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Officer — Broadline Operations. His responsibilities in those positions at Sysco included the oversight of financial and accounting matters for field operations and corporate financial planning and analysis matters. Mr. Morris began his career as a certified public accountant with Arthur Andersen where he advanced to experienced audit manager.

Jason B. Beauvais has served as SeniorExecutive Vice President since 2021, Chief Compliance Officer since 2012 and General Counsel and Secretary since 2008 along with various other roles since joining Main Street in 2008. He also currently serves as Executive Vice President, General Counsel, Chief Compliance Officer and Secretary since 2012. Previously, Mr. Beauvais servedof MSC Income and as Vice President, General Counselchair of the BDC Council Legal Committee of the Small Business Investor Alliance (SBIA), the BDC and Secretary since 2008.small business investment company trade association. From 2006 through 2008, Mr. Beauvais was an attorney with Occidental Petroleum Corporation (NYSE: OXY), an international oil and gas exploration and production company. Prior to joining Occidental Petroleum Corporation, Mr. Beauvais practiced corporate and securities law at Baker Botts L.L.P., where he primarily counseled companies in public issuances and private placements of debt and equity and handled a wide range of general corporate and securities matters as well as mergers and acquisitions.

Brent D. Smith has served as Chief Financial Officer and Treasurer since November 2014 and previously as Senior Vice President—Finance since August 2014. Mr. Smith previously served as Executive Vice President, Chief Financial Officer and Treasurer of Cal Dive International, Inc. from 2010 through June 2014 and in various finance and accounting roles at Cal Dive from 2005 through 2010. On March 3, 2015, Cal Dive and certain of its subsidiaries, excluding its foreign subsidiaries, filed for voluntary protection under Chapter 11 of the Bankruptcy Code. Prior to joining Cal Dive, Mr. Smith was a manager with FTI Consulting (NYSE: FCN). Prior to that, Mr. Smith, a certified public accountant, was employed as a senior auditor at Arthur Andersen LLP.

Nicholas T. Meserve has served as Managing Director on our middle market investment team since 2012. Mr. Meserve has also currently serves as Managing Director of MSC Income and previously served on the Boardboard of Directorsdirectors of HMSMSC Income Fund, Inc., a non-publicly traded business development company of which MSC Advisor I, LLC, a wholly owned subsidiary of Main Street, acts as the investment sub-advisor, sincefrom April 2016.2016 until June 2020. Previously, from 2004 until 2012, Mr. Meserve worked at Highland Capital Management, LP, a large alternative credit manager, and certain of its affiliates, where he managed a portfolio of senior loans and high yield bonds across a diverse set of industries. Prior to Highland, he was a Credit Analyst at JP Morgan Chase & Co.

K. Colton Braud, III has served as a Managing Director on our lower middle market team since January 2017 and has been with the firm in Associate to Director roles since 2012.2012 and currently also serves as a Managing Director of MSC Income. Prior to joining Main Street, Mr. Braud spent two years as an Associate at Wellspring Capital Management, a middle market private equity firm based in New York. While at Wellspring, Mr. Braud'sBraud’s responsibilities included evaluating leveraged buyout opportunities, conducting due diligence across a wide array of industries and portfolio management. Prior to Wellspring, Mr. Braud served as an Analyst at J.P. Morgan Securities Inc. in its Financial Sponsor Group. Mr. Braud currently sits on the board of directors of The Children’s Fund, Inc., a non-profit charitable organization that serves underprivileged youth in the greater Houston area.

