directors and independent
directors. Interested directors are interested
persons as defined in the Investment Company Act of 1940.
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Dollar Range of | |
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Equity Securities | |
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Number of | |
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Beneficially | |
Name of |
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Shares Owned | |
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Percentage | |
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Owned by | |
Beneficial Owner |
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Beneficially(1) | |
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of Class(2) | |
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Directors(3) | |
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Capital Research and Management Company
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7,646,020 |
(4) |
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5.7 |
% |
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333 South Hope Street, 55th Floor
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Los Angeles, CA 90071-1447
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Interested Directors:
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William L. Walton
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3,090,004 |
(5,6,7) |
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2.3 |
% |
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over $100,000 |
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Joan M. Sweeney
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1,618,904 |
(5) |
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1.2 |
% |
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over $100,000 |
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Robert E. Long
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47,111 |
(8) |
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* |
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over $100,000 |
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Independent Directors:
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Brooks H. Browne
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78,713 |
(7,8) |
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* |
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over $100,000 |
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John D. Firestone
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67,426 |
(7,8) |
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* |
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over $100,000 |
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Anthony T. Garcia
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93,512 |
(8) |
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* |
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over $100,000 |
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Ann Torre Grant
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18,500 |
(7,8) |
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* |
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over $100,000 |
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Lawrence I. Hebert
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56,800 |
(8) |
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* |
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over $100,000 |
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John I. Leahy
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52,318 |
(8) |
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* |
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over $100,000 |
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Alex J. Pollock
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20,617 |
(7,8,9) |
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* |
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over $100,000 |
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Marc F. Racicot
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0 |
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Guy T. Steuart II
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359,144 |
(8,10) |
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* |
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over $100,000 |
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Laura W. van Roijen
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67,079 |
(7,8) |
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* |
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over $100,000 |
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Executive Officers:
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Kelly A. Anderson
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254,165 |
(5) |
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* |
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Scott S. Binder
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708,676 |
(5,7,11) |
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* |
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Douglas L. Cooper
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340,461 |
(5,7) |
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* |
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N. John Fontana
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76,910 |
(5) |
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* |
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Michael J. Grisius
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521,184 |
(5,7) |
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* |
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Jeri J. Harman
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75,000 |
(5) |
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Robert D. Long
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685,846 |
(5,7,12) |
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* |
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Jordan C. Paul
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75,000 |
(5) |
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* |
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Timothy H. Pease
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54,572 |
(5) |
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Penni F. Roll
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547,652 |
(5) |
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* |
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Edward H. Ross
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367,661 |
(5) |
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* |
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Daniel L. Russell
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240,234 |
(5) |
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* |
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John M. Scheurer
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1,180,355 |
(5) |
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* |
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John D. Shulman
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633,327 |
(5) |
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* |
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Suzanne V. Sparrow
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417,353 |
(5,6) |
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* |
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Thomas H. Westbrook
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925,430 |
(5,7) |
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* |
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All directors and executive officers as a group(29 in
number)
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12,389,419 |
(13) |
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8.7 |
% |
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* Less than 1%
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(1) |
Beneficial ownership has been determined in accordance with
Rule 16a-1(a)(2) of the Securities Exchange Act of 1934. |
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(2) |
Based on a total of 133,509,037 shares of the
Companys common stock issued and outstanding on
March 21, 2005, and 9,574,778 shares of the
Companys common stock issuable upon the exercise of stock
options exercisable within 60 days held by executive
officers and non-officer directors. |
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(3) |
Beneficial ownership has been determined in accordance with
Rule 16a-1(a)(2) of the Securities Exchange Act of 1934. |
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(4) |
Information regarding share ownership was obtained from the
Schedule 13G/A that Capital Research and Management Company
filed with the SEC on February 7, 2005. |
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(5) |
Share ownership for the following directors and executive
officers includes: |
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Owned | |
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Options | |
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Through | |
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Exercisable | |
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Deferred | |
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Within 60 Days | |
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Allocated | |
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Owned | |
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Compensation | |
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of March 21, | |
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to 401(k) | |
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Directly | |
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Plan II | |
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2005 | |
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Plan | |
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Interested Directors:
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William L. Walton
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444,797 |
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112,769 |
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2,336,035 |
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6,922 |
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Joan M. Sweeney
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298,966 |
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55,877 |
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1,249,127 |
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14,934 |
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Executive Officers:
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Kelly A. Anderson
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112,160 |
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4,943 |
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131,781 |
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5,281 |
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Scott S. Binder
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77,709 |
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26,204 |
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602,935 |
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1,828 |
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Douglas L. Cooper
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16,354 |
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10,839 |
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312,604 |
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664 |
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N. John Fontana
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0 |
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1,910 |
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75,000 |
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0 |
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Michael J. Grisius
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55,522 |
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18,804 |
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429,562 |
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17,296 |
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Jeri J. Harman
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0 |
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0 |
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75,000 |
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0 |
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Robert D. Long
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21,000 |
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22,569 |
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639,903 |
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2,374 |
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Jordan C. Paul
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0 |
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0 |
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75,000 |
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0 |
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Timothy H. Pease
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1,100 |
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971 |
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52,501 |
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0 |
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Penni F. Roll
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83,096 |
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16,467 |
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438,127 |
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9,962 |
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Edward H. Ross
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8,500 |
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17,769 |
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341,392 |
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0 |
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Daniel L. Russell
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1,060 |
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9,979 |
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229,195 |
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0 |
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John M. Scheurer
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279,936 |
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42,845 |
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821,781 |
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35,793 |
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John D. Shulman
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4,799 |
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17,966 |
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610,562 |
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0 |
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Suzanne V. Sparrow
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78,930 |
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5,373 |
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136,647 |
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24,472 |
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Thomas H. Westbrook
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171,487 |
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33,817 |
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720,126 |
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0 |
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(6) |
Includes 196,403 shares held by the 401(k) Plan, of which
Mr. Walton and Ms. Sparrow are sub-trustees of the
fund holding the Companys shares. The sub-trustees
disclaim beneficial ownership of such shares. |
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(7) |
Includes certain shares held in IRA or Keogh accounts:
Walton 12,015 shares; Browne
12,280 shares; Firestone 3,415 shares;
Grant 3,500 shares; Pollock
1,000 shares; van Roijen 6,623 shares;
Binder 273 shares; Cooper
1,309 shares; Grisius 1,061 shares;
R.D. Long 17,000 shares;
Westbrook 16,365 shares. |
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(8) |
Beneficial ownership for these non-officer directors includes
exercisable options to purchase 35,000 shares, except with
respect to Ms. Grant who has exercisable options to
purchase 15,000 shares, and Mr. Pollock who has
exercisable options to purchase 5,000 shares. |
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(9) |
Includes 2,417 shares held in the Deferred Compensation
Plan for Mr. Pollock. |
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(10) |
Includes 276,691 shares held by a corporation for which
Mr. Steuart serves as an executive officer. |
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(11) |
Includes 10,000 shares held in a charitable remainder trust. |
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(12) |
Includes 4,000 shares held by a trust for the benefit of
Mr. Longs children. |
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(13) |
Includes a total of 9,574,778 shares underlying stock
options exercisable within 60 days of March 21, 2005,
which are assumed to be outstanding for the purpose of
calculating the groups percentage ownership, and 196,403
shares held by the 401(k) Plan. |
Equity Compensation Plan Information
The following table sets forth information as of
December 31, 2004, with respect to compensation plans under
which the Companys equity securities are authorized for
issuance:
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Number of securities remaining | |
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Number of securities | |
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available for future issuance | |
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to be issued upon | |
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Weighted-average | |
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under equity compensation plan | |
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exercise of | |
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exercise price of | |
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(excluding securities reflected in | |
|
|
outstanding options | |
|
outstanding options | |
|
column (a)) | |
Plan Category |
|
(a) | |
|
(b) | |
|
(c) | |
|
|
| |
|
| |
|
| |
Equity compensation plans approved by stockholders
|
|
|
20,359,963 |
|
|
$ |
23.55 |
|
|
|
7,925,056 |
|
Equity compensation plans not approved by stockholders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
20,359,963 |
|
|
$ |
23.55 |
|
|
|
7,925,056 |
|
|
|
|
|
|
|
|
|
|
|
5
PROPOSAL 1.
ELECTION OF DIRECTORS
Pursuant to the Companys bylaws, the Board of Directors
may modify the number of members of the Board provided that the
number of directors will not be fewer than three or greater than
fifteen, unless otherwise permitted by law. In accordance with
the bylaws, in March 2005 the Board of Directors expanded the
number of directors from twelve to thirteen and appointed Marc
F. Racicot to fill the vacant position. Directors are elected
for a staggered term of three years each, with the term of
office of only one of the three classes of directors expiring
each year. Directors serve until their successors are elected
and qualified.
The Class I directors, Messrs. Firestone, Garcia,
Hebert and Racicot, and Ms. van Roijen, have been nominated
for election for a three-year term expiring in 2008. No person
being nominated as a director is being proposed for election
pursuant to any agreement or understanding between any such
person and the Company.
A stockholder can vote for or withhold his or her vote from any
or all of the 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 all the nominees named
below. If any of the nominees should decline or be unable to
serve as a director, it is intended that the proxy will be voted
for the election of such person or persons as are nominated as
replacements. The Board of Directors has no reason to
believe that any of the persons named will be unable or
unwilling to serve.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS THAT
STOCKHOLDERS VOTE FOR THE ELECTION OF THE NOMINEES NAMED IN
THIS PROXY STATEMENT.
