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Section 1: DEF 14A (DEF 14A)

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934

Filed by the Registrant ☒
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Definitive Proxy Statement
o
Definitive Additional Materials
o
Soliciting Material Pursuant to §240.14a-12

Hercules Capital, Inc.
(Name of Registrant as Specified in Its Charter)

(Name of Person(s) Filing Proxy Statement if Other Than the Registrant)

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April 24, 2019

Dear Stockholder:

You are cordially invited to attend the 2019 annual meeting of stockholders of Hercules Capital, Inc. The annual meeting will be held on May 30, 2019 at 9:00 a.m., Pacific Time, at Hercules Capital, Inc., 400 Hamilton Avenue, Suite 310, Palo Alto, California.

Details regarding the business to be conducted at the annual meeting are more fully described in the accompanying notice of annual meeting and proxy statement.

Your vote is very important. Whether or not you plan to attend the annual meeting, please carefully review the enclosed proxy statement and then cast your vote. It is important that your shares be represented at the annual meeting, and you are encouraged to vote your shares as soon as possible. The enclosed proxy card contains instructions for voting over the Internet, by telephone, by QR Barcode or by returning your proxy card by mail in the envelope provided. For shares held in “street name,” please follow the relevant instructions for telephone and Internet voting provided by your broker, bank or other nominee.

Your continuing support of Hercules is very much appreciated.

 
Sincerely,
   
 
 

 
Scott Bluestein
Interim Chief Executive Officer
Chief Investment Officer

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400 Hamilton Avenue, Suite 310
Palo Alto, California 94301
(650) 289-3060

NOTICE OF 2019 ANNUAL MEETING OF STOCKHOLDERS
HERCULES CAPITAL, INC.

 
 
 
Time
9:00 a.m., Pacific Time
 
 
 
Date
May 30, 2019
 
 
 
Place
Hercules Capital, Inc. 400 Hamilton Avenue, Suite 310, Palo Alto, California 94301
 
 
 
Purpose
1.
Elect two directors who will serve for the term specified in the Proxy Statement.
 
 
 
 
2.
Approve, on an advisory basis, the compensation of the Company’s named executive officers.
 
 
 
 
3.
Ratify the selection of PricewaterhouseCoopers LLP to serve as our independent public accounting firm for the year ending December 31, 2019.
 
 
 
 
4.
Transact such other business as may properly come before the meeting or any postponement or adjournment thereof.
 
 
 
Record Date
You have the right to receive notice of and to vote at the annual meeting if you were a stockholder of record at the close of business on April 24, 2019. We plan to begin mailing this Proxy Statement on or about April 29, 2019 to all stockholders entitled to vote their shares at the annual meeting.
 
 
 
Voting by Proxy
Please submit a proxy card or, for shares held in “street name,” voting instruction form as soon as possible so your shares can be voted at the meeting. You may submit your proxy card or voting instruction form by mail. If you are a registered stockholder, you may also vote electronically by telephone or over the Internet by following the instructions included with your proxy card. If your shares are held in “street name,” you will receive instructions for voting of shares from your broker, bank or other nominee, which may permit telephone or Internet voting. Follow the instructions on the voting instruction form that you receive from your broker, bank or other nominee to ensure that your shares are properly voted at the annual meeting.
 
 
 
 
The enclosed Proxy Statement is also available at www.proxyvote.com. This website also includes copies of the proxy card and our annual report to stockholders. Stockholders may request a copy of the Proxy Statement and our annual report by contacting our main office at (650) 289-3060.
 
 
 
 
By Order of the Board,
 

 
General Counsel, Chief Compliance Officer
and Secretary

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PROXY STATEMENT—TABLE OF CONTENTS

 
Page
   
 
 
 
 
 
   
 
 
 
 
 
   
 
 
 
Board of Directors and Corporate Governance
 
 
 
   
 
 
 
 
 
   
 
 
 
 
 
   
 
 
 
 
 
   
 
 
 
 
 
   
 
 
 
 
 
   
 
 
 
 
 
   
 
 
 
 
 
   
 
 
 
 
 
   
 
 
 
 
 
   
 
 
 
 
 
   
 
 
 
 
 
   
 
 
 
 
 
   
 
 
 
 
 
   
 
 
 
 
 
   
 
 
 
Executive Officers and Director Compensation
 
 
 
   
 
 
 
 
 
   
 
 
 
 
 
   
 
 
 
 
 
   
 
 
 
 
 
   
 
 
 
 
 
   
 
 
 
 
 
   
 
 
 
OTHER PROXY PROPOSALS
 
 
 
   
 
 
 
 
 
   
 
 
 
 
 
   
 
 
 
 
 
   
 
 
 
MEETING AND OTHER INFORMATION
 
 
 
   
 
 
 
 
 
   
 
 
 
 
 

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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. The “Company,” “Hercules,” “HTGC,” “we,” “us” and “our” refer to Hercules Capital, Inc. and its wholly owned subsidiaries and its affiliated securitization trusts.

About Hercules and 2018 Financial Highlights

We are a specialty finance company focused on providing senior secured venture growth loans to high-growth, innovative venture capital-backed companies in a variety of technology, life sciences and sustainable and renewable technology industries.

2018 Peer Group Analysis

As of December 31, 2018, the Company generally outperformed most of its Peer Group (defined on page 29) over the one-, three- and five-year period as follows:

Performance
Period
Return on
Average Assets
(excl. cash)
Return on
Equity
Return on
Invested Capital
Average Annual
Shareholder Returns (“AASR”)
HTGC
% Rank of
Peer Group
HTGC
% Rank of
Peer Group
HTGC
% Rank of
Peer Group
HTGC
% Rank of
Peer Group
1-year
5.6%
100%
10.8%
100%
5.7%
100%
-6.9%
48%
3-year
5.9%
100%
10.8%
100%
5.9%
100%
6.6%
52%
5-year
6.0%
100%
10.6%
100%
6.1%
100%
1.5%
49%

−1-, 3- and 5-year calculations of performance are based on data through the most recently reported quarter (fiscal year end for HTGC), and as of December 31, 2018 for AASR.

−Companies with less than three and/or less than five full years of historical financial and AASR performance are excluded.

−Financial Services peers are excluded from analysis of capital allocation because services companies are not as capital intensive as REITs and BDCs, which are primarily engaged in direct investment of firm capital.

−The data is from S&P Capital IQ and is not adjusted by Frederic W. Cook & Co., Inc., or F.W. Cook, which means the data may not reflect internal adjustments regularly made by Hercules or by the peer companies when assessing their performance.

Voting Matters and Recommendations

Agenda Items
Board Vote Recommendation
Page Reference
(for more detail)
1.
To elect two directors who will serve for the term specified in the Proxy Statement.
FOR
 
 
 
 
2.
Approve, on an advisory basis, the compensation of the Company’s named executive officers.
FOR
 
 
 
 
3.
To ratify the selection of PricewaterhouseCoopers LLP (“PwC”) to serve as our independent public accounting firm for the fiscal year ending December 31, 2019.
FOR

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SUMMARY INFORMATION

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Board Nominees

Name
Age
Director Since
Independent(1)
Board Committee Members
AC
CC
NCGC
Joseph F. Hoffman
70
2015
X
C
M
Doreen Woo Ho
71
2016
X
M
C

AC = Audit Committee CC = Compensation Committee NCGC = Nominating and Corporate Governance Committee

M = Member C = Committee Chairman

(1) Under the rules and regulations of the SEC and the listing standards of New York Stock Exchange (“NYSE”).

Corporate Governance Highlights

Board Independence: Independent directors comprise the majority of our board of directors (“Board”) (8 out of 9 directors).
Lead Independent Director: A lead independent director enhances our Board’s management oversight responsibilities.
Board Committee: All of the members of our Audit Committee, Compensation Committee, and Nominating and Corporate Governance Committee (“NCG Committee”) are independent directors.
Board Accountability: Our Board and its committees conduct scheduled meetings in executive session, out of the presence of our chief executive officer.
Risk Management: Our Board and its committees remain in close contact with, and receive reports on various aspects of our business from, our senior management team and independent auditors.
The “Corporate Governance” section of this Proxy Statement provides further information about our corporate governance practices, Board structure and Board committees.

Executive Compensation

Consistent with our Board’s recommendation and our stockholders’ preference, we submit an advisory vote to approve our executive compensation (otherwise known as “say-on-pay”) on an annual basis. Accordingly, we are seeking your approval, on an advisory basis, of the compensation for our NEOs, as further described in the “Compensation Discussion and Analysis” section of this Proxy Statement.

2018 Executive Compensation Highlights

For a summary of our 2018 executive compensation and key features of our executive compensation programs, please refer to the Executive Summary of the “Compensation Discussion and Analysis” section of this Proxy Statement on page 25.

Auditor Matters

We are seeking your ratification of PwC as our independent public accounting firm for the 2019 fiscal year. The following table summarizes the fees billed by PwC for the fiscal year ending December 31, 2018, (please refer to the proposal on page 49):

 
2018
(in millions)
Audit Fees
$
    1.3
 
Audit-Related Fees
 
 
Tax Fees
$
0.1
 
All Other Fees
 
0.2
 
Total
$
1.6
 

For 2018, 81.3% of the 2018 fees represented audit and audit-related fees.

SUMMARY INFORMATION
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General Information

For general information regarding our Proxy Statement, please review the questions and answers at the end of our Proxy Statement. For questions in which you require additional information, please call us at (650) 600-5405 or send an e-mail to Melanie Grace, Secretary, at mgrace@htgc.com.