Damian T. Burke has served as a Managing Director on our lower middle market team since September 2019.2019 and currently also serves as a Managing Director of MSC Income. Prior to joining Main Street, from 2016 to 2019, Mr. Burke served as Chief Financial Officer of Melior Innovations, Inc., a Houston, Texas based company focused on commercializing new technologies in the semiconductor, coatings and oil field service sectors. Prior to joining Melior, from 2011 to 2016, Mr. Burke served as VP Corporate Development for Kraton Corporation (NYSE: KRA), a leading global specialty chemicals company, where he created and built out the corporate development group and led the execution of an acquisition program that doubled the size of the

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company. Prior to joining Kraton, from 2006 to 2011, Mr. Burke served as an SVP Development and Strategy with Oldcastle, Inc. (now known as CRH Americas), the North American division of CRH plc (NYSE: CRH), a leading global building materials business, where he led the acquisition of numerous privately held businesses in the building materials and products sectors. Mr. Burke began his career as an engineer with ExxonMobil Corporation (NYSE: XOM) and served in roles of increasing responsibility in the United Kingdom and the United States. Mr. Burke holds an M. Eng. in Chemical Engineering from University College, London and an MBA from the Wharton School of the University of Pennsylvania.

Samuel A. Cashiola has served as a Managing Director since January 2019 and various other roles since joining Main Street in 2012.2012 and currently also serves as a Managing Director of MSC Income. Prior to joining Main Street, Mr. Cashiola was an Associate Analyst on Morgan Keegan'sKeegan’s Internet & e-Commerce Equity Research team, which focused on companies in the digital media and e-commerce segments, and an Associate at T. Rowe Price Associates. Mr. Cashiola holds a B.S. degree in Finance from Wake Forest University and a M.S. degree in Finance from the Owen Graduate School of Management at Vanderbilt University. He

Diego Fernandez is a CFA charterholder and is a member of the CFA Society of Houston.

Watt R. MatthewsManaging Director on our lower middle market investment team. Since joining Main Street in 2013, Mr. Fernandez has previously served on our investment team in various roles from Senior Analyst to Director. Mr. Fernandez also currently serves as a Managing Director since January 2019 and in various other roles sinceof MSC Income. Before joining Main Street, Mr. Fernandez worked for Bank of America Merrill Lynch, where he was involved in 2010. He graduated from the Universityorigination, structuring and execution of Texas at Austin in May 2008 with a B.B.A. in Finance degreeleveraged loans and a minor in Accounting, followed by post-graduate study in Ranch Management from Texas Christian University.high yield bonds for various industries.

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Lance A. Parker, a certified public accountant, has served as Vice President, Chief Accounting Officer and Assistant Treasurer since March 2020 and also held the position of Vice President and Corporate Controller from June 2019 to February 2020. Mr. Parker also currently serves as a Vice President and Assistant Treasurer of MSC Income. Previously, Mr. Parker served as Vice President and Corporate Controller since June 2019. Prior to joining Main Street, Mr. Parker worked at Group 1 Automotive, Inc. (NYSE: GPI), an automotive retailer, as the Vice President and Corporate Controller from November 2006 to May 2019, and also held the position of Director of Corporate Compliance from August 2004 to November 2006. From 1993 to 2003, Mr. Parker served as an auditor, with increasing degrees of responsibility, for both Arthur Andersen LLP and KPMG LLP before leaving his career in public accounting to pursue a position as the Controller for a private advertising and printing company. Mr. Parker currently serves as the Chairman of the Board of Every Village, a faith-based non-profit organization that builds clean water and communication systems in South Sudan.

Shannon D. Martin has served as Vice President—Valuations since March 2020. Previously, Mr. Martin served as Vice President, Chief Accounting Officer and Assistant Treasurer since 2012. From 2006 to 2012, Mr. Martin worked as an independent consultant and performed financial advisory services for several clients, including functioning as acting Chief Accounting Officer from 2008 to 2011 for EquaTerra, Inc. From 1999 to 2006, Mr. Martin was a director of accounting integration and audit with Quanta Services, Inc. (NYSE: PWR), which provides specialty contracting services to the power, natural gas and telecommunications industries, where he focused on the development of integrated accounting, business and information system processes and the company's acquisition and integration strategies. From 1992 to 1999, Mr. Martin, a certified public accountant, worked at Arthur Andersen as a manager in the Commercial Services group.