Information about the Directors
Certain information, as of March 21, 2005, with respect to
each of the five nominees for election at the 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 nominee holds, and the year in
which each nominee became a director of the Company or any of
its predecessor companies.
The Board of Directors of each consolidated subsidiary will be
composed of all of the Companys directors. The business
address of each nominee and director listed below is 1919
Pennsylvania Avenue, NW, Washington, DC 20006.
6
Nominees for Class I Directors Term
Expiring 2008
All five Class I directors are independent directors for
purposes of the Investment Company Act of 1940.
John D. Firestone
Age 61. Mr. Firestone has been a partner of Secor Group
since 1978. Mr. Firestone is a director of Security Storage
Company of Washington, DC, and is currently a member of the
board of several non-profit organizations. He has served as a
director of the Company or one of its predecessors since 1993.
Anthony T. Garcia
Age 48. Mr. Garcia has been a private investor since 2003.
Mr. Garcia was Vice President of Finance of Formity
Systems, Inc., a developer of software products for business
management of data networks, from January 2002 through 2003.
Mr. Garcia was a private investor from 2000 to 2001, the
General Manager of Breen Capital Group (investor in tax liens)
from 1997 to 2000, and a Senior Vice President of Lehman
Brothers Inc. from 1985 to 1996. He has served as a director of
the Company or one of its predecessors since 1991.
Lawrence I. Hebert
Age 58. Mr. Hebert has been a director and President and
Chief Executive Officer of Riggs Bank N.A. (a subsidiary of
Riggs National Corporation) since 2001. In 2005, Mr. Hebert was
elected Chief Executive Officer of Riggs National Corporation
subject to regulatory approval and has served as a director of
Riggs National Corporation since 1988. Mr. Hebert also
serves as a director of Riggs Investment Advisors and Riggs Bank
Europe Limited (both indirect subsidiaries of Riggs National
Corporation). Mr. Hebert previously served as Vice Chairman
(1983 to 1998), President (1984 to 1998), and Chairman and Chief
Executive Officer (1998 to 2001) of Allbritton Communications
Company. He has served as director of the Company or one of its
predecessors since 1989. Riggs Bank N.A. has a
$60 million commitment under the Companys revolving
line of credit.
Marc F. Racicot
Age 56. Mr. Racicot has been an attorney at the law firm of
Bracewell & Patterson, LLP since 2001. He is a former
Governor (1993 to 2001) and Attorney General (1989 to 1993) of
the State of Montana. Mr. Racicot was appointed by
President Bush to serve as the Chairman of the Republican
National Committee (2002 to 2003) and he served as Chairman of
the Bush/Cheney Re-election Committee (2003 to 2004).
Mr. Racicot serves on the Board of Directors for Siebel
Systems, Burlington Northern Santa Fe Corporation, Massachusetts
Mutual Life Insurance Company, Jobs for Americas
Graduates, and the Board of Visitors for the University of
Montana School of Law. He has served as a director of the
Company since March 2005.
Laura W. van Roijen
Age 52. Ms. van Roijen has been a private investor
since 1992. Ms. van Roijen was a Vice President at
Citicorp from 1982 to 1992. She has served as a director of the
Company or one of its predecessors since 1992.
7
Class II Directors Term Expiring
2006
All four Class II directors are independent directors
for purposes of the Investment Company Act of 1940.
Ann Torre Grant
Age 46. Ms. Grant has been a strategic and financial
consultant since 1997. From 1995 to 1997, Ms. Grant served
as Executive Vice President, CFO and Treasurer of NHP, Inc., a
national real estate services firm. From 1991 to 1995,
Ms. Grant was Vice President and Treasurer of US Airways.
She serves on the boards and audit committees of Franklin Mutual
Series and SLM Corporation (Sallie Mae). She has served as a
director of the Company since 2003.
John I. Leahy
Age 74. Mr. Leahy has been the President of Management and
Marketing Associates, a management consulting firm, since 1986.
Mr. Leahy was the President and Group Executive Officer,
Western Hemisphere of Black & Decker Corporation from
1982 to 1985. Mr. Leahy is a director of B & L
Sales, Inc. and is Trustee Emeritus of the Sellinger School of
Business, Loyola College, Maryland. He has served as a director
of the Company or one of its predecessors since 1994.
Alex J. Pollock
Age 62. Mr. Pollock has been a Resident Fellow at the
American Enterprise Institute since 2004. He was President and
Chief Executive Officer of the Federal Home Loan Bank of Chicago
from 1991 to 2004. He serves as a director of the Chicago
Mercantile Exchange, Great Lakes Higher Education Corporation
and the Great Books Foundation. Mr. Pollock is Past
President of the International Union for Housing Finance and the
Bankers Club of Chicago. He has served as a director of the
Company since 2003.
Guy T. Steuart II
Age 73. Mr. Steuart has been a director and President of
Steuart Investment Company, which manages, operates, and leases
real and personal property and holds stock in operating
subsidiaries engaged in various businesses, since 1960 and has
been Chairman of Steuart Investment Company since 2003.
Mr. Steuart is Trustee Emeritus of Washington and Lee
University. He has served as a director of the Company or one of
its predecessors since 1984.
8
Class III Directors Term Expiring 2007
Messrs. Walton and Long and Ms. Sweeney are
interested persons, as defined in the Investment Company Act of
1940, in the cases of Mr. Walton and Ms. Sweeney, due
to their positions as officers of the Company and in the case of
Mr. Long, as the father of an executive officer of the
Company. Mr. Browne is an independent director.
William L. Walton
Age 55. Mr. Walton has been the Chairman, Chief Executive
Officer, and President of the Company since 1997.
Mr. Waltons previous work experience includes serving
as a Managing Director of Butler Capital Corporation, a
mezzanine buyout firm, the personal investment advisor to
William S. Paley, founder of CBS, and a Senior Vice President in
Lehman Brothers Kuhn Loebs Merger and Acquisition Group.
He also founded two education service companies Language
Odyssey and Success Lab. Mr. Walton is a director of Riggs
National Corporation. He has served as director of the Company
or one of its predecessors since 1986.
Joan M. Sweeney
Age 45. Ms. Sweeney is the Chief Operating Officer of the
Company and has been employed by the Company since 1993.
Ms. Sweeney oversees the Companys daily operations.
Prior to joining the Company, Ms. Sweeney was employed by
Ernst & Young, Coopers & Lybrand, and the Division of
Enforcement of the Securities and Exchange Commission. She has
served as a director of the Company since 2004.
Brooks H. Browne
Age 55. Mr. Browne has been a private investor since 2002.
Mr. Browne was the President of Environmental Enterprises
Assistance Fund from 1993 to 2002, and is currently a member of
the board of two non-profit organizations. He has served as a
director of the Company or one of its predecessors since 1990.
Robert E. Long
Age 73. Mr. Long has been the Chief Executive Officer and a
director of GLB Group, Inc. (investment management firm) since
1997 and has been the Chairman of Emerald City Radio Partners,
LLC since 1997. Mr. Long was the President of Business News
Network, Inc. (1995 to 1998), the Chairman and Chief Executive
Officer of Southern Starr Broadcasting Group, Inc. (1991 to
1995), and a director and the President of Potomac Asset
Management, Inc. (1983 to 1991). Mr. Long is a director of
AmBase Corporation, CSC Scientific, Inc., and Advanced Solutions
International, Inc. He has served as a director of the Company
or one of its predecessors since 1972. Mr. Long is the
father of Robert D. Long, an executive officer of the Company.
Committees of the Board of Directors
The Board of Directors of the Company has established an
Executive Committee, an Audit Committee, a Compensation
Committee, and a Corporate Governance/ Nominating Committee. The
Audit Committee, Compensation Committee, and Corporate
Governance/ Nominating Committee each operate pursuant to a
committee charter. The charter of each Committee is available on
the Companys web site at www.alliedcapital.com in the
Investor Resources section.
9
During 2004, the Board of Directors of the Company held 18 board
meetings and 71 committee meetings. All directors attended at
least 75% of the aggregate number of meetings of the respective
boards and of the respective committees on which they served.
Each director makes a diligent effort to attend all Board and
committee meetings, as well as the Annual Meeting of
Stockholders. Each of the directors was present at the
Companys 2004 Annual Meeting of Stockholders.
The Company has designated the Chairman of the Corporate
Governance/ Nominating Committee as the presiding director to
preside at all executive sessions of non-management directors.
In his absence, the Chairman of the Audit Committee has been
designated to serve in such capacity. Executive sessions of
non-management directors are held regularly. Stockholders may
communicate with the presiding director by writing to Presiding
Director of the Board of Directors, Allied Capital Corporation,
c/o Corporate Secretary, 1919 Pennsylvania Avenue, NW,
Washington, DC 20006.
The Executive Committee.
The Executive Committee has and may exercise those rights,
powers, and authority that the Board of Directors from time to
time grants to it, except where action by the Board is required
by statute, an order of the Securities and Exchange Commission
(the Commission), or the Companys charter or
bylaws. The Executive Committee has been delegated authority
from the Board to review and approve certain investments. The
Executive Committee met 43 times during 2004. The Executive
Committee members currently are Messrs. Walton, Firestone,
Hebert, Leahy, Long, and Steuart.
