Scott Bluestein
Hercules CapitalAbout Scott Bluestein
Scott Bluestein (age 46) is Hercules Capital’s Chief Executive Officer and Chief Investment Officer (CEO/CIO) and its only “Interested Director.” He joined Hercules in 2010 as Chief Credit Officer, became CIO in 2014, served as Interim CEO in March–July 2019, and was appointed CEO and President in July 2019; he has served on the Board since 2019. He holds a BBA from Emory University . Under his leadership, Hercules’ performance ranked at or near the top of its peer set in 2024 (ROE 17.2%, ROAA 9.0%, and 1‑yr AASR 33.3%), and over the past 3 and 5 years (top decile ranks across ROE/ROAA/AASR) . Company “value of initial $100” (TSR proxy) reached $250.11 for 2024 . Based on S&P Global data, revenues grew from FY22–FY24 while EBITDA also increased over the same period (see table; values with asterisk are from S&P Global)* .
Past Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| Hercules Capital | Chief Executive Officer & President; Director | 2019–present | Led platform to record NII/fundings; maintained top‑decile ROE/ROAA vs peers . |
| Hercules Capital | Interim Chief Executive Officer | Mar–Jul 2019 | Maintained leadership continuity during transition . |
| Hercules Capital | Chief Investment Officer | 2014–present | Oversight of originations/credit, supporting dividend stability and NAV growth . |
| Hercules Capital | Chief Credit Officer | 2010–2014 | Built credit discipline for venture lending portfolio . |
| Century Tree Capital Mgmt. | Founder & Partner | 2009–2010 | Launched investment platform focused on small/microcap financing . |
| Laurus‑Valens Capital Mgmt. | Managing Director | 2003–2009 | Structured debt/equity financing for growth companies . |
| UBS Investment Bank | Financial Institutions Coverage (FinTech) | 2000–2003 | Originations/coverage in financial technology . |
External Roles
| Organization | Role | Years |
|---|---|---|
| Tectura Corporation | Director (Private) | 2017–present |
| Gibraltar Business Capital | Director (Private) | 2019–present |
| Gibraltar Equipment Finance | Director (Private) | 2023–present |
| Sungevity | Director (Past) | 2017–2020 |
Fixed Compensation
| Year | Base Salary ($) | All Other Compensation ($) | Notes |
|---|---|---|---|
| 2024 | 650,000 | 23,000 (401k match) | Base unchanged vs 2023 |
| 2023 | 650,000 | 22,500 | |
| 2022 | 650,000 | 20,500 |
Performance Compensation
Annual Cash Incentive (Non-formulaic under 1940 Act)
| Year | Design (metrics considered) | Outcome ($) |
|---|---|---|
| 2024 | Discretionary; committee evaluates ROE, ROA, AASR vs peer group; absolute records in total investment income, NII, and gross fundings; also considers expense ratios vs BDC peers . | 3,500,000 |
| 2023 | Discretionary; top‑decile performance on ROE/ROAA/AASR and records in operating performance . | 3,200,000 |
| 2022 | Discretionary; strong relative performance . | 3,000,000 |
Note: As an internally managed BDC, Hercules cannot use formulaic bonus plans; the Compensation Committee must retain discretion under the 1940 Act .
Equity Awards and Vesting
| Grant Date | Instrument | Shares/Units | Grant‑Date Fair Value ($) | Vesting |
|---|---|---|---|---|
| 01/09/2025 | Restricted Stock Award (RSA) (for 2024 performance) | 241,742 | 4,830,005 | 1/3 at 1st anniversary; remainder in equal quarterly installments over the following 2 years . |
| 12/05/2024 | Long‑Term RSUs (LTRSU) | 33,051 | 303,739 | 7‑year cliff; no dividends during vesting period . |
| 01/09/2024 | RSA (for 2023 performance) | 264,368 | 4,600,003 | 1/3 at 1st anniversary; remainder quarterly over next 2 years . |
Additional context:
- Options: none granted since 2010; no options outstanding for NEOs in 2024 .
- 2024 vesting realized: 284,626 shares vested for Bluestein, value realized $5,281,846 (pre‑withholding)—a potential indicator of periodic selling pressure around vest dates .