You may cast your vote in any of the following ways:






Internet
Visit www.proxyvote.com. You will need the 16-digit control number included in the proxy card, voter instruction card or notice.
QR Code
You can scan the QR Code on your proxy card to vote with your mobile phone.
Phone
Call 1-800-690-6903 or the number on your voter instruction form. You will need the control number included in your proxy card.
Mail
Send your completed and signed proxy card or voter instruction form to the address on your proxy card or voter instruction form.
In Person
Attend the meeting in person.

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GENERAL INFORMATION

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth, as of April 17, 2019, the beneficial ownership of each current director, each nominee for director, our NEOs, each person known to us to beneficially own 5% or more of the outstanding shares of our common stock, and our executive officers 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 17, 2019 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 97,072,866 shares of common stock outstanding as of April 17, 2019.

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 executive officers and directors is c/o Hercules Capital, Inc., 400 Hamilton Avenue, Suite 310, Palo Alto, California 94301.

Our directors are divided into two groups—interested directors and independent directors. Interested directors are “interested persons” as defined in Section 2(a)(19) of the Investment Company Act of 1940, as amended (the “40 Act”), and independent directors are all other directors.

Name and Address of Beneficial Owner
Type of Ownership
Number of Shares
Owned Beneficially(1)
Percentage of
Class
Interested Director
 
 
 
 
 
 
 
 
 
Manuel A. Henriquez(2)
 
Record/Beneficial
 
 
2,350,799
 
 
2.4
%
 
 
 
 
 
 
 
 
 
 
Independent Directors
 
 
 
 
 
 
 
 
 
Robert P. Badavas(3)
 
Record/Beneficial
 
 
171,801
 
 
 
*
Jorge Titinger
 
Record/Beneficial
 
 
3,994
 
 
 
*
Thomas J. Fallon(4)
 
Record/Beneficial
 
 
65,955
 
 
 
*
Brad Koenig
 
Record/Beneficial
 
 
10,549
 
 
 
*
Joseph F. Hoffman(5)
 
Record/Beneficial
 
 
44,382
 
 
 
*
Doreen Woo Ho(6)
 
Record/Beneficial
 
 
22,230
 
 
 
*
Carol L. Foster(7)
 
Record
 
 
3,446
 
 
 
*
Gayle Crowell(8)
 
Record
 
 
4,315
 
 
 
*
 
 
 
 
 
 
 
 
 
 
Other Named Executive Officers
 
 
 
 
 
 
 
 
 
Seth H. Meyer(9)
 
Record
 
 
40,355
 
 
 
*
Scott Bluestein(10)
 
Record/Beneficial
 
 
404,006
 
 
 
*
Melanie Grace(11)
 
Record/Beneficial
 
 
44,784
 
 
 
*
Gerard R. Waldt, Jr.(12)
 
 
 
 
 
 
David Lund(12)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Executive officers and directors as a group (14 persons)(13)
 
3.3
%
(1)Beneficial ownership has been determined in accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
(2)Includes 134,247 shares of restricted stock and 378,091 shares of vested deferred restricted stock units and dividend equivalent shares. 1,771,889 shares of common stock held by the Henriquez Family Trust of which 862,784 shares are pledged as a security; 54,348 shares of common stock held in trusts for the benefit of Mr. Henriquez children; and 12,224 shares of common stock held in the Manuel Henriquez-Roth IRA. Mr. Henriquez disclaims any beneficial ownership interest of such shares except to the extent of his pecuniary interest therein. On March 13, 2019, we announced that Mr. Henriquez had voluntarily stepped aside as Chairman of the Board and Chief Executive Officer of the Company. Robert Badavas, the lead independent director of the Company, was elected as Interim Chairman of the Board. Scott Bluestein, the Company’s Chief Investment Officer, was elected Interim Chief Executive Officer.
(3)Includes 20,000 shares of common stock that can be acquired upon the exercise of outstanding options. All 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.
SECURITY OWNERSHIP INFORMATION
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(4)Includes 25,000 shares of common stock that can be acquired upon the exercise of outstanding options. All 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.
(5)Includes 20,000 shares of common stock that can be acquired upon the exercise of outstanding options and 1,666 shares of restricted common stock. All shares are held of record by the Hoffman Trust, and Mr. Hoffman disclaims any beneficial ownership interest of such shares except to the extent of his pecuniary interest therein.
(6)Includes 10,000 shares of common stock that can be acquired upon the exercise of outstanding options.
(7)Includes 3,446 shares of restricted common stock.
(8)Includes 4,315 shares of restricted common stock.
(9)Includes 40,355 shares of restricted common stock.
(10)Includes 136,978 shares of vested deferred restricted stock and dividend equivalent shares and 53,684 shares of restricted common stock.
(11)Includes 22,253 shares of vested deferred restricted stock and dividend equivalent shares and 7,494 shares of restricted common stock.
(12)On September 7, 2018, Mr. Waldt departed the Company and Mr. Lund assumed the responsibilities of Chief Accounting Officer in addition to his responsibilities as Interim Chief Financial Officer. On March 4, 2019, Mr. Lund retired from his position as Interim Chief Financial Officer, and the Company appointed Mr. Meyer as Chief Financial Officer. Mr. Meyer also serves as the principal accounting officer and principal financial officer of the Company. Mr. Lund is continuing to serve the Company as a consultant.
(13)Includes 75,000 shares of common stock that can be acquired upon the exercise of outstanding options, 537,322 shares of vested deferred restricted stock and dividend equivalent shares and 245,207 shares of restricted common stock.
*Less than 1%.

The following table sets forth as of April 17, 2019, the dollar range of our securities owned by our directors and executive officers.

Name
Dollar Range of
Equity Securities
Beneficially Owned
Interested Director
 
 
 
Manuel A. Henriquez
Over $100,000
   
 
Independent Directors
 
Robert P. Badavas
Over $100,000
Jorge Titinger
$50,000-$100,000
Thomas J. Fallon
Over $100,000
Brad Koenig
Over $100,000
Joseph F. Hoffman
Over $100,000
Doreen Woo Ho
Over $100,000
Carol L. Foster
$0-$50,000
Gayle Crowell
$50,000-$100,000
   
 
Other Named Executive Officers
 
Seth H. Meyer
Over $100,000
Scott Bluestein
Over $100,000
Melanie Grace
Over $100,000
Gerard R. Waldt, Jr
David Lund
   
 
   
 

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SECURITY OWNERSHIP INFORMATION

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PROPOSAL 1: ELECTION OF DIRECTORS

The Board unanimously recommends that you vote FOR the nominees for director
(Item 1 on your proxy card)

General

On March 13, 2019, the Company announced that Mr. Henriquez voluntarily stepped aside as Chairman of the Board and Chief Executive Officer of the Company. Mr. Badavas, the lead independent director of the Company, was elected Interim Chairman of the Board. Mr. Henriquez is not a nominee to serve as a director on our Board.

The Board currently consists of nine directors and is divided into three classes. Each class of the Board serves a staggered three-year term. Our Class III directors, whose terms expire at the annual meeting, are Joseph F. Hoffman, Doreen Woo Ho and Manuel A. Henriquez.

The Board has determined that, effective as of the annual meeting, the size of the Board shall be set at eight directors and Class III should be reduced to two directors. The nominees to Class III of the Board this year are Mr. Hoffman and Ms. Woo Ho. The nomination of Mr. Hoffman and Ms. Woo Ho to stand for election at the annual meeting has been recommended by the NCG Committee and has been approved by the Board. Mr. Hoffman and Ms. Woo Ho, if elected, each will serve for a three-year term expiring at the 2022 Annual Meeting of Stockholders, or until their successor is duly elected and qualified, or until their earlier death, resignation or removal from the Board.

Mr. Hoffman and Ms. Woo Ho are not being nominated as a director for election pursuant to any agreement or understanding between such person and Hercules. Mr. Hoffman and Ms. Woo Ho have indicated their willingness to continue to serve if elected and have consented to be named as nominees. Each of Mr. Hoffman and Ms. Woo Ho is not an “interested person” of Hercules, as such term is defined under the 1940 Act.

Director Qualifications

The Board recognizes that it is important to assemble a body of directors that, taken together, has the skills, qualifications, experience and attributes appropriate for functioning as a Board, and working with management, effectively. The NCG Committee is responsible for maintaining a well-rounded and diverse Board that has the requisite range of skills and qualifications to oversee the Company effectively. The NCG Committee has not established a minimum qualification for director candidates. Our Board does not have a specific diversity policy, but considers diversity of race, religion, national origin, gender, sexual orientation, disability, cultural background and professional experiences in evaluating candidates for Board membership. The diversity of background and experience includes ensuring that the Board includes individuals with experience or skills sufficient to meet the requirements of the various rules and regulations of the NYSE and the SEC, such as the requirements to have a majority of independent directors and an Audit Committee Financial Expert. However, in light of our business, the primary areas of experience and qualifications sought by the NCG Committee in incumbent and director candidates include, but are not limited to, the following:

Client Industries—Experience with venture capital-backed companies in general, and our specific portfolio company industries – technology, life sciences, middle market, and sustainable and renewable technology.
Banking/Financial Services—Experience with commercial or investment banking, mutual fund, or other financial services industries, including regulatory experience and specific knowledge of the Securities Act of 1933, as amended (the “Securities Act”).
Leadership/Strategy—Experience as a CEO, COO, President, CFO, or significant division manager responsible for leading a large team and establishing and executing successful business strategies.
Finance, IT and Other Business Operations—Experience related to finance, accounting, IT, treasury, human resources, or other key business processes.
Enterprise Risk Management—Experience with enterprise risk management processes and functions.
Public Company Board Experience and Governance—Experience with corporate governance issues, particularly in publicly-traded companies.
Strategic Planning—Experience with senior executive-level strategic planning for publicly-traded companies, private companies, and non-profit entities.
Mergers and Acquisitions—Experience with public and private mergers and acquisitions, both in identifying and evaluating potential targets, as well as post-acquisition integration activities.
PROPOSAL 1
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For each director, we have highlighted certain key areas of experience that qualify him or her to serve on the Board in each of their respective biographies below beginning on page 10.