The Audit Committee. The
Audit Committee operates pursuant to a charter approved by the
Board of Directors. The charter sets forth the responsibilities
of the Audit Committee. The primary function of the Audit
Committee is to serve as an independent and objective party to
assist the Board of Directors in fulfilling its responsibilities
for overseeing and monitoring the quality and integrity of the
Companys financial statements, the adequacy of the
Companys system of internal controls, the review of the
independence, qualifications and performance of the
Companys independent registered public accounting firm,
and the performance of the Companys internal audit
function. The Audit Committee met 16 times during 2004. The
Audit Committee is presently composed of four persons, including
Messrs. Browne (Chairman) and Garcia and Mmes. Grant and
van Roijen, all of whom are considered independent under the
rules promulgated by the New York Stock Exchange. The
Companys Board of Directors has determined that
Mr. Browne and Ms. Grant are audit committee
financial experts as defined under Item 401 of
Regulation S-K of the Securities Exchange Act of 1934.
Mr. Browne and Ms. Grant each meet the current independence
and experience requirements of Rule 10A-3 of the Exchange Act
and, in addition, are not interested persons of the
Company as defined in Section 2(a)(19) of the Investment
Company Act of 1940.
The Compensation Committee.
The Compensation Committee approves managements
recommendations for the compensation of the Companys
executive officers and reviews the amount of salary and bonus
for each of the Companys other officers and employees. In
addition, the Compensation Committee approves stock option
grants for the Companys officers under the Companys
Amended Stock Option Plan,
10
determines the individual performance awards and individual
performance bonuses for participants and determines other
compensation arrangements for employees. The Compensation
Committee met 11 times during 2004. The Compensation Committee
members currently are Messrs. Leahy (Chairman), Browne, and
Garcia, each of whom is not an interested person as
defined in Section 2(a)(19) of the Investment Company Act
of 1940.
The Corporate Governance/
Nominating Committee. The Corporate Governance/ Nominating
Committee recommends candidates for election as directors to the
Board of Directors and makes recommendations to the Board as to
the Companys corporate governance policies. The Corporate
Governance/ Nominating Committee met once during 2004. The
Corporate Governance/ Nominating Committee members currently are
Messrs. Hebert (Chairman), Browne, and Pollock and
Ms. van Roijen, each of whom is not an interested
person as defined in Section 2(a)(19) of the
Investment Company Act of 1940.
The Corporate Governance/ Nominating Committee will consider
qualified director nominees recommended by stockholders when
such recommendations are submitted in accordance with the
Companys bylaws, Corporate Governance Policy, and any
other applicable law, rule or regulation regarding director
nominations. When submitting a nomination to the Company for
consideration, a stockholder must provide certain information
that would be required under applicable Commission rules,
including the following minimum information for each director
nominee: full name, age and address; principal occupation during
the past five years; current directorships on publicly held
companies and investment companies; number of shares of Company
common stock owned, if any; and, a written consent of the
individual to stand for election if nominated by the Board of
Directors and to serve if elected by the stockholders.
In evaluating director nominees, the Corporate Governance/
Nominating Committee considers the following factors:
|
|
|
|
|
the appropriate size and composition of the Companys Board
of Directors; |
|
|
|
whether or not the person is an interested person of
the Company as defined in Section 2(a)(19) of the
Investment Company Act of 1940; |
|
|
|
the needs of the Company with respect to the particular talents
and experience of its directors; |
|
|
|
the knowledge, skills, and experience of nominees in light of
prevailing business conditions and the knowledge, skills, and
experience already possessed by other members of the Board; |
|
|
|
familiarity with national and international business matters; |
|
|
|
experience with accounting rules and practices; |
|
|
|
appreciation of the relationship of the Companys business
to the changing needs of society; |
11
|
|
|
|
|
the desire to balance the considerable benefit of continuity
with the periodic injection of the fresh perspective provided by
new members; and |
|
|
|
all applicable laws, rules, regulations, and listing standards. |
The Corporate Governance/ Nominating Committees goal is to
assemble a Board of Directors that brings to the Company a
variety of perspectives and skills derived from high quality
business and professional experience.
Other than the foregoing, there are no stated minimum criteria
for director nominees, although the Corporate Governance/
Nominating Committee may also consider such other factors as it
may deem to be in the best interests of the Company and its
stockholders. The Corporate Governance/ Nominating Committee
also believes it appropriate for certain key members of the
Companys management to participate as members of the Board.
The Corporate Governance/ Nominating Committee identifies
nominees by first evaluating the current members of the Board of
Directors willing to continue in service. Current members of the
Board with skills and experience that are relevant to the
Companys business and who are willing to continue in
service are considered for re-nomination, balancing the value of
continuity of service by existing members of the Board with that
of obtaining a new perspective. If any member of the Board does
not wish to continue in service or if the Corporate Governance/
Nominating Committee or the Board decides not to re-nominate a
member for re-election, or if the Corporate Governance/
Nominating Committee recommends to expand the size of the Board
of Directors, the Corporate Governance/ Nominating Committee
identifies the desired skills and experience of a new nominee in
light of the criteria above. Current members of the Corporate
Governance/ Nominating Committee and Board of Directors provide
suggestions as to individuals meeting the criteria of the
Corporate Governance/ Nominating Committee. Consultants may also
be engaged to assist in identifying qualified individuals.
Other Committees. During
2004, the Board of Directors formed an ad hoc Markets Committee,
which was established to monitor the market activity in the
Companys common stock. The Markets Committee met
informally from time to time during the year.
Communication with the Board of Directors
Stockholders with questions about the Company are encouraged to
contact Allied Capitals Investor Relations department.
However, if stockholders feel their questions have not been
addressed, they may communicate with the Companys Board of
Directors by sending their communications to Allied Capital
Corporation Board of Directors, c/o Corporate Secretary, 1919
Pennsylvania Avenue, NW, Washington, DC 20006. All stockholder
communications received by our Corporate Secretary in this
manner will be delivered to one or more members of the Board of
Directors.
12
Code of Business Conduct
Each executive officer as well as every employee of the Company
is subject to the Companys Code of Business Conduct, a
copy of which is available on the Companys website at
www.alliedcapital.com in the Investor Resources section.
Information about Executive Officers
The following information, as of March 21, 2005, pertains
to the Companys executive officers who are not directors
of the Company.
Kelly A. Anderson
Age 51. Ms. Anderson, Executive Vice President and
Treasurer, has been employed by the Company since 1987.
Ms. Anderson is responsible for the Companys
treasury, cash management and infrastructure operations.
Scott S. Binder
Age 50. Mr. Binder, Chief Valuation Officer, has been
employed by the Company since 1997. He has served as Chief
Valuation Officer since 2003, and has also worked in the private
finance investment group. He served as a consultant to the
Company from 1991 until 1997. Prior to joining the Company,
Mr. Binder formed and was President of Overland
Communications Group. He has also worked in the specialty
finance and leasing industries.
Douglas L. Cooper
Age 43. Mr. Cooper, Managing Director, has been employed by
the Company in its commercial real estate investment group since
1999. Prior to joining the Company, Mr. Cooper was a Senior
Vice President at Criimi Mae, a real estate investment trust.
N. John Fontana
Age 46. Mr. Fontana, Managing Director, works in the
Companys private finance investment group and has been
employed by the Company since 2004. Prior to joining the
Company, Mr. Fontana was a Principal of Tigris, an
operations consulting firm in the consumer products and
manufacturing industries from 2002 to 2004. Mr. Fontana was
a turnaround manager working for a series of private equity and
venture capital firms from 1999 to 2002. He participated in the
buyout and served as Chief Operating Officer of Electrolux, LLC
from 1998 to 1999. Previously, he served as a Partner with
Deloitte & Touche Consulting Group.
Michael J. Grisius
Age 41. Mr. Grisius, Managing Director, works in the
Companys private finance investment group and has been
employed by the Company since 1992. Prior to joining the
Company, Mr. Grisius worked in corporate finance at
Chemical Bank and was employed by KPMG LLP.
Jeri J. Harman
Age 47. Ms. Harman, Managing Director, works in the
Companys private finance investment group and has been
employed by the Company since 2004. Prior to joining the
Company, Ms. Harman served as a Managing Director and
Principal for American Capital Strategies, Ltd. from 2000 until
2004. She worked as a Managing
13
Director and Head of Private Placements for First Security Van
Kasper (1996 to 2000) and a Managing Director of Coopers &
Lybrand (1993 to 1996). From 1982 to 1993, Ms. Harman held
various senior level positions in the private placement arm of
The Prudential Insurance Company of America.
Robert D. Long
Age 48. Mr. Long, Managing Director, joined the Company in
its private finance investment group in 2002. Prior to joining
the Company, Mr. Long was Managing Director and Head of
Investment Banking at C.E. Unterberg from 2001 to 2002, and
Managing Director at E*OFFERING/ Wit SoundView from 2000 to
2001. He also held management positions at Bank of America
(Montgomery Securities) (1996 to 2000), and Nomura Securities
International (1992 to 1996), and prior to that he served as a
Managing Director at CS First Boston.
Jordan C. Paul
Age 43. Mr. Paul, Managing Director, joined the Company in
its real estate group in 2004. Prior to joining the Company,
Mr. Paul was President of Aquila Property Company, a
commercial real estate investment advisory firm, from 2000 to
2004. Prior to that, Mr. Paul was President of Llama
Capital Mortgage Company (1999) and held positions earlier in
his career at Ocwen Financial Corporation (1993 to 1998) and
practiced law (1989 to 1993).
Timothy H. Pease
Age 45. Mr. Pease, Senior Vice President and Director of
Financial Operations, has been employed by the Company since
2003. Prior to joining the Company, Mr. Pease was the Principal
Accounting Officer for Amicus Holdings, Inc. from 2001 to 2002.