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Total beneficial ownership (04/17/2025) | 2,292,204 shares (1.3% of outstanding); includes 479,291 restricted shares . |
| Unvested awards at 12/31/2024 | RSAs: 420,877 shares (aggregates 2012–2024 RSA tranches). RSUs: 147,198 units (2013–2024 LTRSUs) . |
| Value realized on vesting (2024) | 284,626 shares; $5,281,846 value realized on vesting . |
| Pledging/hedging | Prohibited for directors and officers (anti‑pledging and anti‑hedging policy) . |
| Ownership guidelines (CEO) | Minimum 5x base salary; Bluestein is in compliance—held 2,286,377 Shares/RSAs/RSUs as of 12/31/2024, exceeding 5x salary threshold . |
Employment Terms
| Provision | Key terms |
|---|---|
| Retention Agreement (Oct 2017) | If terminated without cause or resigns for good reason (or externalization without comparable offer), cash severance equals 1.75x (base salary + 3‑yr avg actual bonus), plus any unpaid prior bonus and pro‑rata current‑year bonus; equity continues vesting for 1.75 years (or fully vests if termination in connection with a change in control); COBRA premiums reimbursed for 18 months . |
| Death/Disability or Change in Control | All unvested RSAs and LTRSUs vest in full for NEOs . |
| Illustrative payout (if terminated 12/31/2024) | Salary: $1,137,500; Bonus: $7,654,167; Other (COBRA): $82,544; Equity acceleration: $7,570,203 (prior to CIC) or $11,412,627 (with CIC); Total: $16,444,414 (no CIC) or $20,286,838 (with CIC) . |
| Clawback | NYSE‑compliant recoupment for restatements; covers Section 16 officers (including CEO) for 3 completed fiscal years prior to restatement trigger . |
| Tax gross‑ups | None (stated best practice) . |
Board Governance
- Role/independence: Bluestein is an “Interested Director” (employee). All three Board committees (Audit, Compensation, Governance) are composed entirely of Independent Directors; Bluestein does not serve on committees .
- Lead Independent Director/Chair: Robert P. Badavas serves as Lead Independent Director and Chairman; regular executive sessions of Independent Directors are held .
- Attendance: All directors attended at least 75% of Board and committee meetings in 2024 .
- Director compensation: As an employee director, Bluestein receives no additional director fees (director compensation pertains to Independent Directors) .
Say‑on‑Pay & Compensation Peer Group
- Say‑on‑Pay results: 2024 approval 90.3% of votes cast; 2023 approval 91% .
- Peer group methodology: Internally managed BDCs, financial services, and REITs; used for context but not as a strict benchmark target; compensation outcomes consider relative ROE/ROAA/AASR ranks .
- Relative performance ranks (as of 12/31/2024): Hercules ranked at the 100th percentile for ROAA and ROE across 1‑, 3‑, and 5‑year periods; AASR 82% (1‑yr), 92% (3‑yr), 90% (5‑yr) .
| Performance Period | ROAA (HTGC) | ROAA % Rank | ROE (HTGC) | ROE % Rank | AASR (HTGC) | AASR % Rank |
|---|---|---|---|---|---|---|
| 1‑Year | 9.0% | 100% | 17.2% | 100% | 33.3% | 82% |
| 3‑Year | 8.4% | 100% | 16.7% | 100% | 19.9% | 92% |
| 5‑Year | 7.4% | 100% | 14.9% | 100% | 20.1% | 90% |
Performance & Track Record
| Year | Company TSR “Value of $100” | Net Income ($000s) | ROE |
|---|---|---|---|
| 2024 | 250.11 | 262,966 | 17.2% |
| 2023 | 187.59 | 337,484 | 14.9% |
| 2022 | 131.26 | 102,081 | 11.6% |
Highlights: Record total investment income, record net investment income, and record gross fundings in 2024; top‑decile relative performance across ROE/ROAA/AASR under Bluestein’s leadership .