A stockholder can vote for or withhold his, her or its vote for 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 the nominees named in this Proxy Statement. If 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 the person nominated by our Board as a replacement. Our Board has no reason to believe that the nominees will be unable or unwilling to serve.

Required Vote

This proposal requires the affirmative vote of the holders of a plurality of the shares of stock outstanding and entitled to vote thereon. Stockholders may not cumulate their votes. If you vote “withhold authority” with respect to a nominee, your shares will not be voted with respect to the person indicated. Because directors are elected by a plurality of the votes, an abstention will have no effect on the outcome of the vote and, therefore, is not offered as a voting option for this proposal.

Broker Non-Votes

Broker non-votes are votes cast for shares held by a broker or other nominee for which the nominee has not received voting instructions from the beneficial owner and does not have discretionary authority to vote the shares on non-routine proposals. Proposal 1 is a non-routine matter. As a result, if you hold shares in “street name” through a broker, bank or other nominee, your broker, bank or nominee will not be permitted to exercise voting discretion with respect to Proposal 1, the election of directors. Therefore, if you do not vote and you do not give your broker or other nominee specific instructions on how to vote for you, then your shares will have no effect on Proposal 1.

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PROPOSAL 1

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Information about the Directors and Executive Officers

For each director, we have highlighted certain key areas of experience that qualify him or her to serve on the Board in each of their respective biographies below.

Name, Address, and Age(1)
Position(s)
held with Company
Term of Office
and Length of
Time Served
Principal
Occupation(s) During Past
5 Years
Other Directorships
Held by Director
or Nominee for Director
During the past 5 years(2)
Independent Directors
 
 
 
 
Robert P. Badavas (66)
Director
Class I Director since 2006
Retired. Chairman and Chief Executive Officer of PlumChoice, provider of remote technical services and support, from 2011-2016.
Constant Contact, Inc., an online marketing company, from 2007-2016.
 
 
 
 
 
Carol L. Foster (55)
Director
Class I Director since 2019
Former Chief Operating Officer and Chief Financial Officer of SharesPost, Inc., supporting late-stage, private growth companies and the entrepreneurs that build them by providing liquidity and a better private capital market from 2017-2018. Founder of CLF Advisors LLC from 2015-2017. Chief Financial Officer of PENSCO Trust Company from 2013-2015
None.
 
 
 
 
 
Jorge Titinger (58)
Director
Class I Director since 2017
President and Founder of Titinger Consulting, a private consulting and advisory service provider since 2016. President and Chief Executive Officer of Silicon Graphics International, a leader in high-performance computing from 2012-2016, which was acquired by Hewlett Packard Enterprise in 2016.
Cohu, a global leader in test and handling equipment, thermal subsystems, test contacting, vision inspection and MEMS test solutions since 2018.
Xcerra, supplies products and services to the semiconductor and electronics manufacturing industry from 2012-2018. CalAmp, a pure-play pioneer in the connected vehicle and broader Industrial Internet of Things marketplace since 2015.
 
 
 
 
 
Gayle Crowell (68)
Director
Class II Director since 2019
Senior Operating Consultant at Warburg Pincus, a global private equity firm focused on growth investing since 2002.
Envestnet, a provider of integrated portfolio, practice management, and reporting solutions to financial advisors and institutions since 2016.
 
 
 
 
 
Thomas J. Fallon (57)
Director
Class II Director since 2014
Chief Executive Officer of Infinera Corporation, manufacturer of high capacity optical transmission equipment, since 2010.
Infinera Corporation since 2014.
 
 
 
 
 
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Name, Address, and Age(1)
Position(s)
held with Company
Term of Office
and Length of
Time Served
Principal
Occupation(s) During Past
5 Years
Other Directorships
Held by Director
or Nominee for Director
During the past 5 years(2)
Brad Koenig (60)
Director
Class II Director since 2017
Former Founder and Chief Executive Officer of FoodyDirect.com, an online marketplace that features foods from the top restaurants, bakeries and artisan purveyors around the country from 2011-2018 which was acquired by Goldbelly, Inc. in 2018. Head of Global Technology Investment Banking at Goldman Sachs, from 1990-2005.
GSV Capital Corporation, identifies and invests in rapidly growing late stage venture capital-backed private companies from 2015-2017.
 
 
 
 
 
Joseph F. Hoffman (70)
Director Nominee
Class III Director since 2015
Retired. SEC Reviewing Partner and Silicon Valley Professional for KPMG from 1998-2009.
None.
 
 
 
 
 
Doreen Woo Ho (71)
Director Nominee
Class III Director since 2016
Commissioner of the San Francisco Port Commission since May, 2011 and served as President from 2012 to 2014.
U.S. Bank since 2012.
(1)The address for each officer and director is c/o Hercules Capital, Inc., 400 Hamilton Avenue., Suite 310, Palo Alto, California 94301.
(2)No director otherwise serves as a director of an investment company subject to the 1940 Act.
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Director Nominees Biographies

The biographical information for the director nominees is as follows:

Joseph F. Hoffman
Board Committee:
Independent:
 
•   Audit, Chair
Yes
 
•   Nominating
 

Mr. Hoffman, 70, is retired from KPMG LLP after 26 years as a partner and senior executive. He has served as a director on our Board since April 2015 and his term expires in 2019.

Business Experience:
SEC Reviewing Partner and Silicon Valley Professional Practice Partner, KPMG LLP (1998-2009)
Audit Partner and Business Unit Partner in Charge, KPMG LLP (1983-1998)
 
 
 
Private Directorships:
LiveOps, Inc., a call center services company (since 2013)
KPMG LLP, an audit, tax, and advisory professional services firm. (2005-2009)
 
 
 
Audit Committees:
LiveOps, Inc. (since 2013)
KPMG LLP (2005-2009)
Willamette University (since 2014)
 
 
 
Non-Profit Leadership:
Board of Trustees, Willamette University (since 2011)
 
 
 
Memberships:
California Society of Certified Public Accountants
National Association of Corporate Directors
American College of Corporate Directors
Association of Governing Boards of Universities and Colleges
 
 
 
Education:
Bachelor’s degree in Mathematics and Economics, Willamette University
Master’s degree in Business Administration, Stanford Graduate School of Business
Certified public accountant, State of California
Skills/ Qualifications:
In particular, Mr. Hoffman’s key areas of skill/qualifications include, but are not limited to:
 
Client Industries—extensive experience in the technology, manufacturing, and financial services industries
 
Finance and Enterprise Risk Management—extensive experience as an advisor to senior management and audit committees on complex accounting, financial reporting, internal controls, and enterprise risk management
 
Leadership/Strategy—significant experience as a business executive and director
 
Governance—experience as the chairman of the governance committee with corporate governance issues, particularly in a publicly-traded company
 
Banking/Financial Services—experience with banking, mutual funds, or other financial services industries, including regulatory experience and specific knowledge of the Securities Act
 
Strategic Planning—experience with senior executive level strategic planning for publicly-traded companies, private companies and/or non-profit companies
 
 
 

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Doreen Woo Ho
Board Committee:
Independent:
 
•   Nominating, Chair
Yes
 
•   Compensation
 

Ms. Woo Ho, 71, is currently a Commissioner of the San Francisco Port Commission and also an Independent Director of US Bancorp. She was previously a senior executive who has held top management roles at some of the largest commercial banks in America, including Wells Fargo Bank, Citibank and United Commercial Bank. She has served as a director on our Board since October 2016 and her term expires in 2019.

Business
Experience:
President and Chief Executive Officer of United Commercial Bank (2009)
Executive Vice President, Enterprise Marketing, Student Loans and Corporate Trust, Wells Fargo & Company (2008)
President of the Consumer Credit Group, Wells Fargo Bank (1998-2007)
Senior Vice President of National Business Banking, US Consumer Bank, Citibank (1974-1998)
 
 
 
Public
Directorships:
U.S. Bank (since 2012)
 
 
 
Prior
Directorships:
United Commercial Bank (2009)
 
 
 
Private
Directorships:
San Francisco Opera (since 1992)
 
 
 
Other
Experience:
Commissioner of the Port of San Francisco (since 2011)
Wells Fargo Bank Management Committee member (1999-2008)
 
 
 
Education:
Bachelor’s in History from Smith College
Masters in East Asian Studies from the School of International and Public Affairs at Columbia University
Skills/ Qualifications:
In particular, Ms. Woo Ho’s key areas of skill/qualifications include, but are not limited to:
 
Banking/Financial Services—held a variety of key executive and management positions at large global financial institutions
 
Leadership/Strategy—extensive experience as a director and executive with broad operational experience in investments and finance
 
Finance, IT and other Business Processes—extensive experience in commercial lending, sales marketing as well as other key business processes
 
Enterprise Risk Management—extensive experience in risk management and regulatory compliance in banking services
 
Governance—gained extensive experience as CEO of a banking institution in corporate governance and executive management
 
Strategic Planning—experience with senior executive level strategic planning for publicly-traded companies, private companies and/or non-profit companies
 
 
 

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Independent Director Biographies

The biographical information for each of the independent directors is as follows:

Robert P. Badavas
Board Committee:
Independent:
 
•   Audit
Yes – Lead Director

Mr. Badavas, 66, retired in August 2016 as Chairman and Chief Executive Officer of PlumChoice, a venture-backed technology, software and services company (since December 2011). He was appointed Interim Chairman of the Board in March 2019 and has served as a director on our Board since March 2006. His term expires in 2020.