He has also held senior accounting positions at Broadband
Residential, Inc. (2000 to 2001) and Host Marriott Services
Corporation (1998 to 2000). Mr. Pease also served as a senior
manager at Arthur Andersen LLP. Mr. Pease is responsible
for managing the Companys accounting and loan servicing
activities.
Penni F. Roll
Age 39. Ms. Roll, Chief Financial Officer, has been
employed by the Company since 1995. Ms. Roll is responsible
for the Companys financial operations. Prior to joining
the Company, Ms. Roll was employed by KPMG LLP.
Edward H. Ross
Age 39. Mr. Ross, Managing Director, joined the Company in
its private finance investment group in 2002. Prior to joining
the Company, Mr. Ross co-founded and served as a Managing
Director of Leveraged Capital at Wachovia Securities (previously
First Union Securities) from 1998 to 2002, a merchant banking
arm for the firm. He also held management positions in First
Unions Leveraged Finance Group (1994 to 1998).
Daniel L. Russell
Age 40. Mr. Russell, Managing Director, joined the Company
in 1998, and works in the private finance investment group.
Prior to joining the Company, Mr. Russell was employed by KMPG
LLP.
14
John M. Scheurer
Age 52. Mr. Scheurer, Managing Director, leads the
commercial real estate group and has been employed by the
Company in the commercial real estate investment group since
1991. Prior to joining the Company, Mr. Scheurer worked in
the commercial real estate business with his own company, The
Scheurer Company, and co-founded Hunter Associates, a leasing
and consulting real estate firm in the Washington, DC area. He
worked for First American Bank in Washington, DC (1977 to 1984).
John D. Shulman
Age 42. Mr. Shulman, Managing Director, has been employed
by the Company in the private finance investment group since
2001. Prior to joining the Company, Mr. Shulman served as the
President and CEO of Onyx International, LLC from 1995 to 2001.
He currently serves as a director of ChemLink Laboratories LLC
and as a member of the investment committees of Taiwan Mezzanine
Fund and Greater China Private Equity Fund.
Suzanne V. Sparrow
Age 39. Ms. Sparrow, Executive Vice President, Chief
Compliance Officer and Corporate Secretary, has been employed by
the Company since 1987. Ms. Sparrow manages the
Companys compliance and corporate governance activities.
Thomas H. Westbrook
Age 41. Mr. Westbrook, Managing Director, has been employed
by the Company in the private finance investment group since
1991. Prior to joining the Company, Mr. Westbrook worked
with the North Carolina Enterprise Fund and was a lending
officer in NationsBanks corporate lending unit.
Compensation of Directors and Certain Executive Officers
The following table sets forth compensation that the Company
paid during the year ended December 31, 2004, to all of the
directors and the three highest paid executive officers of the
Company (collectively, the Compensated Persons) in
each capacity in which each Compensated Person served. Certain
of the Compensated Persons served as both officers and directors.
The Companys directors are divided into two
groups interested directors and independent
directors. Interested directors are interested
persons as defined in the Investment Company Act of 1940.
15
Compensation Table
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension or |
|
|
|
|
|
|
|
|
Retirement |
|
|
|
|
|
|
|
|
Benefits |
|
|
|
|
Aggregate | |
|
Securities | |
|
Accrued as |
|
Directors | |
|
|
Compensation | |
|
Underlying | |
|
Part of |
|
Fees Paid | |
|
|
from the | |
|
Options/ | |
|
Company |
|
by the | |
Name |
|
Company (1,2) | |
|
SARs (3) | |
|
Expenses (2) |
|
Company (4) | |
|
|
| |
|
| |
|
|
|
| |
Interested Directors:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William L. Walton, Chairman and CEO
|
|
$ |
5,292,081 |
|
|
|
400,000 |
|
|
$ |
|
|
|
$ |
|
|
Joan M. Sweeney, Chief Operating Officer
|
|
|
3,031,545 |
|
|
|
300,000 |
|
|
|
|
|
|
|
|
|
Robert E. Long, Director
|
|
|
76,000 |
|
|
|
5,000 |
|
|
|
|
|
|
|
76,000 |
|
Independent Directors:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brooks H. Browne, Director
|
|
|
103,000 |
|
|
|
5,000 |
|
|
|
|
|
|
|
103,000 |
|
John D. Firestone, Director
|
|
|
79,000 |
|
|
|
5,000 |
|
|
|
|
|
|
|
79,000 |
|
Anthony T. Garcia, Director
|
|
|
95,000 |
|
|
|
5,000 |
|
|
|
|
|
|
|
95,000 |
|
Ann Torre Grant, Director
|
|
|
80,000 |
|
|
|
5,000 |
|
|
|
|
|
|
|
80,000 |
|
Lawrence I. Hebert, Director
|
|
|
82,500 |
|
|
|
5,000 |
|
|
|
|
|
|
|
82,500 |
|
John I. Leahy, Director
|
|
|
102,500 |
|
|
|
5,000 |
|
|
|
|
|
|
|
102,500 |
|
Alex J. Pollock, Director
|
|
|
41,500 |
|
|
|
5,000 |
|
|
|
|
|
|
|
41,500 |
|
Guy T. Steuart II, Director
|
|
|
76,000 |
|
|
|
5,000 |
|
|
|
|
|
|
|
76,000 |
|
Laura W. van Roijen, Director
|
|
|
79,000 |
|
|
|
5,000 |
|
|
|
|
|
|
|
79,000 |
|
Executive Officer:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John M. Scheurer
|
|
|
2,119,459 |
|
|
|
150,000 |
|
|
|
|
|
|
|
|
|
|
|
(1) |
There were no perquisites paid by the Company in excess of the
lesser of $50,000 or 10% of the Compensated Persons total
salary and bonus for the year. |
|
|
(2) |
The following table provides detail as to aggregate compensation
paid for 2004 to the three highest paid executive officers of
the Company, including the Chief Executive Officer: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other | |
|
|
Salary | |
|
Bonus | |
|
IPA | |
|
Benefits | |
|
|
| |
|
| |
|
| |
|
| |
Mr. Walton
|
|
$ |
1,457,692 |
|
|
$ |
750,000 |
|
|
$ |
2,949,976 |
|
|
$ |
134,413 |
|
Ms. Sweeney
|
|
|
973,077 |
|
|
|
500,000 |
|
|
|
1,461,721 |
|
|
|
96,747 |
|
Mr. Scheurer
|
|
|
589,615 |
|
|
|
300,000 |
|
|
|
1,120,846 |
|
|
|
108,998 |
|
|
|
|
In 2004, the Company established individual performance awards.
See also Individual Performance Award. Included for
each executive officer in Other Benefits is, among
other things, an employer contribution to the 401(k) Plan, a
contribution to the Deferred Compensation Plan I, and
health and dental insurance. See also Employment
Agreements. |
|
|
(3) |
See Stock Option Awards for terms of options granted
in 2004. |
|
|
(4) |
Consists only of directors fees paid by the Company for
2004. Such fees are also included in the column titled
Aggregate Compensation from the Company. |
Compensation of Non-Officer Directors
Each non-officer director receives an annual retainer of
$40,000. In addition, committee chairs receive an annual
retainer of $5,000. For each committee meeting attended,
Executive Committee members receive $1,000 per meeting; Audit
Committee members receive $2,500 per meeting; and members of the
Compensation and Corporate Governance/ Nominating Committees
receive $1,500 per meeting.
Directors may choose to defer such fees through the
Companys Deferred Compensation Plan, and may choose to
invest such deferred income in shares of the Companys
common stock through a trust.
16
Non-officer directors are eligible for stock option awards under
the Companys Amended Stock Option Plan pursuant to an
exemptive order from the Securities and Exchange Commission. The
terms of the order, which was granted in September 1999,
provided for a one-time grant of 10,000 options to each
non-officer director on the date that the order was issued, or
on the date that any new director is elected by stockholders to
the Board of Directors. Thereafter, each non-officer director
will receive 5,000 options each year on the date of the Annual
Meeting of Stockholders at the fair market value on the date of
grant. See Amended Stock Option Plan.
Stock Option Awards
The following table sets forth the details relating to option
grants in 2004 to Compensated Persons under the Companys
Amended Stock Option Plan, and the potential realizable value of
each grant, as prescribed to be calculated by the Commission.
See Amended Stock Option Plan.
