HERCULES CAPITAL, INC. 2024 PROXY STATEMENT
Notice of Annual Meeting
June 20, 2024
Empowering Innovators
TO MY FELLOW STOCKHOLDER,
On behalf of the Board of Directors and the Hercules Capital team, thank you for your investment.
Following another record-breaking year in 2023, it is my pleasure to once again invite you to the Hercules Capital Annual Meeting of Stockholders.
This year marks our 20th year investing in the venture and growth stage asset class. Our success and longevity is attributable to the tremendous dedication, efforts and capabilities of our employees, the trust that our venture capital and private equity partners place with us every day and the support by you - our valued stockholders. Since 2004, we have committed more than $19 billion to technology and life sciences companies that drive innovation, enhance the lives of countless individuals, strengthen businesses and foster economic growth. Your investment and support is vital to our mission and success.
Protecting your investment is a responsibility that I, the Hercules team and our Board of Directors take very seriously. At the 2023 annual meeting, stockholders granted us the ability to sell shares of common stock if the price per share becomes less than the net asset value per share, subject to certain conditions and stockholder protections. This approval expires at the 2024 annual meeting and we are asking stockholders to renew this approval for an additional year. We still have no current intention to conduct such sales. However, we continue to believe strongly that having this approval is protective to our stockholders during times of extreme market conditions and helps ensure that we are poised to seize short-term opportunities for the long-term. To ensure that we lock in this protection for another year, it imperative that you vote your shares using one of the methods described on page 1 of this proxy statement before June 20, 2024.
Since 2004, we have committed
more than $19 billion to
technology and life sciences
companies that drive
innovation, enhance the lives
of countless individuals,
strengthen businesses and
foster economic growth.
Your investment
and support is
vital to our
mission and
success.
As we enter into our third decade of venture and growth-stage lending, the Board of Directors and the entire Hercules team remain steadfast in our efforts to maximize total stockholder returns and expand our platform capabilities for the benefit of our clients. We are honored to continue to put your investment to work by lending to innovative, entrepreneurial companies.
Thank you for your commitment to Hercules Capital and the entrepreneurs and businesses we serve.
Sincerely,
Scott Bluestein
Chief Executive Officer Chief Investment Officer
As presented above, Return on Average Equity and Return on Average Assets are (i) sourced from Hercules Capital, Inc. and S&P Capital IQ as of December 31, 2023 and (ii) based on net investment income, excluding realized and unrealized gains/losses.
NOTICE OF 2024 ANNUAL MEETING
The details of the 2024 annual meeting of stockholders (the "Annual Meeting") of Hercules Capital, Inc. are as follows:
Annual Meeting
Date and Time | Location | Record Date |
Thursday, June 20, 2024 | www.virtualshareholdermeeting.com/HTGC2024 | Friday, April 19, 2024 |
9:00 a.m. Pacific Time |
Voting Matters
At or before the Annual Meeting, we ask that you vote on the following items:
For more | |||
Board | information, | ||
Proposal | Description | Recommendation | see page: |
1 | Election of three Independent Directors | FOR | 5 |
2 | Advisory vote to approve the Company's named executive officer compensation | FOR | 40 |
3 | Authorization of the Company to sell or issue shares of its common stock at a price | FOR | 42 |
below its then-current NAV per share, subject to the conditions set forth in Proposal 3 | |||
4 | Ratification of the selection of the Independent Public Accountant for the fiscal year | FOR | 50 |
ending December 31, 2024 | |||
YOUR VOTE IS IMPORTANT - How to vote:
Internet: Visit www.proxyvote.com | Phone | |||||
You will need the 16-digit control number included in the | Call 1-800-690-6903 or the number on your voter instruction form. | |||||
proxy card, voter instruction card or notice. | You will need the control number included in your proxy card. | |||||
QR Code | ||||||
You can scan the QR Code on your proxy card to vote | Send your completed and signed proxy card or voter instruction | |||||
with your mobile phone. | form to the address on your proxy card or voter instruction form. | |||||
You may also attend and participate in the Annual Meeting virtually by following the instructions on www.proxyvote.com. Please have your 16-Digit Control Number (located on your proxy card) to join the meeting.
