ITEM 5.02  DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS;
           APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY ARRANGEMENTS OF CERTAIN
           OFFICERS.

2021 Annual Incentive Compensation Program Awards

On January 8, 2021, the Compensation Committee (the "Committee") of the Board of Directors of Capstead Mortgage Corporation (the "Company") adopted the 2021 Annual Incentive Compensation Program applicable to the Company's executive officers (the "2021 Annual Incentive Program"). The 2021 Annual Incentive Program is structurally similar to the 2020 Annual Incentive Compensation Program, except as described below. The 2021 Annual Incentive Program provides defined metrics against which the Company's performance is to be measured, specifically absolute economic return, relative operating efficiency as well as individual goals and objectives for each of the executive officers. Payouts are determined formulaically, defining threshold, target and maximum performance levels based on multiples of base salary, thereby limiting the maximum annual incentive payout for each executive officer.

The only change for 2021 consisted of reducing the absolute economic return Target level to 5.0% from 6.0%. Each executive officer's total award opportunity as measured at Target performance levels is equal to 125% of annual base salary on January 1, 2021.

The 2021 Annual Incentive Program is filed with this Form 8-K as Exhibit 10.1 and is incorporated by reference herein. This summary does not purport to be complete and is qualified in its entirety by reference to Exhibit 10.1.

Award of Dividend Equivalent Rights ("DERs")

An additional performance-based short-term incentive compensation program for executives provides for quarterly cash payments equal to per share dividends declared on the Company's common stock multiplied by a notional amount of non-vesting or "phantom" shares of common stock, referred to as DERs. DERs are not attached to any stock or option awards. DERs outstanding during 2020 totaling 655,000 expired December 31, 2020. On January 8, 2021 the Committee awarded DERs totaling 662,000 expiring December 31, 2021 as follows:



                                  2020              2021
Executive Officer              DER Grants        DER Grants
Phillip A. Reinsch,           200,000        200,000
President and Chief
Executive Officer
Robert R. Spears, Jr.,        200,000        200,000
Executive Vice President
and Chief Investment
Officer
Roy S. Kim, Senior Vice       140,000        140,000
President - Asset and
Liability Management
Lance J. Phillips, Senior     115,000        122,000
Vice President and Chief
Financial Officer


2021 Long-Term Awards

Pursuant to the Amended and Restated 2014 Flexible Incentive Plan, on January 8, 2021, the Committee granted two forms of incentive compensation awards to the executive officers of the Company based on the closing price of the Company's common stock on January 8, 2021, consisting of (a) restricted common stock and (b) performance units (the "Performance Units").

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Restricted Stock Awards

The restricted common stock awards vest in full on the first business day of 2024 and were granted in the following share amounts determined by reference to the closing stock price on the date of grant with a value equal to 75% of each grantee's annual base salary on January 1, 2021:



                                       Number of shares of
                                        Restricted Common
Executive Officer                             Stock
Phillip A. Reinsch, President                82,381
and Chief Executive Officer
Robert R. Spears, Jr., Executive             79,086
Vice President and Chief
Investment Officer
Roy S. Kim, Senior Vice                      56,678
President - Asset and Liability
Management
Lance J. Phillips, Senior Vice               49,428
President and Chief Financial
Officer

Each executive officer will enter into a Restricted Stock Agreement with the Company in the form filed with this Form 8-K as Exhibit 10.2.

Performance Units

Prior to granting Performance Units, the Committee adopted long-term performance unit award criteria (the "2021 Long-Term Performance Unit Award Criteria"). The 2021 Long-Term Performance Unit Award Criteria are the same structurally as the criteria adopted by the Committee in 2020. The number of shares of common stock into which the Performance Units are convertible is dependent on the extent, if any, that defined relative economic return, absolute economic return and relative total stockholder return performance metrics are achieved during a three-year performance period ending December 31, 2023, as specifically outlined in the 2021 Long-Term Performance Unit Award Criteria. As in the past, the conversion ratio for the Performance Units will be adjusted to interpolate the appropriate conversion factors for any metrics that perform above related Threshold but below the Maximum performance levels. Accordingly, the Performance Units could expire without converting into any shares of common stock or could be convertible into as many as 200% of the number of Performance Units granted.

Each executive officer of the Company was granted the following Performance Units in amounts determined by reference to the closing stock price on the date of grant with a value equal to 75% of each grantee's annual base salary on January 1, 2021 as measured at Target performance levels. These units are convertible into the indicated number of shares of common stock:





                         Number of
                        Performance    Number of shares of Common Stock into which
  Executive Officer        Units          the Performance Units are Convertible
                                          Below
                                        Threshold     Threshold    Target   Maximum
Phillip A. Reinsch,        82,381           0           41,190     82,381   164,762
President and Chief
Executive Officer
Robert R. Spears, Jr.,     79,086           0           39,543     79,086   158,172
Executive Vice
President and Chief
Investment Officer
Roy S. Kim, Senior         56,678           0           28,339     56,678   113,356
Vice President - Asset
and Liability
Management

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Lance J. Phillips, Senior Vice President and Chief 49,428 0 24,714 49,428 98,856 Financial Officer

The common stock into which the Performance Units are convertible will be issued by the Company following the end of the three-year performance period and on or prior to March 15, 2024. Dividends accrue from the date of grant and will be paid in cash when and if the units convert into shares of common stock based on the number of shares ultimately issued.

The 2021 Long-Term Performance Unit Award Criteria is filed with this Form 8-K as Exhibit 10.3 and is incorporated by reference herein. This summary does not purport to be complete and is qualified in its entirety by reference to Exhibit 10.3.

Each executive officer will enter into a Performance Unit Agreement with the Company in the form filed with this Form 8-K as Exhibit 10.4.

ITEM 9.01.FINANCIAL STATEMENTS AND EXHIBITS





  (d) Exhibits.




Exhibit No.                                 Description
   10.1       2021 Annual Incentive Compensation Program
   10.2       Form of Restricted Stock Agreement
   10.3       2021 Long-Term Performance Unit Award Criteria
   10.4       Form of Performance Unit Agreement
    104     Cover Page Interactive Data File (embedded within the Inline XBRL document)

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