Options Granted During 2004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Potential Realizable | |
|
|
|
|
|
|
|
|
|
|
Value at Assumed | |
|
|
Number of | |
|
|
|
|
|
|
|
Annual Rates | |
|
|
Securities | |
|
Percent of | |
|
|
|
|
|
Of Stock Appreciation | |
|
|
Underlying | |
|
Total Options | |
|
Exercise | |
|
|
|
Over 10-Year Term (2) | |
|
|
Options | |
|
Granted | |
|
Price Per | |
|
Expiration | |
|
| |
Name |
|
Granted | |
|
In 2004 (1) | |
|
Share | |
|
Date | |
|
5% | |
|
10% | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
Interested Directors:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William L. Walton
|
|
|
400,000 |
|
|
|
4.90 |
% |
|
$ |
28.98 |
|
|
|
3/11/14 |
|
|
$ |
7,290,146 |
|
|
$ |
18,474,663 |
|
Joan M. Sweeney
|
|
|
300,000 |
|
|
|
3.70 |
|
|
|
28.98 |
|
|
|
3/11/14 |
|
|
|
5,467,610 |
|
|
|
13,855,997 |
|
Robert E. Long
|
|
|
5,000 |
|
|
|
0.06 |
|
|
|
24.44 |
|
|
|
5/12/14 |
|
|
|
76,851 |
|
|
|
194,755 |
|
Independent Directors:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brooks H. Browne
|
|
|
5,000 |
|
|
|
0.06 |
|
|
|
24.44 |
|
|
|
5/12/14 |
|
|
|
76,851 |
|
|
|
194,755 |
|
John D. Firestone
|
|
|
5,000 |
|
|
|
0.06 |
|
|
|
24.44 |
|
|
|
5/12/14 |
|
|
|
76,851 |
|
|
|
194,755 |
|
Anthony T. Garcia
|
|
|
5,000 |
|
|
|
0.06 |
|
|
|
24.44 |
|
|
|
5/12/14 |
|
|
|
76,851 |
|
|
|
194,755 |
|
Ann Torre Grant
|
|
|
5,000 |
|
|
|
0.06 |
|
|
|
24.44 |
|
|
|
5/12/14 |
|
|
|
76,851 |
|
|
|
194,755 |
|
Lawrence I. Hebert
|
|
|
5,000 |
|
|
|
0.06 |
|
|
|
24.44 |
|
|
|
5/12/14 |
|
|
|
76,851 |
|
|
|
194,755 |
|
John I. Leahy
|
|
|
5,000 |
|
|
|
0.06 |
|
|
|
24.44 |
|
|
|
5/12/14 |
|
|
|
76,851 |
|
|
|
194,755 |
|
Alex J. Pollock
|
|
|
5,000 |
|
|
|
0.06 |
|
|
|
24.44 |
|
|
|
5/12/14 |
|
|
|
76,851 |
|
|
|
194,755 |
|
Guy T. Steuart II
|
|
|
5,000 |
|
|
|
0.06 |
|
|
|
24.44 |
|
|
|
5/12/14 |
|
|
|
76,851 |
|
|
|
194,755 |
|
Laura W. van Roijen
|
|
|
5,000 |
|
|
|
0.06 |
|
|
|
24.44 |
|
|
|
5/12/14 |
|
|
|
76,851 |
|
|
|
194,755 |
|
Executive Officer:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John M. Scheurer
|
|
|
150,000 |
|
|
|
1.80 |
|
|
|
28.98 |
|
|
|
3/11/14 |
|
|
|
2,733,805 |
|
|
|
6,927,998 |
|
|
|
(1) |
In 2004, the Company granted options to purchase a total of
8,169,750 shares. |
|
(2) |
Potential realizable value is calculated on 2004 options
granted, and is net of the option exercise price but before any
tax liabilities that may be incurred. These amounts represent
certain assumed rates of appreciation, as mandated by the
Commission. Actual gains, if any, on stock option exercises are
dependent on the future performance of the shares, overall
market conditions, and the continued employment by the Company
of the option holder. The potential realizable value will not
necessarily be realized. |
17
The following table sets forth the details of option exercises
by Compensated Persons during 2004 and the values of those
unexercised options at December 31, 2004.
Option Exercises and Year-End Option Values
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Securities | |
|
Value of Unexercised | |
|
|
|
|
|
|
Underlying Unexercised | |
|
In-the-Money Options | |
|
|
Shares | |
|
|
|
Options as of 12/31/04 | |
|
as of 12/31/04 (2) | |
|
|
Acquired | |
|
Value | |
|
| |
|
| |
Name |
|
On Exercise | |
|
Realized (1) | |
|
Exercisable | |
|
Unexercisable | |
|
Exercisable | |
|
Unexercisable | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
Interested Directors:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William L. Walton
|
|
|
0 |
|
|
$ |
0 |
|
|
|
2,336,035 |
|
|
|
504,066 |
|
|
$ |
13,884,995 |
|
|
$ |
881,565 |
|
Joan M. Sweeney
|
|
|
0 |
|
|
|
0 |
|
|
|
1,249,127 |
|
|
|
379,093 |
|
|
|
6,891,866 |
|
|
|
665,682 |
|
Robert E. Long
|
|
|
0 |
|
|
|
0 |
|
|
|
35,000 |
|
|
|
0 |
|
|
|
122,870 |
|
|
|
0 |
|
Independent Directors:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
122,870 |
|
|
|
0 |
|
Brooks H. Browne
|
|
|
0 |
|
|
|
0 |
|
|
|
35,000 |
|
|
|
0 |
|
|
|
122,870 |
|
|
|
0 |
|
John D. Firestone
|
|
|
0 |
|
|
|
0 |
|
|
|
35,000 |
|
|
|
0 |
|
|
|
122,870 |
|
|
|
0 |
|
Anthony T. Garcia
|
|
|
0 |
|
|
|
0 |
|
|
|
35,000 |
|
|
|
0 |
|
|
|
122,870 |
|
|
|
0 |
|
Ann Torre Grant
|
|
|
0 |
|
|
|
0 |
|
|
|
15,000 |
|
|
|
0 |
|
|
|
49,200 |
|
|
|
0 |
|
Lawrence I. Hebert
|
|
|
0 |
|
|
|
0 |
|
|
|
35,000 |
|
|
|
0 |
|
|
|
122,870 |
|
|
|
0 |
|
John I. Leahy
|
|
|
0 |
|
|
|
0 |
|
|
|
35,000 |
|
|
|
0 |
|
|
|
122,870 |
|
|
|
0 |
|
Alex J. Pollock
|
|
|
6,800 |
|
|
|
41,838 |
|
|
|
5,000 |
|
|
|
0 |
|
|
|
7,000 |
|
|
|
0 |
|
Guy T. Steuart II
|
|
|
0 |
|
|
|
0 |
|
|
|
35,000 |
|
|
|
0 |
|
|
|
122,870 |
|
|
|
0 |
|
Laura W. van Roijen
|
|
|
0 |
|
|
|
0 |
|
|
|
35,000 |
|
|
|
0 |
|
|
|
122,870 |
|
|
|
0 |
|
Executive Officer:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John M. Scheurer
|
|
|
73,373 |
|
|
|
715,132 |
|
|
|
869,781 |
|
|
|
238,282 |
|
|
|
4,253,449 |
|
|
|
543,378 |
|
|
|
(1) |
Value realized is calculated as the closing market price on the
date of exercise, net of option exercise price, but before any
tax liabilities or transaction costs. This is the deemed market
value, which may actually be realized only if the shares are
sold at that price. |
|
|
(2) |
Value of unexercised options is calculated as the closing market
price on December 31, 2004, ($25.84), net of the option
exercise price, but before any tax liabilities or transaction
costs. In-the-Money Options are options with an
exercise price that is less than the market price as of
December 31, 2004. |
Amended Stock Option Plan
The Companys Amended Stock Option Plan is intended to
encourage stock ownership in the Company by officers and
directors, thus giving them a proprietary interest in the
Companys performance. The Amended Stock Option Plan was
most recently approved by stockholders on May 12, 2004.
The Compensation Committees principal objective in
awarding stock options to the eligible officers and directors of
the Company is to align each optionees interests with the
success of the Company and the financial interests of its
stockholders by linking a portion of such optionees
compensation with the performance of the Companys stock
and the value delivered to stockholders.
Stock options are granted under the Amended Stock Option Plan at
a price not less than the prevailing market value at the time of
the grant and will have realizable value only if the
Companys stock price increases. The Compensation Committee
determines the amount and features of the stock options, if any,
to be awarded to optionees. The Compensation Committee evaluates
a number of criteria, including the past service of each such
optionee to the Company, the present and potential contributions
of such optionee to the success of the Company, and such other
factors
18
as the Compensation Committee shall deem relevant in connection
with accomplishing the purposes of the Amended Stock Option
Plan, including the recipients current stock holdings,
years of service, position with the Company, and other factors.
The Compensation Committee does not apply a formula assigning
specific weights to any of these factors when making its
determination. The Compensation Committee awards stock options
on a subjective basis and such awards depend in each case on the
performance of the officer under consideration, and in the case
of new hires, their potential performance.
The Company has received approval from the Commission to grant
options under the Amended Stock Option Plan to non-officer
directors. Pursuant to the Commission order, initially each
incumbent non-officer director received options to purchase
10,000 shares and each will receive options to purchase
5,000 shares each year thereafter on the date of the Annual
Meeting of Stockholders. New non-officer directors receive
options to purchase 10,000 shares upon election by
stockholders to the Board of Directors, and options to purchase
5,000 shares each year thereafter, on the date of the
Annual Meeting of Stockholders.
The Amended Stock Option Plan is designed to satisfy the
conditions of Section 422 of the Code so that options
granted under the Amended Stock Option Plan may qualify as
incentive stock options. To qualify as
incentive stock options, options may not become
exercisable for the first time in any year if the number of
incentive options first exercisable in that year multiplied by
the exercise price exceeds $100,000.
401(k) Plan
The Company maintains a 401(k) plan (the 401(k)
Plan). All full-time employees who are at least
21 years of age have the opportunity to contribute pre-tax
salary deferrals into the 401(k) Plan up to $14,000 annually for
the 2005 plan year, and to direct the investment of these
contributions. Plan participants who reach the age of 50 during
the 2005 plan year are eligible to defer an additional $4,000
during 2005. The 401(k) Plan allows eligible participants to
invest in shares of the Companys common stock, among other
investment options. In addition, during the 2005 plan year, the
Company expects to contribute up to 5% of each
participants eligible compensation for the year, up to a
maximum compensation of $210,000, to each participants
plan account on the participants behalf, which fully vests
at the time of the contribution. The contribution with respect
to compensation in excess of $210,000 is made to the Deferred
Compensation Plan I. On February 25, 2005, the 401(k)
Plan held less than 1% of the outstanding shares of the Company.