Business
Experience:
President, Petros Ventures, Inc., a management and advisory services firm (2009-2011 and 2016-present)
President and Chief Executive Officer of TAC Worldwide, a multi-national technical workforce management and business services company (2005-2009)
Executive Vice President and Chief Financial Officer, TAC Worldwide (2003-2005)
Senior Partner and Chief Operating Officer, Atlas Venture, an international venture capital firm (2001-2003)
Chief Executive Officer at Cerulean Technology, Inc., a venture capital backed wireless application software company (1995-2001)
Certified Public Accountant, PwC (1974-1983)
 
 
 
Public
Directorships:
Constant Contact, Inc., including chairman of the audit committee, a provider of email and other engagement marketing products and services for small and medium sized organizations, acquired by Endurance International Group Holdings, Inc., (2007-2016)
 
 
 
Prior
Directorships:
PlumChoice
Arivana, Inc.; a telecommunications infrastructure company—publicly traded until its acquisition by SAC Capital
RSA Security; an IT security company—publicly traded until its acquisition by EMC
On Technology; an IT software infrastructure company—publicly traded until its acquisition by Symantec
Renaissance Worldwide; an IT services and solutions company—publicly traded until its acquisition by Aquent
 
 
 
Other
Experience:
Board of Trustees. Bentley University (since 2005); Chairman (since 2018); Vice Chairman (2013-2018)
Board of Trustees Executive Committee and Corporate Treasurer, Hellenic College/Holy Cross School of Theology (2002-2018)
Trustee Emeritus, The Learning Center for the Deaf; Board Chair (1995-2005)
Master Professional Director Certification, American College of Corporate Directors
National Association of Corporate Directors
Annunciation Greek Orthodox Cathedral of New England, Parish Council President (since 2016)
 
 
 
Education:
Bachelor’s degree in Accounting and Finance from Bentley University
Skills/ Qualifications:
In particular, Mr. Badavas’ key areas of skill/qualifications include, but are not limited to:
 
Client Industries—extensive experience in software, business and technology enabled services and venture capital
 
Leadership/Strategy—significant experience as a senior corporate executive in private and public companies, including tenure as chief executive officer, chief financial officer and chief operating officer
 
Finance, IT and Other Business Strategy and Enterprise Risk Management—prior experience as a CEO directing business strategy and as a CFO directing IT, financing and accounting, strategic alliances and human resources and evaluation of enterprise risk in such areas
 
Governance—extensive experience as an executive and director of private and public companies with governance matters
 
Strategic Planning—experience with senior executive level strategic planning for publicly-traded companies, private companies and/or non-profit companies
 
Mergers and Acquisitions—experience with public and/or private company M&A both in identifying targets and evaluating potential targets, as well as post-acquisition integration activities
 
 
 
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Gayle Crowell
Board Committee:
Independent:
 
•   Compensation
Yes

Ms. Crowell, 68, serves as Senior Operating Consultant at Warburg Pincus, a global private equity firm focused on growth investing (since 2002). She has served as a director on our Board since February 2019 and her term expires in 2021.

Business
Experience:
President and CEO, RightPoint Software (acquired by E.piphany), developed customer relationship management software (1998-2000)
Senior Vice President and General Manager, ViewStar (acquired by Mosaix), a network based process automation software encompassing workflow automation, document image processing and information management company (1994-1998)
Vice President of Worldwide Sales, Oracle Corporation, a computer technology corporation (1990-1992)
Vice President of Sales, DSC, a networking company (1989-1990)
Vice President of Sales, Cubix Corporation, a company that designs, engineers and manufactures computer hardware systems (1985-1989)
 
 
 
Public
Directorships:
Envestnet, a leading provider of integrated portfolio, practice management, and reporting solutions to financial advisors and institutions (2016-present)
 
 
 
Private
Directorships:
Dude Solutions, the leading provider of cloud-based operations management software to optimize facilities, assets and workflow (2014-present)
 
 
 
Prior
Directorships:
MercuryGate, a developer of a transportation management system and offers a software that enables shippers, carriers, brokers, freight forwarders and third party logistics providers to plan, monitor and track shipments (2014-2018)
Yodlee, develops an account aggregation service that allows users to see their credit card, bank, investment, email, travel reward accounts, etc. on one screen (2002-2015)
Coyote Logistics, a third-party logistics provider that combines a centralized marketplace with freight and transportation solutions to empower your business (2011-2015)
SRS (2004-2013)
TradeCard, a SaaS collaboration product that was designed to allow companies to manage their extended supply chains including tracking movement of goods and payments (2009-2013)
 
 
 
Education:
Bachelor of Science from University of Nevada Reno
Skills/ Qualifications:
In particular, Ms. Crowell’s key areas of skill/qualifications include, but are not limited to:
 
Client Industries—significant experience in venture capital and technology
 
Banking/Financial Services—held a variety of key executive and management positions at large global financial institutions
 
Leadership/Strategy—extensive experience as a director and executive with broad operational experience in investments and finance
 
Finance, IT and other Business Processes—extensive experience in commercial lending, sales marketing as well as other key business processes
 
Enterprise Risk Management—experience in managing enterprise risk as CEO
 
Governance—experienced in both corporate governance and executive compensation for both public and private companies
 
Strategic Planning—experience with senior executive level strategic planning for publicly-traded companies, private companies and/or non-profit companies
 
Mergers and Acquisitions—experience with public and/or private company M&A both in identifying targets and evaluating potential targets, as well as post-acquisition integration activities
 
 
 
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Thomas J. Fallon
Board Committee:
Independent:
 
•   Nominating
Yes

Mr. Fallon, 57, currently serves as Chief Executive Officer of Infinera Corporation (since 2010) and a member of Infinera’s board of directors (since 2009). He has served as a director on our Board since July 2014 and his term expires in 2021.

Business
Experience:
Chief Executive Officer, Infinera Corporation (2010-Current)
Chief Operating Officer, Infinera Corporation (2006-2009)
Vice President of Engineering and Operations, Infinera Corporation (2004-2006)
 
 
 
Other Business
Experience:
Vice President, Corporate Quality and Development Operations of Cisco Systems, Inc. (2003-2004)
General Manager of Cisco Systems’ Optical Transport Business Unit, VP Operations, VP Supply, various executive positions (1991-2003)
 
 
 
Prior
Directorships:
Piccaro, a leading provider of solutions to measure greenhouse gas concentrations, trace gases and stable isotopes (2010-2016)
 
 
 
Other
Experience:
Member, Engineering Advisory Board of the University of Texas at Austin
Member, President’s Development Board University of Texas
 
 
 
Education:
Bachelor’s degree in Mechanical Engineering from the University of Texas at Austin
Master’s degree in Business Administration from the University of Texas at Austin
Skills/ Qualifications:
In particular, Mr. Fallon’s key areas of skill/qualifications include, but are not limited to:
 
Client Industries—significant experience in venture capital and technology
 
Leadership/Strategy—extensive experience as a director and executive in both public and private companies
 
Governance—experienced in both corporate governance and executive compensation for both public and private companies
 
Strategic Planning-experience with senior executive level strategic planning for publicly-traded companies, private companies and/or non-profit companies
 
Mergers and Acquisitions—experience with public and/or private company M&A both in identifying targets and evaluating potential targets, as well as post-acquisition integration activities
 
 
 

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Carol L. Foster
Board Committee:
Independent:
 
•   Audit
Yes

Ms. Foster, 55, formerly served as Chief Operating Officer and Chief Financial Officer of SharesPost, Inc., supporting late-stage, private growth companies and the entrepreneur that build them by providing liquidity and a better private capital market from 2017 to 2018. She has served as a director on our Board since January 2019 and her term expires in 2020.

Business
Experience:
Founder, CLF Advisors LLC (2015-2017)
Chief Financial Officer, PENSCO Trust Company (2013-2015)
Partner, Chief Financial Officer, Calera Capital LL (fka Fremont Partners) (2004-2007)
Director, Technology Investment Banking, Merrill Lynch & Co. (1995-2003)
Associate, Mergers & Acquisitions, Goldman, Sachs & Co (1992-1995)
 
 
 
Non-Profit
Leadership:
Risk and Audit Committee Member, Sacred Heart Schools (since 2017)
 
 
 
Education:
Bachelor of Science from Southern Methodist University
Master’s in Business Administration from Columbia University Graduate School of Business
Skills/ Qualifications:
In particular, Ms. Foster’s key areas of skill/qualifications include, but are not limited to:
 
Client Industries—significant experience in venture capital and technology
 
Banking/Financial Services—held a variety of key executive and management positions at large global financial institutions
 
Leadership/Strategy—extensive experience as a director and executive with broad operational experience in investments and finance
 
Finance, IT and other Business Processes—extensive experience in commercial lending, sales marketing as well as other key business processes
 
Strategic Planning—experience with senior executive level strategic planning for publicly-traded companies, private companies and/or non-profit companies
 
Mergers and Acquisitions—experience with public and/or private company M&A both in identifying targets and evaluating potential targets, as well as post-acquisition integration activities
 
 
 

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Brad Koenig
Board Committee:
Independent:
 
•   Audit
Yes
 
•   Compensation
 
 
•   Nominating
 

Mr. Koenig, 60, founded and served as Chief Executive Officer of FoodyDirect.com, an online marketplace that features foods from the top restaurants, bakeries and artisan purveyors around the country from 2011-2018 when the company was acquired by Goldbelly, Inc. He has served as a director on our Board since October 2017 and his term expires in 2021.