We plan to begin mailing the Proxy Statement to stockholders on or about April 23, 2024. The enclosed proxy statement (the "Proxy Statement") is also available at www.proxyvote.com, where you can also find copies of the proxy card and the Company's Annual Report on Form 10-K (the "Annual Report"). Stockholders may request a copy of the Proxy Statement and the Annual Report by contacting our main office at (650) 289-3060.
By Order of the Board,
Kiersten Zaza Botelho
Corporate Secretary
CONTENTS
SUMMARY INFORMATION | 1 | Potential Payments upon Termination or Change in | |
2024 Annual Meeting and How to Vote | 1 | Control | 33 |
About Hercules, Our Governance and Our Performance | 2 | CEO Pay Ratio | 35 |
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL | Pay vs. Performance | 36 | |
Independent Director Compensation | 38 | ||
OWNERS AND MANAGEMENT | 3 | ||
Equity Compensation Plan Information | 39 | ||
PROPOSAL 1: ELECTION OF THREE INDEPENDENT | PROPOSAL 2: ADVISORY VOTE TO APPROVE THE | ||
DIRECTORS | 5 | ||
COMPANY'S NAMED EXECUTED OFFICER | |||
Summary of the Board and 2024 Director Nomination | |||
COMPENSATION | 40 | ||
Process | 6 | ||
Key Stockholder Considerations | 6 | PROPOSAL 3: AUTHORIZATION OF THE COMPANY | |
Board Structure and Composition | 6 | TO SELL OR ISSUE SHARES OF ITS COMMON | |
Board Committees | 7 | STOCK AT A PRICE BELOW ITS THEN-CURRENT | |
Director Qualifications | 7 | NAV PER SHARE, SUBJECT TO THE CONDITIONS | |
Corporate Governance Practices | 7 | SET FORTH IN PROPOSAL 3 | 42 |
Director Independence; Conflicts | 8 | Overview and Conditions of Below-NAV Sales | 43 |
Board Oversight of Risk | 9 | Reasons to Conduct Below-NAV Sales | 44 |
Corporate Responsibility | 9 | Key Stockholder Considerations | 45 |
Additional Information | 9 | Dilutive Effect of Below-NAV Sales on Stockholders | 45 |
Communication with the Board | 9 | Trading History of the Shares | 46 |
Availability of Corporate Governance Documents | 10 | Tables | 47 |
Committee Composition, Responsibilities and Meetings | 11 | PROPOSAL 4: RATIFICATION OF SELECTION OF | |
BIOGRAPHICAL INFORMATION | 12 | INDEPENDENT PUBLIC ACCOUNTANT FOR THE | |
Biographical Summary Table (Directors) | 12 | FISCAL YEAR ENDING DECEMBER 31, 2024 | 50 |
Biographical Information of Director Nominees | 13 | Background | 51 |
Biographical Information of Directors | 16 | Key Stockholder Considerations | 51 |
Officers Who Are Not Directors | 20 | Principal Accountant Fees and Services | 51 |
COMPENSATION DISCUSSION AND ANALYSIS | 21 | Pre-Approval Policy | 52 |
Introduction | 22 | AUDIT COMMITTEE REPORT | 53 |
Compensation Determination Process | 22 | STOCKHOLDER PROPOSALS | 54 |
Role of the Independent Compensation Consultant | 23 | ||
Peer Group Composition, Data and Review | 23 | QUESTION AND ANSWERS | 55 |
Assessment of Company and Individual | |||
Performance, Pay-for-Performance Alignment and | |||
Other Considerations | 24 | ||
Risk Assessment of the Compensation Program | 25 | ||
The NEO Compensation Program | 26 | ||
Compensation Philosophy | 26 | ||
Regulatory Limitations on Compensation | 26 | ||
Compensation Elements | 27 | ||
Clawback Policy for Section 16 Officers | 29 | ||
COMPENSATION COMMITTEE REPORT | 30 | ||
COMPENSATION TABLES | 31 | ||
Executive Compensation Tables | 31 | ||