See Voting Securities.
Individual Performance Award
The Compensation Committee has established a long-term incentive
compensation program whereby the Compensation Committee of the
Board of Directors determines an individual performance award
for certain officers annually, generally at the beginning of
each year. In determining the award for any one officer, the
Compensation Committee considers individual performance factors,
as well as the individuals contribution to the returns
generated for stockholders, among other factors. The individual
performance awards are deposited in a trust in approximately
19
equal cash installments, on a quarterly basis, and the cash is
used to purchase shares of the Companys common stock in
the market. See Deferred Compensation Plan II.
The following table presents the individual performance awards
that have been awarded by the Compensation Committee for 2005 to
the Compensated Persons as well as for all other participants as
a group:
|
|
|
|
|
|
|
2005 | |
|
|
Individual | |
Name and Position |
|
Performance Award(1) | |
|
|
| |
William L. Walton, Chief Executive Officer
|
|
$ |
1,475,000 |
|
Joan M. Sweeney, Chief Operating Officer
|
|
|
750,000 |
|
John M. Scheurer, Managing Director
|
|
|
550,000 |
|
All Executive Officers as a Group (excluding the Compensated
Persons)
|
|
|
3,385,500 |
|
Non-Executive Officers as a Group
|
|
|
1,345,000 |
|
|
|
(1) |
Represents individual performance awards expected to be expensed
for financial reporting purposes for 2005 for these officers,
assuming each participant remains employed by the Company
throughout the year. These amounts are subject to change if
there is a change in the composition of the pool of award
recipients during the year. |
Individual Performance Bonus
As a result of recent changes in regulation imposed by the Jobs
Creation Act of 2004 associated with deferred compensation
arrangements, as well as an increase in the competitive market
for recruiting and retaining top performers in private equity
firms, the Compensation Committee recommended to the Board and
the Board has approved that for 2005 a portion of the IPA should
be replaced with an individual performance bonus
(IPB). The IPB for 2005 has been determined to be
approximately $7.5 million. The IPB will be distributed in
cash to award recipients in equal bi-weekly installments as long
as each recipient remains employed by the Company. If a
recipient terminates employment during the year, any remaining
cash payments under the IPB would be forfeited. The following
table presents the individual performance bonuses that have been
awarded for 2005 for the Compensated Persons, as well as for all
other recipients as a group:
|
|
|
|
|
|
|
2005 | |
|
|
Individual | |
Name and Position |
|
Performance Bonus(1) | |
|
|
| |
William L. Walton, Chief Executive Officer
|
|
$ |
1,475,000 |
|
Joan M. Sweeney, Chief Operating Officer
|
|
|
750,000 |
|
John M. Scheurer, Managing Director
|
|
|
550,000 |
|
All Executive Officers as a Group (excluding the Compensated
Persons)
|
|
|
3,385,500 |
|
Non-Executive Officers as a Group
|
|
|
1,345,000 |
|
|
|
(1) |
Represents individual performance bonuses expected to be
expensed for financial reporting purposes for 2005 for these
officers, assuming each recipient remains employed by the
Company throughout the year. These amounts are subject to change
if there is a change in the composition of the pool of award
recipients during the year. |
Deferred Compensation Plan
The Company maintains a deferred compensation plan (the
DCP I). The DCP I is an unfunded plan, as
defined by the Internal Revenue Code of 1986, as amended (the
Code), that provides for the deferral of
compensation by directors, employees, and consultants of the
Company. Any director, senior officer, or
20
consultant of the Company is eligible to participate in the Plan
at such time and for such period as designated by the Board of
Directors. The DCP I is administered through a trust, and
the Company funds this plan through cash contributions.
Directors may choose to defer directors fees through the
DCP I, and may choose to invest such deferred income in
shares of the Companys common stock through a trust. On
February 25, 2005, the DCP I held 1,372 shares of
the Companys common stock. The DCP I may be amended
during 2005 as needed in order to conform to the requirements of
the Jobs Creation Act of 2004.
Deferred Compensation Plan II
In conjunction with the IPA, the Company established a
non-qualified deferred compensation plan (DCP II) in 2004,
which is administered through a trust by an independent
third-party trustee. The individual performance awards are
generally deposited in the trust in equal installments, on a
quarterly basis, in the form of cash. The Compensation Committee
designed the DCP II to require the trustee to use the cash
to purchase shares of the Companys common stock in the
market on the New York Stock Exchange. A participant only vests
in the award as it is deposited into the trust. The Compensation
Committee, in its sole discretion, shall designate the senior
officers who will receive individual performance awards and
participate in the DCP II. During any period of time in
which a participant has a deferral account in the DCP II,
any dividends declared and paid on shares of common stock
allocated to the participants account shall be reinvested
by the trustee as soon as practicable in shares of the
Companys common stock purchased in the open market.
In the event of termination of employment, one-third of the
participants deferral account will be immediately
distributed, one half of the then current remaining balance will
be distributed on the first anniversary of his or her employment
termination date, and the remainder of the account balance will
be distributed on the second anniversary of the employment
termination date. In the event of a change of control, which is
defined on page 22 in Employment Agreements,
all amounts in a participants deferral account will be
immediately distributed to the participant.
The aggregate maximum number of shares of the Companys
common stock that the trustee is authorized to purchase in the
open market for the purpose of investing the cash from
individual performance awards is 3,500,000 shares, subject to
appropriate adjustments in the event of a stock dividend, stock
split, or similar change in capitalization affecting the
Companys common stock. On February 25, 2005, the
DCP II held 506,065 shares of the Companys
common stock.
A participant who violates certain non-solicitation covenants
contained in the DCP II during the two years after the
termination of his or her employment will forfeit back to the
Company the remaining value of his or her deferral account.
The DCP II is administered by the Compensation Committee of
the Companys Board of Directors. The Board of Directors
reserves the right to amend, terminate, or discontinue
DCP II, provided that no such action will adversely affect
a participants rights under DCP II with respect to
the amounts paid to his or her deferral account. The DCP II
may be amended during 2005 as needed in order to conform to the
requirements of the Jobs Creation Act of 2004.
21
Employment Agreements
The Company entered into employment agreements in 2004 with
William L. Walton, the Companys Chairman and CEO, and
Joan M. Sweeney, the Companys Chief Operating
Officer, each of whom is a Compensated Person. The Company also
entered into an employment agreement in 2004 with Penni F.
Roll, the Companys Chief Financial Officer. Each of the
agreements provides for a three-year term that extends one day
at the end of every day during its length, unless either party
provides written notice of termination of such extension. In
that case, the agreement would terminate three years from such
notification.
Each agreement specifies each executives base salary
compensation during the term of the agreement. The Compensation
Committee has the right to increase the base salary during the
term of the employment agreement. In addition, each employment
agreement states that the Compensation Committee may provide, at
their sole discretion, an annual cash bonus. This bonus is to be
determined with reference to each executives performance
in accordance with performance criteria to be determined by the
Compensation Committee in its sole discretion. Under each
agreement, each executive also is entitled to participate in the
Companys Amended Stock Option Plan, and to receive all
other awards and benefits previously granted to each executive
including life insurance premiums.
The executive has the right to voluntarily terminate employment
at any time with 30 days notice, and in such case,
the employee will not receive any severance pay. Among other
things, the employment agreements prohibit the solicitation of
employees from the Company in the event of an executives
departure for a period of two years.
If employment is terminated with cause, the employee will not
receive any severance pay. If employment is terminated without
cause during the term of the agreement, or within 24 months
after a change in control, the executive shall be entitled to
severance pay for a period not to exceed 36 months.
Severance pay shall include three times the average base salary
for the preceding three years, plus three times the average
bonus compensation for the preceding three years, plus a lump
sum amount equal to $3,178,000 for Mr. Walton and
$2,831,000 for Ms. Sweeney. In the event of a change in
control, each executive would be entitled to a tax equalization
payment calculated in accordance with Section 280G of the
Internal Revenue Code on distributions to which the employee is
entitled upon termination, and the Company would also provide
compensation to offset any applicable excise tax penalties
imposed on the executive under Section 4999 of the Internal
Revenue Code. Such severance pay shall be paid in two
installments: 75% of such pay shall be paid at the time of
separation, and 25% shall be paid on the second anniversary of
such separation. Stock options would cease to vest during the
severance period.
Under the employment agreements, a Change in Control
means (i) the sale or other disposition of all or
substantially all of the Companys assets; or (ii) the
acquisition, whether directly, indirectly, beneficially (within
the meaning of Rule 13d-3 of the 1934 Act), or of record,
as a result of a merger, consolidation or otherwise, of
securities of the Company representing fifteen percent (15%) or
more of the aggregate voting power of the Companys then
outstanding common stock by any person (within the meaning of
Section 13(d) and 14(d) of the 1934 Act), including, but
not limited to, any corporation or group of persons acting in
concert,
22
other than (A) the Company or its subsidiaries and/or
(B) any employee pension benefit plan (within the meaning
of Section 3(2) of the Employee Retirement Income Security
Act of 1974) of the Company or its subsidiaries, including a
trust established pursuant to any such plan; or (iii) the
individuals who were members of the Board of Directors as of the
Effective Date (the Incumbent Board) cease to
constitute at least two-thirds
(2/3)
of the Board; provided, however, that any director appointed by
at least two-thirds
(2/3)
of the then Incumbent Board or nominated by at least two-thirds
(2/3)
of the Corporate Governance/ Nominating Committee of the Board
of Directors (a majority of the members of the Corporate
Governance/ Nominating Committee shall be members of the then
Incumbent Board or appointees thereof), other than any director
appointed or nominated in connection with, or as a result of, a
threatened or actual proxy or control contest, shall be deemed
to constitute a member of the Incumbent Board.