Business
Experience:
Head of Global Technology Investment Banking at Goldman Sachs, a leading global investment banking, securities and investment management firm (1990-2005).
Co-Head of Global Technology, Media and Telecommunications at Goldman Sachs (2002-2005)
 
 
 
Private
Directorships:
Theragenics Corporation, medical device company serving the surgical products and prostate cancer treatment markets (2013-present)
 
 
 
Prior
Directorships:
GSV Capital Corporation, identifies and invests in rapidly growing late stage vesture capital-backed private companies (2015-2017)
 
EveryAction Software, the leading technology provider to Democratic and progressive campaigns and organizations, offering clients an integrated platform of the best fundraising, compliance, field, organizing, digital and social networking products (2009-2018)
 
 
 
Other
Experience:
Adviser to Oak Hill Capital Management, a private equity firm
 
 
 
Education:
Bachelor’s degree in Economics from Dartmouth College
 
Master’s degree in Business Administration from Harvard Business School
Skills/ Qualifications:
In particular, Mr. Koenig’s key areas of skill/qualifications include, but are not limited to:
 
Client Industries—significant experience in venture capital and technology
 
Leadership/Strategy—extensive experience as a director and executive in both public and private companies
 
Finance, IT and Other Business Processes—extensive experience as a manager and CEO related to finance, accounting, IT, treasury, human resources, or other key business processes
 
Banking/Financial Services—experience with banking, mutual funds, or other financial services industries, including regulatory experience and specific knowledge of the Securities Act
 
Mergers and Acquisitions—experience with public and/or private company M&A both in identifying targets and evaluating potential targets, as well as post-acquisition integration activities
 
 
 

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Jorge Titinger
Board Committee:
Independent:
 
•   Compensation, Chair
Yes

Mr. Titinger, 58, currently serves as Principal and Founder of Titinger Consulting (since 2016), a private consulting and advisory service provider focusing on strategy development and execution, board governance, operational transformations, and culture changes. He has served as a director on our Board since December 2017 and his term expires in 2020.

Business
Experience:
President and Chief Executive Officer of Silicon Graphics International, leader in high performance computing (2012-2016)
President and Chief Executive Officer of Verigy, Inc., provider of advanced automated test systems and solutions to the semiconductor industry (2008-2011)
Senior Vice President and General Manager, Product Business Groups of FormFactor, Inc., the leading provider of essential test and measurement technologies for the semiconductor industry (2007-2008)
Senior Vice President, Global Operations & Corporate Support Groups of KLA-Tencor Corporation, the leading provider of process control and yield management solutions (2002 – 2007)
Vice President, Global Operations, Silicon Business Sector (SBS) Products of Applied Materials, Inc., a leader in materials engineering solutions used to produce virtually every new chip and advanced display in the world (1998 – 2002)
President and Chief Operating Officer of Insync Systems, Inc., a gas delivery systems manufacturer (1995-1998)
Vice President, Operations/Co-Founder of NeTpower, Inc., a high-performance computer workstations and servers manufacturer (1992-1995)
Director, Manufacturing Engineering of MIPS Computer Systems, Inc./Silicon Graphics, Inc., a Graphics Computing Company (1989-1992)
Test Engineering Manager, Networked Computers Manufacturing Operations of Hewlett-Packard Company, a Graphics Computing Company (1985-1989)
 
 
 
Public
Directorships:
Cohu, a global leader in test and handling equipment, thermal subsystems, test contacting, vision inspection and MEMS test solutions
CalAmp, a pure-play pioneer in the connected vehicle and broader Industrial Internet of Things marketplace with its extensive portfolio of intelligent communications devices, robust and capable cloud platform, and targeted software applications
 
 
 
Private Directorships:
Transtech Glass Investment Ltd., a specialty glass company for the transportation market
Panasas Inc, a supplier of innovative storage solutions to the high performance computing industry
 
 
 
Prior
Directorships:
Xcerra (acquired by Cohu), parent company of four brands that have been supplying innovative products and services to the semiconductor and electronics manufacturing industry
Semiconductor Equipment & Material International (Semi), North America, global industry association serving the manufacturing supply chain for the micro- and nano-electronics industries
Transtech Glass Investment Ltd., a specialty glass company for the transportation market.
Silicon Graphics International
Verigy, Inc.
Electroglas, Inc., provides advanced wafer probers, device handlers, test floor management software and services
Thermawave acquired and integrated into Kla-Tencor Corporation
 
 
 
Other
Experience:
Former Board Member, Unidad de Negocios Transaccionales (Grupo El Comercio)
Chairman of the Board, Hispanic Foundation of Silicon Valley (HFSV)
Former Board Member, Information Technology & Audit Committees, Stanford Children’s Hospital
Advisory Board Member, Hispanic IT Executive Council (HITEC), Silicon Valley Education Foundation
 
 
 
Education:
Bachelor’s degree in Electrical Engineering from Stanford University
Master’s degree in Electrical Engineering from Stanford University
 
Master’s degree in Engineering Management and Business from Stanford University
Skills/ Qualifications:
 
In particular, Mr. Titinger’s key areas of skill/qualifications include, but are not limited to:
 
Client Industries—significant experience in venture capital and technology
 
Leadership/Strategy—extensive experience as a director and executive in both public and private companies
 
Finance, IT and Other Business Processes—extensive experience as a manager and CEO related to finance, accounting, IT, treasury, human resources, or other key business processes.
 
Enterprise Risk Management—experience in managing enterprise risk as CEO
 
Governance—experienced in both corporate governance and executive compensation for both public and private companies
 
Strategic Planning—experience with senior executive level strategic planning for publicly-traded companies, private companies and/or non-profit companies
 
Mergers and Acquisitions—experience with public and/or private company M&A both in identifying targets and evaluating potential targets, as well as post-acquisition integration activities

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CORPORATE GOVERNANCE

Our business, property and affairs are managed under the direction of our Board. Members of our Board are kept informed of our business through discussions with our chairman and chief executive officer, our chief financial officer, our chief investment officer, our general counsel, and our other officers and employees, and by reviewing materials provided to them and participating in meetings of our Board and its committees.

Because our Board is committed to strong and effective corporate governance, it regularly monitors our corporate governance policies and practices to ensure we meet or exceed the requirements of applicable laws, regulations and rules, and the NYSE’s listing standards. The Board has adopted a number of policies to support our values and good corporate governance, including corporate governance guidelines, Board committee charters, insider trading policy, code of ethics, code of business conduct and ethics, and related person transaction approval policy. The Board has approved corporate governance guidelines that provide a framework for the operation of the Board and address key governance practices. Examples of our corporate governance practices include:

Continued Board Recruitment and Refreshment
Lead Independent Director
Majority Independent Directors
Independent Audit and Compensation, Nominating and Governance Committees
Annual Board and Committee Self-Evaluations
Annual Board Review of Senior Management Succession Plans
Anti-Hedging Policy
Active Stockholder Outreach
Pay for Performance Philosophy
Stock Ownership Guidelines for Executives and Directors
Clawback Provisions for Executive Incentive Compensation
No Tax Gross-Up Payments

Our Board will continue to review and update the corporate governance guidelines, corporate governance practices, and our corporate governance framework.

Board Leadership Structure

Our Board is currently comprised of eight independent directors and one interested director, including an independent chairman of the Board and a lead independent director position to further strengthen our governance structure. In addition, all of the members of our Audit Committee, Compensation Committee, and NCG Committee are independent directors. Even though no executive officers are currently members of the Board, our Board and its committees remain in close contact with Hercules’ management and receive reports on various aspects of Hercules’ management and enterprise risk directly from our senior management and independent auditors. Our Board believes this provides an efficient and effective leadership model for the Company.

No single leadership model is right for all companies at all times. Our Board recognizes that depending on the circumstances, other leadership models, such as electing the chief executive officer to the Board or combining the role of chairman of the Board with the role of chief executive officer, might be appropriate. Accordingly, our Board periodically reviews its leadership structure.

Lead Independent Director

Our Board has instituted the lead independent director position to provide an additional measure of balance, ensure our Board’s independence, and enhance its ability to fulfill its management oversight responsibilities. Mr. Badavas currently serves as our lead independent director (along with being our independent chairman of the Board). The lead independent director:

Has the authority to call meetings of the independent directors.
Frequently consults with our chief executive officer about strategic policies.
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Provides our chief executive officer with input regarding Board meetings.
Serves as a liaison between the chief executive officer and the independent directors.
Otherwise assumes such responsibilities as may be assigned to him by the independent directors.

Board Oversight of Risk

While day-to-day risk management is primarily the responsibility of our management team, our Board, as a whole and through its committees, is responsible for oversight of the risk management processes.

Our Audit Committee has oversight responsibility not only for financial reporting with respect to our major financial exposures and the steps management has taken to monitor and control such exposures, but also for the effectiveness of management’s enterprise risk management process that monitors and manages key business risks facing our company. In addition to our Audit Committee, the other committees of our Board consider the risks within their areas of responsibility. For example, our Compensation Committee considers the risks that may be posed by our executive compensation program.