Summary Compensation Table | 31 | ||
Grants of Plan Based Awards in 2023 | 32 | ||
Outstanding Equity Awards at Fiscal Year End, | |||
December 31, 2023 | 32 | ||
Options Exercised and Stock Vested in 2023 | 33 | ||
Nonqualified Deferred Compensation in 2023 | 33 |
i
HELPFUL RESOURCES
Definition of Certain Terms or Abbreviations
1940 Act means the Investment Company Act of 1940, as amended
Annual Meeting means the 2024 annual meeting of stockholders
Annual Report means the Company's Annual Report on Form 10-K
BDC means business development company
Board means the Company's Board of Directors
CEO means chief executive officer
Committees means the Company's Audit, Compensation and Nominating and Governance ("Governance") Committees
Company, we or us means Hercules Capital, Inc., its wholly- owned subsidiaries and affiliated securitization trusts
Director means a member of the Company's Board
Dodd-FrankAct means the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010
Exchange Act means the Securities Exchange Act of 1934, as amended
Independent Director means a Director who is not an "interested person" of the Company, as defined by the 1940 Act and applicable NYSE rules
Independent Public Accountant means
PricewaterhouseCoopers LLP, or PwC
NAV means net asset value
NYSE means the New York Stock Exchange
SEC means the Securities and Exchange Commission
NEO means named executive officer
Proxies refers to Scott Bluestein and Kiersten Zaza Botelho, the designated proxies for the Annual meeting
Proxy Statement means this proxy statement, which provides important information about the Annual Meeting
RIC means regulated investment company under the Internal Revenue Code of 1986, as amended
Securities Act means the Securities Act of 1933, as amended
Shares means shares of the Company's common stock
Where You Can Find More Information
Annual Meeting
Proxy Statement & Annual Report
https://investor.htgc.com/company-information/annual-reports-proxy
Voting Your Proxy Online before the 2024 Annual Meeting
www.proxyvote.com
Board of Directors
https://investor.htgc.com/corporate-governanceboard-of-directors
Communications with the Board
Please see page 9 of this Proxy Statement for details.
Committee Charters
https://investor.htgc.com/corporate-governance/governance-documents
- Audit Committee Charter
- Compensation Committee Charter
- Nominating and Corporate Governance Committee Charter
Other Governance Documents
https://investor.htgc.com/corporate-governance/governance-documents
- Code of Business Conduct and Ethics
- Code of Ethics for Directors, Officers and All Employees
- Corporate Governance Guidelines
- ESG Policy
- Sarbanes-OxleyWhistleblower Procedures
Investor Relations
https://investor.htgc.com
ii
VOTING INFORMATION
Quorum Required to Hold the Annual Meeting
We cannot conduct any business at the Annual Meeting unless a quorum of stockholders is present - meaning generally that stockholders who collectively hold a majority of the outstanding Shares have voted or authorized a proxy to vote. Abstentions and broker non-votes (see below) will be treated as Shares present for determining whether we have a quorum. If we do not have a quorum, the chairman of the Annual Meeting may adjourn the meeting to a later date to allow additional time for stockholders to vote.