These employment agreements may be amended during 2005 as needed
in order to conform to the requirements of the Jobs Creation Act
of 2004.
Retention Agreements
In March 2005, the Company entered into a retention agreement
with John M. Scheurer, Managing Director in the Companys
commercial real estate group, in connection with the
Companys consideration of strategic alternatives for its
commercial real estate investment portfolio, including a sale,
spin-out or recapitalization of all or part of the
Companys commercial real estate assets. This agreement
expires on June 30, 2005, if a transaction has not been
completed by that date.
If the Company consummates a transaction, the agreement provides
that the Company will pay Mr. Scheurer a one-time lump sum bonus
of $500,000 if 1) he remains employed by the Company until the
transaction is consummated; or 2) the Company terminates his
employment without cause prior to the consummation of a
transaction. If the Company consummates a transaction and Mr.
Scheurer is hired by an acquirer and either remains employed by
the acquirer for at least 90 days following the transaction or
is terminated by the acquirer without cause during such period,
he will receive an additional $500,000. In addition, Mr.
Scheurer will receive a supplemental payment of $600,000 if a
transaction is consummated and he satisfies other conditions.
If the company consummates a transaction and an acquirer either
1) does not offer to employ Mr. Scheurer; 2) offers to employ
Mr. Scheurer but at a base salary below $750,000; or 3) employs
Mr. Scheurer but later terminates his employment for any reason
other than for cause within the initial twelve months of
employment, the agreement provides that the Company will pay Mr.
Scheurer a one-time lump sum payment of $1,200,000. Should Mr.
Scheurer remain with the acquirer for twelve months after the
consummation of a transaction and receive compensation of less
than $1,200,000 from the acquirer during the initial 12-month
period, the agreement provides that the Company will pay Mr.
Scheurer a one-time lump sum payment equal to the difference
between the amount paid to him by the acquirer during such
period and $1,200,000.
The Company also entered into similar agreements with four other
executives in the commercial real estate group, including
Douglas Cooper and Jordan Paul, both of
23
whom are Managing Directors in the commercial real estate group.
These agreements expire on June 30, 2005, if a transaction has
not been completed by that date.
If the Company consummates a transaction, the agreement provides
that the Company will pay the four executives, in the aggregate,
one-time lump sum bonuses totaling $900,000 if 1) the
individuals remain employed by the Company until the transaction
is consummated; or 2) the Company terminates the
individuals employment without cause prior to the
consummation of a transaction. If the Company consummates a
transaction and the individuals are hired by an acquirer and
either remain employed by the acquirer for at least 90 days
following the transaction or are terminated by the acquirer
without cause during such period, the individuals in the
aggregate would receive an additional amount totaling $900,000.
If the Company consummates a transaction and an acquirer either
1) does not offer to employ the individuals; 2) offers to employ
the individuals but at a base salary below a certain threshold;
or 3) employs the individuals but later terminates the
individuals employment for any reason other than for cause
or does not agree to pay a minimum compensation amount within
the initial twelve months of employment, the agreement provides
that the Company will pay the individuals, in the aggregate,
one-time lump sum payments totaling up to $2,750,000
Indemnification Agreements
The Company has entered into indemnification agreements with its
directors and certain senior officers of the Company. The
indemnification agreements are intended to provide these
directors and senior officers the maximum indemnification
permitted under Maryland law and the Investment Company Act of
1940. Each indemnification agreement provides that the Company
shall indemnify the director or senior officer who is a party to
the agreement (an Indemnitee), including the
advancement of legal expenses, if, by reason of his or her
corporate status, the Indemnitee is, or is threatened to be,
made a party to or a witness in any threatened, pending, or
completed proceeding, other than a proceeding by or in the right
of the Company.
Certain Relationships and Related Transactions
The following table sets forth certain information, as of
March 21, 2005, regarding indebtedness to the Company in
excess of $60,000 of any person serving as a director or
executive officer of the Company and of any nominee for election
as a director at any time since January 1, 2004. All of
such indebtedness results from loans made by the Company to
enable the exercise of stock options. The loans are required to
be fully collateralized and are full recourse against the
borrower and have varying terms not exceeding ten years. The
interest rates charged generally reflect the applicable federal
rate on the date of the loan.
As a business development company under the Investment Company
Act of 1940, the Company is entitled to provide and has provided
loans to officers of the Company in connection with the exercise
of options. However, as a result of
24
provisions of the Sarbanes-Oxley Act of 2002, the Company has
been prohibited from making new loans to its executive officers
since July 30, 2002.
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Range of | |
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Highest Amount | |
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Interest Rates | |
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Amount | |
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Outstanding | |
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| |
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Outstanding at | |
Name and Position with Company |
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During 2004 | |
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High | |
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Low | |
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March 21, 2005 | |
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| |
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| |
Executive Officers who are
Interested
Directors(1): |
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William L. Walton, Chief Executive Officer
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$ |
2,416,230 |
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6.24% |
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4.45% |
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$ |
0 |
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Joan M. Sweeney, Chief Operating Officer
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2,231,157 |
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6.63% |
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4.45% |
|
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399,962 |
|
|
Executive Officers:
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|
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Kelly A. Anderson, Executive Vice President and Treasurer
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1,432,225 |
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6.34% |
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|
|
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3.91% |
|
|
|
496,225 |
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Scott S. Binder, Chief Valuation Officer
|
|
|
297,923 |
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|
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4.93% |
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|
|
|
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4.93% |
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|
|
0 |
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Douglas L. Cooper, Managing Director
|
|
|
282,845 |
|
|
|
4.98% |
|
|
|
|
|
4.45% |
|
|
|
276,845 |
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Michael J. Grisius, Managing Director
|
|
|
242,788 |
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|
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4.68% |
|
|
|
|
|
3.91% |
|
|
|
230,727 |
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Penni F. Roll, Chief Financial Officer
|
|
|
1,273,924 |
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|
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6.24% |
|
|
|
|
|
4.45% |
|
|
|
1,174,832 |
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John M. Scheurer, Managing Director
|
|
|
2,058,996 |
|
|
|
6.63% |
|
|
|
|
|
4.73% |
|
|
|
167,453 |
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John D. Shulman, Managing Director
|
|
|
99,991 |
|
|
|
2.85% |
|
|
|
|
|
2.85% |
|
|
|
99,991 |
|
Suzanne V. Sparrow, Chief Compliance Officer and Secretary
|
|
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713,809 |
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|
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6.18% |
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|
|
|
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4.45% |
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626,309 |
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Thomas H. Westbrook, Managing Director
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370,134 |
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|
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4.98% |
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|
|
|
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4.98% |
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370,134 |
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|
(1) |
Interested directors are interested persons as
defined by the Investment Company Act of 1940. |
Section 16(a) Beneficial Ownership Reporting
Compliance
Pursuant to Section 16(a) of the Securities Exchange Act of
1934, the Companys directors and executive officers, and
any persons holding 10% or more of its common stock, are
required to report their beneficial ownership and any changes
therein to the Commission and the Company. Specific due dates
for those reports have been established, and the Company is
required to report herein any failure to file such reports by
those due dates. Based on the Companys review of
Forms 3, 4, and 5 filed by such persons, the Company
believes that during 2004 all Section 16(a) filing
requirements applicable to such persons were met in a timely
manner.
PROPOSAL 2.
RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
The Audit Committee and the disinterested members of the Board
of Directors have appointed KPMG LLP as the Companys
independent registered public accounting firm for the year
ending December 31, 2005. If the stockholders ratify the
selection of KPMG LLP as the Companys accountants, KPMG
LLP also will be the independent registered public accounting
firm for the consolidated subsidiaries of the Company.
KPMG LLP has advised the Company that neither the firm nor any
present member or associate of it has any material financial
interest, direct or indirect, in the Company or its subsidiaries.
25
The Company expects that a representative of KPMG LLP will be
present at the Meeting and will have an opportunity to make a
statement if he or she so chooses and will be available to
respond to appropriate questions.
Unless marked to the contrary, the shares represented by the
enclosed proxy card will be voted for ratification of the
selection of KPMG LLP as the independent registered public
accounting firm of the Company.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS THAT
STOCKHOLDERS VOTE TO RATIFY THE SELECTION OF KPMG LLP AS
THE
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM OF THE
COMPANY.
Fees Paid to KPMG LLP for 2004 and 2003
The following are aggregate fees billed to the Company by KPMG
LLP during 2004 and 2003.
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|
Fiscal Year Ended | |
|
|
December 31 | |
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| |
|
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2004 | |
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2003 | |
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| |
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| |
Audit Fees
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$ |
1,447,000 |
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$ |
764,495 |
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Audit-Related Fees
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|
|
432,000 |
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|
|
73,014 |
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Tax Fees
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|
|
58,500 |
|
|
|
77,075 |
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All Other Fees
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|
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TOTAL FEES:
|
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$ |
1,937,500 |
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$ |
914,584 |
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Audit Fees. Audit fees consist of fees billed for
professional services rendered for the audit of our year-end
consolidated financial statements and reviews of the interim
consolidated financial statements included in quarterly reports
and services that are normally provided by KPMG LLP in
connection with statutory and regulatory filings. These services
for 2004 also include the audits of managements assessment
of the effectiveness of the Companys internal controls
over financial reporting.