Katherine S. Silva, a certified public accountant, has served as Vice President since 2015, with responsibility for managing Small Business Administration (“SBA”) matters and several administrative functions, and Assistant Treasurer since 2010, with responsibility for managing day-to-day treasury activities. Ms. Silva also serves as Vice President and Assistant Treasurer of MSC Income. She also serves as special assistant to Mr. Foster. Ms. Silva has worked at Main Street since 2005 and holds a Bachelor of Arts in Journalism from the University of Georgia.

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COMPENSATION DISCUSSION AND ANALYSIS

The following Compensation Discussion and Analysis, or CD&A, provides information relating to the compensation of Main Street'sStreet’s Named Executive Officers, or NEOs, for 2019,2021, who were:

•

Dwayne L. Hyzak, Member of the Board, Chief Executive Officer and Senior Managing Director;



•

David L. Magdol, President, Chief Investment Officer and Senior Managing Director;



•

Vincent D. Foster, Executive Chairman of the Board;



•

Jesse E. Morris, Executive Vice President and Chief Operating Officer; and



•

Brent D. Smith, Chief Financial Officer and Treasurer.

Compensation Philosophy and Objectives

The Main Street compensation system was developed by the Compensation Committee and approved by all independent directors. The system is designed to attract and retain key executives, motivate them to achieve the Company'sCompany’s business objectives and reward them for performance while aligning management'smanagement’s interests with those of the Company'sCompany’s stockholders. The structure of Main Street'sStreet’s incentive compensation programs is formulated to encourage and reward the following, among other things:

•

achievement of income and capital gains to sustain and grow the Company's dividend payments;



•

maintenance of liquidity and capital flexibility to accomplish the Company's business objectives, including the preservation of investor capital;



•

attainment of superior risk-adjusted returns on the Company's investment portfolio; and



•

professional development and growth of individual executives, the management team and other employees.

The Compensation Committee has the primary authority to establish compensation for the NEOs and other key employees and administers all executive compensation arrangements and policies. Main Street'sStreet’s Chief Executive Officer assists the Committee by providing recommendations regarding the compensation of NEOs and other key employees, excluding himself. The Committee exercises its discretion by modifying or accepting these recommendations. The Chief Executive Officer routinely attends a portion of the CommitteeCommittee’s meetings. However, the Committee often meets in executive session without the Chief Executive Officer or other members of management when discussing compensation matters and on other occasions as determined by the Committee.

The compensation packages for Main Street NEOs and other key employees are structured to reflect the Compensation Committee'sCommittee’s commitment to corporate governance best practices and performance-oriented executive compensation. Specifically, the Compensation Committee has implemented the following practices for NEOs and other key employees:

•

no employment agreements;



•

no cash severance benefits;



•

no supplemental defined benefit pensions; and



•

no tax gross-up payments.

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The Compensation Committee believes the above practices are appropriate in light of the Company'sCompany’s current objectives and compensation philosophies but reserves the right to re-visit these practices in the future as may be appropriate. The Compensation Committee takes into account

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competitive market practices with respect to the salaries and total direct compensation of the NEOs and other key employees. Members of the Committee consider market practices by reviewing public and non-public information for executives at comparable companies and funds. The Committee also has the authority to utilize compensation consultants to better understand competitive pay practices and has retained such expertise in the past.

Independent Compensation Consultant

The Compensation Committee has from time to time engaged independent compensation consultants to assist the Committee and provide advice on a variety of compensation matters relating to NEO, other key employee and independent director compensation, incentive compensation plans and compensation trends, best practices and regulatory matters. Any such compensation consultants are hired by and report directly to the Compensation Committee. Although compensation consultants may work directly with management on behalf of the Compensation Committee, any such work is under the control and supervision of the Compensation Committee. The Compensation Committee did not retain any independent compensation consultants or pay any fees for compensation consulting services for fiscal year 2019.2021.

Assessment of Market Data

In assessing the competitiveness of executive compensation levels, the Compensation Committee analyzes market data of certain companies, including internally managed business development companies, or BDCs, private equity firms, private credit firms, and other asset management and financial services companies. This analysis focuses on key elements of compensation practices in general, and more specifically, the compensation practices at companies and funds reasonably comparable in asset size, typical investment size and type, market capitalization and general business scope as compared to the Company.