Vote Required for Each Proposal to Pass
Proposal | Vote Required | |
1 | Election of three Independent Directors | Affirmative vote of a majority of the votes cast for and against a Director Nominee at the |
Annual Meeting in person or by proxy | ||
2 | Advisory vote to approve the Company's named | Affirmative vote of a majority of the votes cast at the Annual Meeting in person or by |
executive officer compensation | proxy | |
3 | Authorization of the Company to sell or issue | The affirmative vote of holders of at least a "majority of outstanding shares" (as defined in |
shares of its common stock at a price below its | the 1940 Act) of (i) the Shares and (ii) the Shares held by persons that are not affiliated | |
then-current NAV per share, subject to the | persons of the Company, is required to approve this proposal. Under the 1940 Act, the | |
conditions set forth in Proposal 3 | vote of holders of a "majority of outstanding shares" means the vote of the holders of the | |
lesser of (a) 67% or more of the outstanding Shares present or represented by proxy at | ||
the Annual Meeting if the holders of more than 50% of the Shares are present or | ||
represented by proxy or (b) more than 50% of the outstanding Shares. |
4 Ratification of the selection of the Independent Public Accountant for the fiscal year ending December 31, 2024
Affirmative vote of a majority of the votes cast at the Annual Meeting in person or by proxy
Abstentions and Broker Non-Votes
An abstention represents action by a stockholder to refrain from voting "for" or "against" a proposal. Abstentions will have no effect on the outcomes of Proposals 1, 2 and 4 but will have the effect of a vote against Proposal 3. "Broker non-votes" represent votes that are not cast on a non-routinematter by a broker that is present (in person or by proxy) at the meeting because (i) the Shares entitled to cast the votes are held in "street name," (ii) the broker lacks discretionary authority to vote the Shares and (iii) the broker has not received voting instructions from the beneficial owner. For the Annual Meeting, each of
Proposals 1 - 3 is a non-routinematter. This means that if you hold your Shares in "street name," your Shares will have no effect on the outcome of Proposals 1 - 3 unless you give your broker (or bank or other nominee) specific instructions on how to vote your Shares. Proposal 4 is a routine matter. As a result, if you beneficially own your Shares and you do not provide your broker, bank or nominee with voting instructions, then your broker, bank or nominee will be able to vote your Shares with respect to Proposal 4 on your behalf.
YOUR VOTE IS IMPORTANT - PLEASE VOTE TODAY
iii
SUMMARY INFORMATION
This summary provides highlights about Hercules Capital, Inc. and information contained elsewhere in this Proxy Statement. This summary does not contain all of the information that you should consider when deciding how to vote your Shares.
2024 Annual Meeting and How to Vote
You are receiving this Proxy Statement because you hold Shares of Hercules Capital, Inc. (the "Company"). Each year, we hold an annual meeting to solicit stockholder feedback and approval on certain items relating to our operations and governance, including the election of members of our Board. Our 2024 Annual Meeting will be held on June 20, 2024. We encourage you to vote on the following proposals, which are described in more detail elsewhere in this Proxy Statement. You do not need to attend the Annual Meeting in order to vote your Shares - instead, you may easily cast your vote online, by phone or by mail, as described below.
For more | |||||||||
Board | information, | ||||||||
Proposal | Description | Recommendation | see page: | ||||||
1 | Election of three Independent Directors | FOR | 5 | ||||||
2 | Advisory vote to approve the Company's named executive officer compensation | FOR | 40 | ||||||
3 | Authorization of the Company to sell or issue shares of its common stock at a price | FOR | 42 | ||||||
below its then-current NAV per share, subject to the conditions set forth in Proposal 3 | |||||||||
4 | Ratification of the selection of the Independent Public Accountant for the fiscal year | FOR | 50 | ||||||
ending December 31, 2024 | |||||||||
How to Vote | |||||||||
Internet: Visit www.proxyvote.com | Phone | ||||||||
You will need the 16-digit control number included in the | Call 1-800-690-6903 or the number on your voter instruction form. | ||||||||
proxy card, voter instruction card or notice. | You will need the control number included in your proxy card. | ||||||||
QR Code | |||||||||
You can scan the QR Code on your proxy card to vote | Send your completed and signed proxy card or voter instruction | ||||||||
with your mobile phone. | form to the address on your proxy card or voter instruction form. | ||||||||
You may also attend and participate in the Annual Meeting virtually by following the instructions on www.proxyvote.com. Please have your 16-Digit Control Number (located on your proxy card) to join the meeting. If you encounter any difficulties accessing the virtual Annual Meeting during the check-in or meeting time, please call the technical support number that will appear on the log in website page fifteen minutes prior to the meeting start time.