Audit-Related Fees. Audit-related fees consist of fees
billed for assurance and related services that are reasonably
related to the performance of the audit or review of our
consolidated financial statements and are not reported under
Audit Fees. These services include attest services
that are not required by statute or regulation, consultations
concerning financial accounting and reporting standards, and
fees related to requests for documentation and information from
regulatory and other government agencies.
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.
All Other Fees. All other fees would include fees for
products and services other than the services reported above.
Report of the Audit Committee
As part of its oversight of the Companys financial
statements, the Audit Committee reviewed and discussed with both
management and the Companys independent registered public
accounting firm all of the Companys financial statements
filed with the Commission for each quarter during 2004 and as of
and for the year ended December 31, 2004. Management
advised the Audit Committee that all financial statements were
prepared in accordance with accounting principles
26
generally accepted in the United States of America
(GAAP), and reviewed significant accounting issues
with the Audit Committee. The Audit Committee also discussed
with the independent registered public accounting firm the
matters required to be discussed by Statement on Auditing
Standards No. 61, Communication with Audit Committees,
as amended, by the Auditing Standards Board of the American
Institute of Certified Public Accountants.
The Audit Committee of the Board has established a pre-approval
policy that describes the permitted audit, audit-related, tax,
and other services to be provided by KPMG LLP, the
Companys independent registered public accounting firm.
The policy requires that the Audit Committee pre-approve the
audit and non-audit services performed by the independent
registered public accounting firm in order to assure that the
provision of such service does not impair the firms
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 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.
The Audit Committee received and reviewed the written
disclosures from the independent registered public accounting
firm required by Independence Standard No. 1,
Independence Discussions with Audit Committees, as
amended, by the Independence Standards Board, and has discussed
with the firm its independence. The Audit Committee has reviewed
the audit fees paid by the Company to the independent registered
public accounting firm. It has also reviewed non-audit services
and fees to assure compliance with the Companys and the
Audit Committees policies restricting the independent
registered public accounting firm from performing services that
might impair its independence. The Audit Committee also reviewed
the requirements and the Companys implementation of
Section 404 of the Sarbanes-Oxley Act of 2002 including the
Public Company Accounting Oversight Boards Auditing
Standard No. 2 regarding the audit of internal controls over
financial reporting.
Based on the reviews and discussions referred to above, the
Audit Committee recommended to the Board of Directors that the
financial statements as of and for the year ended
December 31, 2004, be included in the Companys Annual
Report on Form 10-K for the year ended December 31,
2004, for filing with the Commission. The Audit Committee also
recommended the selection of KPMG LLP to serve as the
independent registered public accounting firm of the Company for
the year ending December 31, 2005.
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|
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Audit Committee |
|
Brooks H. Browne, Chairman |
|
Anthony T. Garcia, Member |
|
Ann Torre Grant, Member |
|
Laura W. van Roijen, Member |
27
OTHER BUSINESS
The Board of Directors knows of no other business to be
presented for action at the Meeting. If any matters do come
before the 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 Meeting. The submission of a
proposal does not guarantee its inclusion in the Companys
Proxy Statement or presentation at the Meeting unless certain
securities law requirements are met.
2006 ANNUAL MEETING OF STOCKHOLDERS
Any stockholder proposals submitted pursuant to the SECs
Rule 14a-8 for inclusion in the Companys proxy
statement and form of proxy for the 2006 annual meeting of
stockholders must be received by the Company on or before
December 7, 2005. Such proposals must also comply with the
requirements as to form and substance established by the SEC if
such proposals are to be included in the proxy statement and
form of proxy. Any such proposal should be mailed to: Allied
Capital Corporation, 1919 Pennsylvania Avenue, N.W.,
Washington, D.C. 20006, Attention: Corporate Secretary.
Stockholder proposals or director nominations to be presented at
the 2006 annual meeting of stockholders, other than stockholder
proposals submitted pursuant to the SECs Rule 14a-8,
must be delivered to, or mailed and received at, the principal
executive offices of the Company not less than ninety
(90) days in advance of the one year anniversary of the
date the Companys proxy statement was released to
stockholders in connection with the previous years annual
meeting of stockholders. For the Companys 2006 annual
meeting of stockholders, the Company must receive such proposals
and nominations no later than January 6, 2006. If the date
of the annual meeting has been changed by more than thirty
(30) calendar days from the date contemplated at the time
of the previous years proxy statement, stockholder
proposals or director nominations must be so received not later
than the tenth day following the day on which such notice of the
date of the 2006 annual meeting of stockholders or such public
disclosure is made. Proposals must also comply with the other
requirements contained in the Companys bylaws, including
supporting documentation and other information. Proxies
solicited by the Company will confer discretionary voting
authority with respect to these proposals, subject to SEC rules
governing the exercise of this authority.
28
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ALLIED
CAPITAL CORPORATION 1919
PENNSYLVANIA AVE. NWWASHINGTON,
DC 20006
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VOTE BY INTERNET www.proxyvote.com Use the Internet to transmit your voting instructions
and for electronic delivery of information up until
11:59 P.M. Eastern Time the day before the cut-off date or meeting
date. Have your proxy card in hand when you access the web
site and follow the instructions to obtain your records and
to create an electronic voting instruction form. |
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VOTE BY PHONE 1-800-690-6903 |
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Use any touch-tone telephone to transmit your
voting instructions |
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up until 11:59 P.M. Eastern Time the
day before the cut-off date |
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or meeting date. Have your proxy card in hand
when you call |
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and then follow the instructions. |
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VOTE BY MAIL |
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Mark, sign, and date your proxy card and return
it in the postage- |
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paid envelope we have provided or return it
to Allied Capital |
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Corporation, c/o ADP, 51 Mercedes Way, Edgewood,
NY 11717. |
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: þ
ALCAP1 KEEP THIS PORTION FOR YOUR RECORDS
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID
ONLY WHEN SIGNED AND DATED.
ALLIED CAPITAL CORPORATION
Election of Directors
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1.
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This election of the following five persons |
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(except as marked to the contrary) as Class |
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I Directors who will serve as directors of |
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For
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Withhold
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For All
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To withhold authority to vote, mark For All Except |
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Allied Capital Corporation until 2008, or until their successors are elected
and qualified.
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All
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All
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Except
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and write the nominees number on the line below. |
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NOMINEES: CLASS I DIRECTORS
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_____________________________________________ |
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01) John D. Firestone |
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02) Anthony T. Garcia |
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03) Lawrence I. Hebert |
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04) Marc F. Racicot |
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05) Laura W. van Roijen |
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Vote On Proposal |
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For |
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Against |
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Abstain |
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2.
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The ratification of the selection of KPMG LLP as independent registered
public accounting firm for Allied Capital Corporation for the year ending
December 31, 2005.
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o
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o
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o |
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3.
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To transact such other business as may properly come before the Meeting. |
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IMPORTANT: Please sign your name(s) exactly as shown hereon and date your proxy in
the blank provided. For joint accounts, each joint owner should sign. When signing as attorney,
executor, administrator, trustee or guardian, please give your full title as such. If the signer
is a corporation or partnership, please sign in full corporate or partnership name by a duly
authorized officer or partner.
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Yes
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No |
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Please indicate if you plan to attend this meeting in person.
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_____________________________________________
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__________________________________________ |
Signature [PLEASE SIGN WITHIN BOX] Date
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P10330 |
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Signature (Joint Owners) Date |
ALLIED CAPITAL CORPORATION
Annual Meeting of Stockholders
Admission Ticket
May 17, 2005
10:00 a.m.
The Four Seasons Hotel
2800 Pennslyvania Avenue, NW
Washington, DC
If you plan to attend the Annual Meeting of Stockholders on May 17th, please detach this card and bring it with you
for presentation at the Meeting. Please be sure to bring this ticket
with you, as you will need it to gain access to the Meeting.
The doors will open at
9:15 a.m.; a continental breakfast buffet will be served.
ALLIED CAPITAL CORPORATION
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The
undersigned hereby appoints WILLIAM L. WALTON, PENNI F. ROLL and SUZANNE V. SPARROW, or any
one of them, and each with full power of substitution, to act as attorneys and proxies for the undersigned
to vote all the shares of Common Stock of the Company which the undersigned is entitled to vote at the Annual
Meeting of Stockholders of the Company to be held at the Four Seasons Hotel, 2800 Pennsylvania Avenue, NW,
Washington, DC on May 17, 2005 at 10:00 A.M. [Eastern] and at all adjournments thereof, as indicated
on this proxy.
THIS PROXY IS REVOCABLE AND WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED, THIS
PROXY WILL BE VOTED FOR THE NOMINEES AND FOR THE PROPOSAL LISTED. If any other business is presented
at the meeting, this proxy will be voted by the proxies in their best judgment,
including a motion to adjourn or postpone the meeting to another time and/or place for the purpose
of soliciting additional proxies. At the present time, the Board of Directors knows of no other business
to be presented at the meeting.
PLEASE MARK, SIGN AND RETURN THIS PROXY IN THE ENCLOSED ENVELOPE. THE UNDERSIGNED ACKNOWLEDGES RECEIPT
FROM THE COMPANY PRIOR TO THE EXECUTION OF THIS PROXY OF A NOTICE OF ANNUAL MEETING OF STOCKHOLDERS AND A PROXY STATEMENT.
(CONTINUED ON REVERSE SIDE)