Management provides regular updates throughout the year to our Board regarding the management of the risks they oversee at each regular meeting of our Board. Also, our Board receives presentations throughout the year from various department and business group heads that include discussion of significant risks as necessary. Additionally, our full Board reviews our short and long-term strategies, including consideration of significant risks facing our business and their potential impact.

During 2018, in addition to unanimous written consents, the Board held the following meetings:

Type of Meeting
Number
Regular Meetings to address regular, quarterly business matters
8
Other Meetings to address business matters that arise between quarters, such as fair valuing the portfolio investments, quarterly audit committee presentations and review and approval of earnings reports, among other matters
3

Each director makes a diligent effort to attend all Board and committee meetings, as well as our annual meeting of stockholders. All directors attended at least 75% of the aggregate number of meetings of the Board and of the respective committees on which they served. Each of our then-serving directors attended our 2018 annual meeting of stockholders in person.

Board Committees

Our Board has established an Audit Committee, a Compensation Committee, and a NCG Committee. A brief description of each committee is included in this Proxy Statement and the charters of the Audit, Compensation, and NCG Committees are available on the Investor Relations page of our website at http://investor.htgc.com/governance-documents.

As of the date of this Proxy Statement, the members of each of our Board Committees are as follows (the names of the respective committee chairperson are bolded and noted with a “C”):

                               Audit
                        Compensation
            Nominating and Governance
Joseph F. Hoffman-C
Robert P. Badavas
Brad Koenig
Carol L. Foster
 
Jorge Titinger-C
Brad Koenig
Doreen Woo Ho
Gayle Crowell
 
Doreen Woo Ho-C
Thomas J. Fallon
Joseph F. Hoffman
Brad Koenig

Each of our directors who sits on a committee satisfies the independence requirements for purposes of the rules promulgated by the NYSE and the requirements to be a non-interested director as defined in Section 2(a)(19) of the 1940 Act. Mr. Hoffman, Chairman of the Audit Committee and Messrs. Badavas, Foster and Koenig, members of the Audit Committee, are each an “audit committee financial expert” as defined by applicable SEC rules.

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Committee Governance

Each committee is governed by a charter that is approved by the Board, which sets forth each committee’s purpose and responsibilities. The Board reviews the committees’ charters, and each committee reviews its own charter, on at least an annual basis, to assess the charters’ content and sufficiency, with final approval of any proposed changes required by the full Board.

Committee Responsibilities and Meetings

The key oversight responsibilities of the Board’s committees, and the number of meetings held by each committee during 2018, are as follows:

Audit Committee
Number of meetings held in 2018: 3
Overseeing the accounting and financial reporting processes and the integrity of the financial statements.
Establishing procedures for complaints relating to accounting, internal accounting controls or auditing matters.
Examining the independence qualifications of our auditors.
Assisting our Board’s oversight of our compliance with legal and regulatory requirements and enterprise risk management.
Assisting our Board in fulfilling its oversight responsibilities related to the systems of internal controls and disclosure controls which management has established regarding finance, accounting, and regulatory compliance.
Reviewing and recommending to the Board the valuation of the Company’s portfolio.
Compensation Committee
Number of meetings held in 2018: 1
Oversees our overall compensation strategies, plans, policies and programs.
The approval of director and executive compensation.
The assessment of compensation-related risks.
Nominating and Corporate Governance Committee
Number of meetings held in 2018: 3
Discharging our Board’s responsibilities related to general corporate governance practices, including developing, reviewing and recommending to our Board a set of principles to be adopted as the Company’s Corporate Governance Guidelines.
Conducting an annual performance evaluation of our Board, its committees, and its members.
Reviewing board composition, size, and refreshment and identifying and recommending to our Board qualified director candidates.
Overseeing succession planning for CEO and NEOs of the Company.
Criteria considered by the NCG Committee in evaluating qualifications of individuals for election as members of the Board consist of the independence and other applicable NYSE corporate governance requirements; the 1940 Act and all other applicable laws, rules, regulations and listing standards; and the criteria, polices and principles set forth in the NCG Committee charter.
Considers nominees properly recommended by a stockholder. Stockholder recommendations for candidates for the Board should be sent to the Nominating and Corporate Governance Committee, c/o Melanie Grace, Secretary, 400 Hamilton Avenue, Suite 310, Palo Alto, California 94301. The NCG Committee will evaluate any such recommendations using the same criteria as it uses for other candidates.
The NCG Committee regularly considers the composition of our Board to ensure there is a proper combination of skills and viewpoints. In 2018, the NCG Committee conducted a search to identify new director nominee candidates who would enhance the mix of leadership skills and qualifications on our Board. On January 11, 2019, the Board increased its size to eight directors and filled the vacancy by appointing Carol L. Foster to serve on the Board until her earlier resignation or removal. On February 4, 2019, the Board increased its size to nine directors and filled the vacancy by appointing Gayle Crowell to serve on the Board until such time as her successor is duly elected and qualified or until their earlier resignation or removal.
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Director Independence

The NYSE’s listing standards and Section 2(a)(19) of the 1940 Act require that a majority of our Board and every member of our Audit, Compensation, and NCG Committees are “independent.” Under the NYSE’s listing standards and our corporate governance guidelines, no director will be considered to be independent unless and until our Board affirmatively determines that such director has no direct or indirect material relationship with our company or our management. Our Board reviews the independence of its members annually.

In determining that Ms. Woo Ho, Foster and Crowell and Messrs. Badavas, Fallon, Hoffman, Koenig and Titinger are independent, our Board, through the NCG Committee, considered the financial services, commercial, family and other relationships between each director and his or her immediate family members or affiliated entities, on the one hand, and Hercules and its subsidiaries, on the other hand.

Communication with the Board

We believe that communications between our Board, our stockholders and other interested parties are an important part of our corporate governance process. Stockholders with questions about Hercules are encouraged to contact Michael Hara, Investor Relations at (650) 433-5578. However, if stockholders believe that their questions have not been addressed, they may communicate with our Board by sending their communications to Hercules Capital, Inc., c/o Melanie Grace, Secretary, 400 Hamilton Avenue, Suite 310, Palo Alto, California 94301. All stockholder communications received in this manner will be delivered to one or more members of our Board.

Mr. Badavas currently serves as the lead independent director, and he presides over executive sessions of the independent directors. Parties may communicate directly with Mr. Badavas by sending their communications to Hercules Capital, Inc., c/o Melanie Grace, Secretary at the above address. All communications received in this manner will be delivered to Mr. Badavas.

All communications involving accounting, internal accounting controls and auditing matters, possible violations of, or non-compliance with, applicable legal and regulatory requirements or our code of ethics, or retaliatory acts against anyone who makes such a complaint or assists in the investigation of such a complaint, will be referred to Melanie Grace, Secretary. The communication will be forwarded to the chair of our Audit Committee if our secretary determines that the matter has been submitted in conformity with our whistleblower procedures or otherwise determines that the communication should be so directed. The acceptance and forwarding of a communication to any director does not imply that the director owes or assumes any fiduciary duty to the person submitting the communication, all such duties being only as prescribed by applicable law.

Code of Business Conduct and Ethics

Our code of business conduct and ethics requires that our directors and executive officers avoid any conflict, or the appearance of a conflict, between an individual’s personal interests and the interests of Hercules. Pursuant to our code of business conduct and ethics, which is available on the Governance Documents page of our website at http://investor.htgc.com/governance-documents, each director and executive officer must disclose any conflicts of interest, or actions or relationships that might give rise to a conflict, to our Audit Committee. Certain actions or relationships that might give rise to a conflict of interest are reviewed and approved by our Board.

Availability of Corporate Governance Documents

To learn more about our corporate governance and to view our corporate governance guidelines, code of business conduct and ethics, and the charters of our Audit Committee, Compensation Committee, and NCG Committee, please visit the Investor Relations page of our website at http://investor.htgc.com/governance-documents under “Governance Documents.” Copies of these documents are also available in print free of charge by writing to Hercules Capital, Inc., c/o Melanie Grace, Secretary, 400 Hamilton Avenue, Suite 310, Palo Alto, California 94301.

Compensation Committee Interlocks and Insider Participation

All members of our Compensation Committee are independent directors and none of the members are present or past employees of the Company. No member of our Compensation Committee: (i) has had any relationship with the Company requiring disclosure under Item 404 of Regulation S-K under the Exchange Act; or (ii) is an executive officer of another entity, at which one of our executive officers serves on the Board.

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Certain Relationships and Related Transactions

We have established a written policy to govern the review, approval and monitoring of transactions involving the Company and certain persons related to Hercules. As a BDC, the 1940 Act restricts us from participating in transactions with any persons affiliated with Hercules, including our officers, directors, and employees and any person controlling or under common control with us.

In order to ensure that we do not engage in any prohibited transactions with any persons affiliated with Hercules, our officers screen each of our transactions for any possible affiliations, close or remote, between the proposed portfolio investment, Hercules, companies controlled by us and our employees and directors. We will not enter into any agreements unless and until we are satisfied that no affiliations prohibited by the 1940 Act exist or, if such affiliations exist, we have taken appropriate actions to seek Board review and approval or exemptive relief from the SEC for such transaction.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

We believe, based on a review of Forms 3, 4 and 5 and any amendments thereto filed with the SEC and other information known to us, that during fiscal year 2018, our directors, officers (as defined in the rules under Section 16 of the Exchange Act), and any greater than 10% stockholders have complied with all Section 16(a) filing requirements in a timely manner, with the exception of the following filed late due to administrative oversight: one Form 4 for Mr. Waldt, two Form 4’s for Messrs. Henriquez, Bluestein, Fallon, Hoffman, Koenig and Titinger and Ms. Grace and four Form 4’s for Ms. Woo Ho.