Frequently Asked Questions and Contact Information
We have provided responses to the following asked questions at the back of this Proxy Statement, on page 55.
- Why did I receive this Proxy Statement?
- How do I vote?
- What happens if I do nothing (aka choose not to vote)?
- May I change my vote or revoke my proxy?
- What is householding?
- What is the vote required for each proposal?
- What are abstentions and "broker non-votes"?
- Who is paying for the costs of soliciting these proxies?
- How do I find out the results of the voting at the Annual Meeting?
If you have any further questions about how to cast your vote, the Annual Meeting or about this Proxy Statement generally, please contact Michael Hara, Managing Director of Investor Relations and Corporate Communications, at (650) 433-5578 or mhara@htgc.comor Kiersten Zaza Botelho, Corporate Secretary, at (617) 314-9973 or kbotelho@htgc.com.
1
About Hercules, Our Governance and Our Performance
We are a specialty finance company focused on providing senior secured loans to high-growth, innovative venture capital-backed and institutional-backed companies in a variety of technology, life sciences and sustainable and renewable technology industries. As the largest and leading venture lending platform in the industry, we are committed to delivering strong, sustainable long-term stockholder returns.
Corporate Governance Highlights
Board Practices | Stockholder Matters | ||
• 7 out of 8 Directors are Independent Directors | • Long-standing, active stockholder engagement | ||
• Demonstrated commitment to Board refreshment (in past five years, | • Annual "say-on-pay" advisory vote (91% stockholder | ||
assuming election of current Director Nominees, 4 new Directors have | approval in 2023) | ||
joined and 4 have rolled off the Board) | • Majority voting with resignation policy for Directors in | ||
• Demonstrated commitment to periodic committee refreshment and | uncontested elections | ||
committee chair succession (since 2019, new chairs have been appointed | |||
on all three Committees) | |||
• Robust Director nominee selection process | Other Best Practices | ||
• Regular Board, Committee and Director evaluations | • Stock ownership guidelines for executive officers and | ||
• Lead Independent Director elected by the Independent Directors, with | |||
Directors | |||
robust duties and oversight responsibilities | |||
• Annual Board review of CEO and senior management | |||
• Independent Audit, Compensation and Governance Committees | |||
succession planning | |||
• Regular executive sessions of Independent Directors | |||
• Anti-hedging and anti-pledging policies | |||
• Strategy and risk oversight by full Board and Committees | |||
• Clawback policy for incentive awards | |||
• Regular review and assessment of Committee responsibilities | |||
• No tax gross-up payments | |||
2023 Performance |
We are incredibly proud of our 2023 performance and the returns we delivered to our stockholders. For information regarding our performance as compared to that of our Peer Group during 2023, please see the discussion beginning on page 23 of this Proxy Statement.
2
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of April 9, 2024, the beneficial ownership of each current Director, Director Nominee, our NEOs, each person known to us to beneficially own 5% or more of the outstanding Shares, and our NEOs and Directors as a group. Beneficial ownership is determined in accordance with the rules of the SEC. Common stock subject to options or warrants that are currently exercisable or exercisable within 60 days of April 9, 2024 are deemed to be outstanding and beneficially owned by the person holding such options or warrants. Such Shares, however, are not deemed outstanding for the purposes of computing the percentage ownership of any other person. Percentage of ownership is based on 162,230,026 Shares outstanding as of April 9, 2024. Unless otherwise indicated, to our knowledge, each stockholder listed below has sole voting and investment power with respect to the Shares beneficially owned by the stockholder, except to the extent authority is shared by their spouses under applicable law. Unless otherwise indicated, the address of all NEOs and Directors is c/o Hercules Capital, Inc., 1 N B Street, Suite 2000, San Mateo, California 94401.