        As regardsWith respect to other internally managed BDCs like Main Street, the Compensation Committee considers the compensation practices and policies pertaining to executive officers as detailed in their company'scompany’s respective proxies, research analysts'analysts’ reports and other publicly available information. However, there are relatively few internally managed BDCs and none that are directly comparable to the Company as regards business strategies, assets under management, including for external parties through our wholly owned external investment manager, typical investment size and type and market capitalization. Moreover, regarding the compensation and retention of executive talent, the Company also competes with private equity funds, private credit funds, hedge funds and other types of specialized investment funds. Since these funds are generally private companies that are not required to publicly disclose their executive compensation practices and policies, the Committee relies on third-party compensation consultants and surveys as well as other available information to compare compensation practices and policies.

Items taken into account from comparable companies and funds include, but are not necessarily limited to, base compensation, bonus compensation, stock option awards, restricted stock awards, carried interest and other compensation. In addition to actual levels of cash and equity related compensation, the Compensation Committee also considers other approaches comparable companies are taking with regard to overall executive compensation practices. Such items include, but are not necessarily limited to, the use of employment agreements for certain employees, the mix of cash and equity compensation, the use of third-party compensation consultants and certain corporate and executive performance measures that are established to achieve longer term total return for stockholders. Finally, in addition to analyzing comparable companies and funds, the Committee also evaluates the relative cost structure of the Company as compared to the entire BDC sector, including internally and externally managed BDCs, as well as other private funds.

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Assessment of Company Performance

The Compensation Committee believes that sustained financial performance coupled with consistent stockholders'stockholders’ returns as well as proportional employee compensation are essential components for Main Street'sStreet’s long-term business success. Main Street typically makes three to seven-year investments in its portfolio companies. However, the Company's

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Company’s business plan involves taking on investment risks over a range of time periods. Accordingly, much emphasis is focused on maintaining the stability of net asset values as well as the continuity of earnings to pass through to stockholders in the form of recurring dividends. The quality of the earnings supporting the dividends as well as the maintenance and growth of dividends are key metrics in the Committee'sCommittee’s assessment of financial performance.

Main Street'sStreet’s primary strategy is to generate current income from debt and equity investments and to realize capital gains from equity-related investments. This income supports the payment of dividends to stockholders. The recurring payment of dividends requires a methodical investment approach and active monitoring and management of the investment portfolio over time. A meaningful part of the Company'sCompany’s employee base is dedicated to the maintenance of asset values and expansion of this recurring income to sustain and grow dividends. The Committee believes that stability of the management team is critical to achieving successful implementation of the Company'sCompany’s strategies. Further, the Committee, in establishing and assessing executive salary and performance incentives, is more focused on Main Street results as compared to its business objectives rather than the performance of Main Street relative to other comparable companies or industry metrics.

Executive Compensation Components

For 2019,2021, the components of Main Street'sStreet’s direct compensation program for NEOs included:

•

base salary;



•

annual cash bonuses;



•

long-term compensation pursuant to the 2015 Equity and Incentive Plan; and



•

other benefits.

The Compensation Committee designs each NEO'sNEO’s direct compensation package to appropriately reward the NEO for his or her contribution to the Company. The judgment and experience of the Committee are weighed with individual and Company performance metrics and consultation with the Chief Executive Officer (except with respect to himself) to determine the appropriate mix of compensation for each individual. The Compensation Committee does not target a specific level of compensation relative to market practice, and only uses such data as a reference point when establishing compensation levels for NEOs. Cash compensation consisting of base salary and discretionary bonuses tied to achievement of individual performance goals that are reviewed and approved by the Committee, as well as corporate objectives, are intended to motivate NEOs to remain with the Company and work to achieve expected business objectives. Stock-based compensation is awarded based on performance expectations approved by the Committee for each NEO. The blend of short-term and long-term compensation may be adjusted from time to time to balance the Committee'sCommittee’s views regarding the benefits of current cash compensation and appropriate retention incentives.