CORPORATE GOVERNANCE
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INFORMATION ABOUT EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS

Our executive officers perform policy-making functions for us within the meaning of applicable SEC rules. They may also serve as officers of our other subsidiaries. There are no family relationships among our directors or executive officers.

The following information outlines the name and age of our executive officers (as of the date of this Proxy Statement) and his or her principal occupation with the Company, followed by the biographical information of each of such executive officer:

Name
Age
Principal Occupation
Scott Bluestein
40
Interim Chief Executive Officer and Chief Investment Officer
Seth H. Meyer(1)
50
Chief Financial Officer
Melanie Grace
50
General Counsel, Chief Compliance Officer and Secretary
(1)On March 4, 2019, Mr. Lund retired from his position as Interim Chief Financial Officer, and the Company appointed Mr. Meyer as Chief Financial Officer. Mr. Meyer also serves as the principal accounting officer and principal financial officer of the Company. Mr. Lund is continuing to serve the Company as a consultant.

Executive Biographies

Scott Bluestein joined us in 2010 as Chief Credit Officer. He was promoted to Chief Investment Officer in 2014 and elected Interim Chief Executive Officer in 2019. Mr. Bluestein is responsible for overseeing the business and operations of the company, as well as managing the investment teams and investments made by the Company.

Business Experience
Founder and Partner, Century Tree Capital Management (2009-2010)
Managing Director, Laurus-Valens Capital Management, an investment firm specializing in financing small and microcap growth-oriented businesses through debt and equity securities (2003-2009)
Member of Financial Institutions Coverage Group focused on Financial Technology, UBS Investment Bank (2000-2003)
 
 
 
Education/Other:
Bachelor’s in Business Administration from Emory University

Seth H. Meyer joined us in 2019 as Chief Financial Officer. Mr. Meyer oversees the financial and accounting functions of the Company.

Business Experience
Chief Financial Officer, Swiss Re Corporate Solutions Ltd. (2011-2017)
Managing Director, Swiss Re, serving as Group Tax Director, Finance Division Operating Officer and Head of Finance Large Transactions (2000-2011)
Senior Tax Manager, PricewaterhouseCoopers LLP (1997-2000)
Tax Manager, Jackson National Life Insurance Company (1994-1997)
Senior Tax Accountant, KPMG Peat Marwick (1992-1994)
Tax/Audit Assistant, Burke & Stegman CPAs (1990-1992)
 
 
 
Education/Other:
Bachelor’s in Accounting from Michigan State University
Master’s in Professional Accounting from Michigan State University
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Melanie Grace joined us in 2015 as General Counsel, Chief Compliance Officer and Secretary. She has over 19 years of experience representing public and private companies in securities, compliance and transactional matters. Ms. Grace oversees the legal and compliance function for the Company and serves as secretary for the Company and select subsidiaries.

Business Experience
Chief Legal Officer and Corporate Secretary, WHV Investments, Inc. where she also served as interim Chief Compliance Officer (2011-2015)
 
Member, Management, Operations and Proxy Committees, WHV Investments, Inc. (2013-2015)
 
Chair, Ethics Committee, WHV Investments, Inc. (2013-2015)
Chief Counsel, Corporate, NYSE Euronext (2005-2008)
Associate, Fenwick & West LLP (2000-2005)
 
 
 
 
Education/Other:
Bachelor’s and Master’s in History from the University of California, Riverside
Juris Doctor from Boston University School of Law
Member, State Bar of California
Registered In-House Counsel, New York
Designated Investment Adviser Certified Compliance Professional®
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EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

The Compensation Discussion and Analysis discusses our 2018 executive compensation program, as it relates to the following executive officers:

Manuel A. Henriquez(1)
Former Chairman of the Board of Directors and Former Chief Executive Officer (“CEO”)
Scott Bluestein(1)
Interim Chief Executive Officer and Chief Investment Officer
Melanie Grace
General Counsel, Chief Compliance Officer and Secretary
David Lund(2)
Former Interim Chief Financial Officer (“CFO”)
Gerard R. Waldt, Jr.(2)
Former Interim Chief Accounting Officer
(1)On March 13, 2019, we announced that Mr. Henriquez had voluntarily stepped aside as Chairman of the Board and Chief Executive Officer of the Company. Mr. Badavas, the lead independent director of the Company, was elected as Interim Chairman of the Board. Mr. Bluestein, the Company’s Chief Investment Officer, was elected Interim Chief Executive Officer.
(2)On September 7, 2018, Mr. Waldt departed the Company, and Mr. Lund assumed the responsibilities of Chief Accounting Officer in addition to his responsibilities as Interim Chief Financial Officer. On March 4, 2019, Mr. Lund retired from his position as Interim Chief Financial Officer, and the Company appointed Mr. Meyer as Chief Financial Officer. Mr. Meyer also serves as the principal accounting officer and principal financial officer of the Company. Mr. Lund is continuing to serve the Company as a consultant.

We refer to Messrs. Henriquez, Bluestein, Lund and Waldt and Ms. Grace as our “named executive officers,” or “NEOs”.

Executive Summary

Under the oversight of our Compensation Committee, the Company’s executive compensation program is designed to attract, incent and retain talented individuals who are critical to our continued success and our corporate growth and who will deliver sustained strong performance over the longer term. Our executive compensation program is designed to motivate the Company’s executive officers to maintain the financial strength of the Company while avoiding any inappropriate focus on short-term profits that would impede the Company’s long-term growth and encourage excessive risk-taking.

In 2018, the Company continued to review and enhance our compensation practices in accordance with our executive compensation philosophy. The review considered both compensation levels and company performance over a one-, three-, and five-year period from 2014 to 2018 (the “Performance Periods”). The 2018 compensation decisions made by the Compensation Committee considered the fact that our performance relative to a peer group of companies was generally above the median, and in most cases above the 90th percentile, measured using:

Return on average assets (“ROAA”)
Return on equity (“ROE”)
Return on investment capital (“ROIC”)
Average Annual Shareholder Return (“AASR”)

The Company’s incentive compensation practices are significantly limited by the requirements imposed on us as an internally managed business development company (“BDC”) pursuant to the 1940 Act. (See “Limitations Imposed by the Investment Company Act of 1940” below). These are regulatory limitations related to our corporate structure that are relatively unique and do not apply to most other publicly-traded companies. As discussed further below, our NEOs were compensated to reflect the Company’s performance during the Performance Periods.

In addition to key factors involved in the 2018 decisions made by the Compensation Committee, we continue to maintain the enhancements to our executive officer compensation program that we adopted in 2016, such as our clawback policy for all Section 16 officers and consideration of a mix of corporate and individual performance factors for our NEOs. In 2018, the Company entered into retention awards with Messrs. Henriquez and Bluestein that provide for certain benefits upon certain terminations of employment.

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Compensation Philosophy and Objectives

The primary principle of our compensation program is to align a substantial portion of executive compensation to the financial strength, long-term profitability, and risk management of the Company and to the creation of long-term stockholder value.

As an internally managed BDC, the Company’s compensation program is designed to encourage our NEOs to think and act like stockholders. The structure of the NEOs’ compensation program is designed to encourage and reward the following factors, among other things:

Sourcing and pursuing attractively priced investment opportunities to venture-backed and selected publicly-listed companies;
Maintaining credit quality, monitoring financial performance, and ultimately managing a successful exit of the Company’s investment portfolio;
Achieving the Company’s dividend objectives (which focus on stability and potential growth);
Providing compensation and incentives necessary to attract, motivate and retain key executives critical to our continued success and growth;
Focusing management behavior and decision-making on goals that are consistent with the overall strategy of the business;
Ensuring a linkage between NEO compensation and individual contributions to our performance; and
Creation of compensation principles and processes that are designed to balance risk and reward in a way that does not encourage unnecessary risk taking.

We believe that our continued success during 2018, despite strong competition for top-quality executive talent in the commercial and venture lending industry, was attributable to our ability to attract, motivate and retain the Company’s outstanding executive team using both short- and long-term incentive compensation programs.

The Company’s NEO compensation objectives are achieved through its executive compensation program, which at the end of 2018 consisted of the following:

ELEMENTS OF EXECUTIVE COMPENSATION
Compensation Element
Form of Compensation
Principal Compensation Objective
Annual Base Salary
Cash paid on a regular basis throughout the year
Provide a level of fixed income that is market competitive to allow the Company to retain and attract executive talent
Annual Cash
Bonus Awards
Cash awards paid on an annual basis following year-end (not formulaic, but subject to Committee discretion, due to regulatory requirements that do not allow formulaic incentive plans as explained in more detail later in this CD&A in the section titled “Our Regulatory Status and Limitations Imposed by the Investment Company Act of 1940”)
Reward NEOs who contribute to our financial performance and strategic success during the year, and reward individual achievements
Long-Term Equity
Incentive Awards
Equity incentive awards vest 1/3 on a one-year cliff with remaining 2/3 vesting quarterly over two years based on continued employment with the Company
Reward NEOs who contribute to our success through the alignment with and creation of shareholder value, provide meaningful retention incentives, and reward individual achievements
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ELEMENTS OF EXECUTIVE COMPENSATION
Compensation Element
Form of Compensation
Principal Compensation Objective
Special Performance-Based 2018 Retention Equity
The long-term Retention Performance Stock Unit awards (the “Retention PSUs”) vest based on the Company’s relative Total Shareholder Return over the 4-year performance period compared to a peer group of certain publicly traded BDCs, with 50% of the target number of PSUs vesting if the relative TSR is at the 25th percentile level of the peer group, 100% of the target number of PSUs vesting if the relative TSR is at the 50th percentile of the peer group, 200% of the target number of PSUs vesting if the relative TSR is at the 90th percentile of the peer group and by linear interpolation between the foregoing metrics
Promote long-term management consistency and retention and to mitigate the likelihood of departure to competitors of those individuals most responsible for delivering financial performance to our stockholders.