Multi‑Year Compensation (Summary Compensation Table)
| Year | Salary ($) | Bonus ($) | Stock Awards ($) | All Other Comp ($) | Total ($) |
|---|---|---|---|---|---|
| 2024 | 650,000 | 3,500,000 | 4,903,742 | 23,000 | 9,076,742 |
| 2023 | 650,000 | 3,200,000 | 5,019,494 | 22,500 | 8,891,994 |
| 2022 | 650,000 | 3,000,000 | 3,700,008 | 20,500 | 7,370,508 |
Outstanding/Unvested Equity Detail (12/31/2024)
| Award type | Unvested units | Notes |
|---|---|---|
| RSAs | 420,877 | Aggregates 01/11/2022, 01/11/2023, 01/09/2024 RSA tranches; vest 1/3 at 1 year then quarterly over 2 years . |
| LTRSUs | 147,198 | 02/06/2023, 12/07/2023, 12/05/2024; 7‑year cliff vest, no dividends during vesting . |
Company Financials During Tenure (for growth context)
| Metric (USD) | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|
| Revenues | 14,430,000* | 50,913,000* | 77,666,000* |
| EBITDA | 250,619,000* | 381,692,000* | 412,256,000* |
Values retrieved from S&P Global.*
Compensation Structure Analysis (Signals)
- Mix of pay: High at‑risk mix—large discretionary cash bonus tied to absolute/relative performance and recurring meaningful equity grants (RSAs with three‑year vesting; LTRSUs with seven‑year vesting) .
- Shift in vehicles: No options (none since 2010); awards delivered via RSAs/LTRSUs—lower risk vs options and more retention‑oriented .
- Ownership alignment: Large personal stake (1.3% of shares outstanding as of 4/17/2025) and strict anti‑pledging/hedging; CEO ownership well above 5x salary guideline .
- Discretion under 1940 Act: Committee cannot use formulaic plan metrics; nonetheless, pay decisions explicitly reference ROE/ROAA/AASR ranks and record operating performance—supporting pay‑for‑performance narrative .
- Clawback policy: NYSE‑compliant restatement recoupment adopted and in effect .
- Say‑on‑Pay support: Strong (90.3% in 2024; 91% in 2023), reducing governance/engagement risk on pay .
Board Service History and Dual‑Role Implications
- Service history: Director since 2019; current Class III nominee (term as director expires in 2028 upon re‑election) .
- Committees: None (all committees are independent) .
- Independence and oversight: Only one Interested Director (Bluestein) on an otherwise seven‑member independent Board; Lead Independent Chair (Badavas) presides over executive sessions; strong independence structure mitigates CEO/CIO dual role risks .
- Attendance: All directors ≥75% meeting attendance in 2024 .
- Director pay: No separate compensation for Bluestein’s director service .
Risk Indicators & Red Flags
- Pledging/hedging: Prohibited by policy (reduces alignment risk) .
- Option repricing: Not applicable; no options granted since 2010 .
- Related party transactions: Subject to strict 1940 Act restrictions and board review policy; none flagged specific to Bluestein .
- Legal/tax gross‑ups: No tax gross‑ups .
Employment & Contracts (Retention/Transition)
| Topic | Details |
|---|---|
| Start date at company | 2010 (Chief Credit Officer); CIO since 2014; CEO/President since 2019 . |
| Contract term/auto‑renewal | Retention agreement governs severance; term mechanics not disclosed beyond triggers . |
| Non‑compete / non‑solicit / garden leave | Not specifically disclosed in proxy . |
| Post‑termination consulting | Not disclosed . |
Investment Implications
- Pay‑for‑performance and alignment: Strong alignment through large equity ownership, strict anti‑pledging/hedging, and multi‑year equity vesting (three‑year RSA and seven‑year LTRSU)—reducing short‑termism and supporting long‑term TSR/NAV stability .
- Retention risk: Retention agreement is robust (1.75x salary+bonus multiple, 1.75‑year continued vesting, or full vest on CIC with termination). Combined with seven‑year LTRSUs and top‑decile performance records, near‑term flight risk appears low; however, sizable annual vesting/settlement events (e.g., 284,626 shares vested in 2024) could create episodic selling pressure near vest dates .
- Governance comfort: Only one interested director, independent chair/committees, regular executive sessions, high Say‑on‑Pay support (90%+), and NYSE‑compliant clawback should reassure investors on oversight and compensation discipline .
- Operating track record: Top‑decile ROE/ROAA/AASR vs peers and record NII/fundings in 2024 underpin the discretionary bonus outcomes and equity sizing; if performance normalizes, expect commensurate moderation in variable pay, given the 1940 Act‑driven discretion framework .
- Equity overhang/dilution risk: Equity plan remains the primary long‑term incentive vehicle; while option usage is minimal (none for NEOs), ongoing RSA/LTRSU issuance bears monitoring—mitigated by high TSR and ROE performance and strong shareholder support .