Number of Shares Owned | ||||||||
Name Address of Beneficial Owner | Type of Ownership | Beneficially(1) | Percentage of Class | |||||
Interested Director | ||||||||
Scott Bluestein(2) | Record/Beneficial | 2,305,061 | 1.4% | |||||
Independent Directors | ||||||||
Robert P. Badavas(3) | Record/Beneficial | 126,686 | * | |||||
DeAnne Aguirre(4) | Record/Beneficial | 7,998 | * | |||||
Gayle Crowell(5) | Record/Beneficial | 48,808 | * | |||||
Thomas J. Fallon(6) | Record/Beneficial | 90,412 | * | |||||
Wade Loo(7) | Record/Beneficial | 20,301 | * | |||||
Pam Randhawa(8) | Record/Beneficial | 12,584 | * | |||||
Nikos Theodosopoulos(9) | Record/Beneficial | 967 | * | |||||
Other Named Executive Officers | ||||||||
Seth H. Meyer(10) | Record/Beneficial | 355,626 | * | |||||
Christian Follmann(11) | Record/Beneficial | 97,655 | * | |||||
Kiersten Zaza Botelho(12) | Record/Beneficial | 50,069 | * | |||||
Named Executive Officers and Directors as a | ||||||||
group (11 persons)(13) | 1.9% | |||||||
Beneficial Owners of More than 5% | ||||||||
Kingdom Holding Company(14) | 9,411,490 | 5.8% |
- Less than 1%.
- Beneficial ownership has been determined in accordance with Rule 13d-3 under the Exchange Act.
- Includes 557,067 restricted Shares.
- Includes 15,000 Shares that can be acquired upon the exercise of outstanding options and 4,234 restricted Shares. 107,452 Shares are held of record by the Robert P. Badavas Trust of 2007 and Mr. Badavas disclaims any beneficial ownership interest of such Shares except to the extent of his pecuniary interest therein.
- Includes 3,386 restricted Shares. 4,612 shares are held of record by the Aguirre Family 2004 Trust and Ms. Aguirre disclaims any beneficial ownership interest in such Shares except to the extent of her pecuniary interest therein.
- Includes 4,917 restricted Shares.
- Includes 4,917 restricted Shares. 85,495 Shares are held of record by the Fallon Family Revocable Trust and Mr. Fallon disclaims any beneficial ownership interest of such Shares except to the extent of his pecuniary interest therein.
- Includes 3,010 restricted Shares. 17,291 Shares are held of record by the Loo Revocable Trust and Mr. Loo disclaims any beneficial ownership interest of such Shares except to the extent of his pecuniary interest therein.
- Includes 4,234 restricted Shares.
- Includes 643 restricted Shares.
- Includes 193,188 restricted Shares.
- Includes 55,465 restricted Shares and 350 Shares held by Mr. Follmann's spouse in her name. Mr. Follmann disclaims any beneficial ownership interest of such Shares held by his spouse except to the extent of his pecuniary interest therein.
- Includes 42,636 restricted Shares.
- Includes 15,000 Shares that can be acquired upon the exercise of outstanding options and 873,697 restricted Shares.
- Based on information provided in a Schedule 13G filed on May 8, 2023, Kingdom Holding Company reported sole voting and dispositive power with respect to Shares. The Schedule 13G does not include any information regarding Shares acquired or sold since the date of such Schedule 13G. The business address of Kingdom Holding Company is 66 Floor, Kingdom Centre, P.O. Box 1, Riyadh 11321, Kingdom of Saudi Arabia.
3
Attachments
- Original Link
- Original Document
- Permalink
Disclaimer
Hercules Capital Inc. published this content on 17 May 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 17 May 2024 16:51:01 UTC.