The compensation program is designed to reflect best practices in executive compensation:

2018 GOVERNANCE “BEST PRACTICES” HIGHLIGHTS
OF EXECUTIVE COMPENSATION
No employment agreements for NEOs.
Maintain stock ownership guidelines for NEOs to own at least two times his or her salary.
No guaranteed retirement benefits or pensions.
No executive perquisite allowances beyond the benefit programs offered to all employees.
No tax gross ups for NEOs.
No repricing of stock options without stockholder approval, as required under applicable NYSE rules (and subject to other requirements under the 1940 Act).
Clawback policy for all Section 16 officers.
Routinely engage an independent compensation consultant to review NEO compensation.

Executive Compensation Governance

The Company’s executive compensation program is supported by strong corporate governance and Board-level oversight. The Compensation Committee provides primary oversight of our compensation programs, including the design and administration of executive compensation plans, assessment and setting of corporate performance goals, as well as individual performance metrics, and the approval of executive compensation. In addition, the Compensation Committee retains an independent compensation consultant, and where appropriate, discusses compensation-related matters with our CEO, as it relates to the other NEOs. The Compensation Committee developed our 2018 compensation program, and the compensation paid to our NEOs during and in respect of 2018 was approved by the Compensation Committee as well as all of our independent directors.

Role of Compensation Committee: The Compensation Committee is comprised entirely of independent directors who are also non-employee directors as defined in Rule 16b-3 under the Exchange Act, independent directors as defined by the NYSE rules, and are not “interested persons” of the Company, as defined by Section 2(a)(19) of the 1940 Act. For 2018, Messrs. Titinger and Woodward and Ms. Woo Ho comprised the Compensation Committee and Mr. Titinger served as chairman the Compensation Committee during 2018. Mr. Woodward retired from the Board in June 2018 and was replaced by Mr. Koenig in December 2018. Ms. Crowell joined the Compensation Committee in March 2019.
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The Compensation Committee operates pursuant to a charter that sets forth its mission, specific goals and responsibilities. A key component of the Compensation Committee’s goals and responsibilities is to evaluate, approve and/or make recommendations to our Board regarding the compensation of our NEOs, and to review their performance relative to their compensation to assure that they are compensated in a manner consistent with the compensation philosophy discussed above.

The Compensation Committee has not established a policy or target for the allocation between cash and non-cash or short-term and long-term compensation. Rather, the Compensation Committee undertakes a subjective analysis in light of the principles described herein and, in connection with its analysis, reviews and considers information provided by independent compensation consultants and surveys to which the Company subscribes to determine the appropriate level and mix of base compensation, performance-based pay, and other elements of compensation.

In addition, the Compensation Committee evaluates and makes recommendations to our Board regarding the compensation of the directors for their services. Annually, the Compensation Committee:

Evaluates our CEO’s performance
Reviews our CEO’s evaluation of the other NEOs’ performance
Determines and approves the compensation paid to our CEO, and
With input from our CEO, reviews and approves the compensation of the other NEOs.

The Compensation Committee periodically reviews our compensation programs and equity incentive plans to ensure that such programs and plans are consistent with our corporate objectives and appropriately align our NEOs’ interests with those of our stockholders. The Compensation Committee also administers our stock incentive program. The Compensation Committee may not delegate its responsibilities discussed above.

Role of Compensation Consultant: The Compensation Committee has engaged Frederic W. Cook & Co., Inc., or F.W. Cook, as an independent outside compensation consultant to assist the Compensation Committee and provide advice on incorporating a variety of compensation matters relating to CEO and NEOs compensation, peer group selection, compensation program design best practices, market and industry compensation trends, improved program designs, market competitive director compensation levels and regulatory developments. F.W. Cook was hired by and reports directly to the Compensation Committee. F. W. Cook does not provide any other services to the Company. The Compensation Committee has assessed the independence of F.W. Cook pursuant to the NYSE rules, and it has been concluded that F. W. Cook’s work for the Compensation Committee does not raise any conflict of interest.

The Compensation Committee has engaged F.W. Cook to provide the following services to the Committee:

Provide information, research, market analysis and recommendations with respect to our 2018 executive and non-employee director compensation programs, including evaluating the components of our executive and non-employee director compensation programs and the alignment of the compensation programs with our performance;
Advise on the design of the executive and non-employee director compensation programs and the reasonableness of individual compensation targets and awards, including in the context of business and shareholder performance, as well as importance of individual officers to the Company’s success;
Provide advice and recommendations that incorporated both market data and Company-specific factors; and
Assist the Compensation Committee in making pay recommendations for the NEOs after the evaluation of, among other things, Company and individual performance, market pay level, and management recommendations.

The Compensation Committee’s executive compensation determinations are subjective and the result of the Compensation Committee’s business judgment. Its determinations are informed by the experiences of its members and the peer group pay and performance data provided by its independent compensation consultant. Accordingly, the Compensation Committee does not target a percentile within its peer group when determining levels of compensation. Instead, it uses the data as a reference point when determining the types and amounts of compensation provided by the Company.

Role of Chief Executive Officer: From time to time and at the Compensation Committee’s request, our CEO will attend the Compensation Committee’s meetings to discuss the Company’s performance and compensation-related matters. Our CEO does not attend executive sessions of the Compensation Committee, unless invited by the
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Compensation Committee. While our CEO does not participate in any deliberations relating to his own compensation, our CEO reviews on at least an annual basis the performance of each of the other NEOs and other executive officers. Based on these performance reviews and the Company’s overall absolute and relative performance, our CEO makes recommendations to the Compensation Committee on any changes to base salaries, annual bonuses and equity awards. The Compensation Committee considers the recommendations submitted by our CEO, as well as data and analysis provided by management and F.W. Cook, but retains full discretion to approve and/or recommend for Board approval all executive and director compensation.

Peer Data

To determine the competitiveness of executive compensation levels, the Compensation Committee analyzes a group of internally managed BDCs, financial services companies and real estate investment trusts (“REITs”) as set forth below (the “Peer Group”). The Peer Group is viewed as reflecting the labor market for our officer and employee talent, has a similar investor base, and, like the Company, the BDCs and REITs are pass-through entities with the majority of earnings required to be distributed to stockholders as a dividend. The Compensation Committee does not specifically benchmark the compensation of our NEOs against that paid by other companies. Our Peer Group was used as a factor in determining the annual cash bonus awards made with respect to 2018 (but paid in 2019) as well as the further considerations further described below under “Annual Cash Bonus Awards”. The Peer Group data used in such determination is for the period January 1, 2018 through September 30, 2018.

HTGC Peer Group
Internally Managed BDCs
Financial Services
Real Estate Investment Trusts
KCAP Financial*
Main Street Capital
Alliance Bernstein
BGC Partners
Cowen Group
Evercore Partners
Greenhill & Co.
Houlihan Lokey
LPL Financial Holdings
On Deck Capital
Wisdom Tree Investment
Capstead Mortgage
Hannon Armstrong
iStar Inc.
Ladder Capital
MFA Financial
Redwood Trust
Sabra Health Care
Seritage Growth
*On April 1, 2019, KCAP became Portman Ridge Finance Corporation and announced the BDC had externalized.

As of December 31, 2018, which is the last day of the period over which the Compensation Committee reviewed performance metrics for our Peer Group, the Company generally outperformed most of its Peer Group over the one-, three- and five-years as follows:

 
Return on
Average Assets
(excl. cash)
Return on
Equity
Return on
Invested Capital
Average Annual
Shareholder Return (“AASR”)
Performance Period
HTGC
% Rank of
Peer Group
HTGC
% Rank of
Peer Group
HTGC
% Rank of
Peer Group
HTGC
% Rank of
Peer Group
1-year
 
5.6
%
 
100
%
 
10.8
%
 
100
%
 
5.7
%
 
100
%
 
-6.9
%
 
48
%
3-year
 
5.9
%
 
100
%
 
10.8
%
 
100
%
 
5.9
%
 
100
%
 
6.6
%
 
52
%
5-year
 
6.0
%
 
100
%
 
10.6
%
 
100
%
 
6.1
%
 
100
%
 
1.5
%
 
49
%

−1-, 3- and 5-year calculations of performance are based on data through the most recently reported quarter (fiscal year end for HTGC), and as of December 31, 2018 for AASR.

−Companies with less than three and/or less than five full years of historical financial and AASR performance are excluded.

−Financial Services peers are excluded from analysis of capital allocation because services companies are not as capital intensive as REITs and BDCs, which are primarily engaged in direct investment of firm capital.

−The data is from S&P Capital IQ and is not adjusted by F.W. Cook, which means the data may not reflect internal adjustments regularly made by Hercules or by the peer companies when assessing their performance.

The Company believes that compensation paid to our NEOs for 2018 was commensurate with the Company’s overall absolute performance as well as our performance relative to the Peer Group during the relevant Performance Periods. The 2018 compensation decisions made by the Compensation Committee considered the fact that our performance relative to the Peer Group was generally above the median, and in most cases above the 90th percentile, measured using