Base Salary

Base salary is used to recognize the experience, skills, knowledge and responsibilities required of the NEOs in their roles. In connection with establishing the base salary of each NEO, the Compensation Committee and management consider a number of factors, including the seniority and experience level of the individual, the functional responsibilities of the position, the experience level of

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the individual, the Company'sCompany’s ability to replace the executive, the past base salary of the individual and the relative number of well-qualified candidates available in the area. In addition, the Committee considers publicly available information regarding the base salaries paid to similarly situated executive officers and other competitive market practices.

The salaries of the NEOs are reviewed on an annual basis, as well as at the time of promotion or any substantial change in responsibilities. The key factors in determining increases in salary level are relative performance and competitive pressures.

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Annual Cash Bonuses

Annual cash bonuses are intended to reward individual performance on an annual basis and can therefore be variable from year to year. Cash bonus awards for the NEOs are determined by the Compensation Committee on a discretionary basis based on performance criteria, particularly the Company'sCompany’s dividend performance as well as corporate and individual performance goals and other measures established by the Committee with the Chief Executive Officer'sOfficer’s input (except with respect to his own performance criteria). Should actual performance exceed expected performance criteria, the Committee may adjust individual cash bonuses to take such superior performance into account. Likewise, should actual performance fall below expected performance criteria, the Committee may adjust individual cash bonuses to take such inferior performance into account.

Long-Term Incentive Awards

Main Street'sStreet’s Board of Directors and stockholders approved the 2015 Equity and Incentive Plan in May 2015 to provide stock-based awards as long-term incentive compensation to employees, including the NEOs. The Company uses stock-based awards to (i) attract and retain key employees, (ii) motivate employees by means of performance-related incentives to achieve long-range performance goals, (iii) enable employees to participate in the Company'sCompany’s long-term growth in value and (iv) link employees'employees’ compensation to the long-term interests of stockholders. At the time of each award, the Compensation Committee will determine the terms of the award, including any performance period (or periods) and any performance objectives relating to vesting of the award.

Restricted Stock. Main Street has received exemptive relief from the SEC that permits the Company to grant restricted stock in exchange for or in recognition of services by its executive officers and employees. Pursuant to the 2015 Equity and Incentive Plan, the Compensation Committee may award shares of restricted stock to plan participants in such amounts and on such terms as the Committee determines in its sole discretion, provided that such awards are consistent with the conditions set forth in the SEC'sSEC’s exemptive order. Each restricted stock grant will be for a fixed number of shares as set forth in an award agreement between the grantee and Main Street. Award agreements will set forth time and/or performance vesting schedules and other appropriate terms and/or restrictions with respect to awards, including rights to dividends and voting rights. The Committee generally awards restricted stock to employees, including NEOs, which generally vests in equal increments over a three-year time frame based on continued service during the vesting period.

Our Board has adopted the 2022 Equity and Incentive Plan and recommended that it be submitted to stockholders for their approval at the Annual Meeting. If our stockholders approve our 2022 Equity and Incentive Plan, stock-based awards granted as long-term incentive compensation to employees will be issued thereunder going forward, and no further awards would be granted under the 2015 Equity and Incentive Plan. Terms of the 2022 Equity and Incentive Plan are substantially similar to the 2015 Equity and Incentive Plan. Please refer to “Approval of the 2022 Equity and Incentive Plan (Item 3)” for a summary of certain principal features of the 2022 Equity and Incentive Plan, and to Attachment A for the actual text of the 2022 Equity and Incentive Plan.

Options. The Compensation Committee may also grant stock options to purchase Main Street'sStreet’s common stock (including incentive stock options and nonqualified stock options). The Committee expects that any options granted will represent a fixed number of shares of common stock, will have an exercise price equal to the fair market value of common stock on the date of grant, and will be exercisable, or "vested,"“vested,” at some later time after grant. Certain stock options may provide for vesting based on the grantee remaining employed by Main Street for a time certain and/or the grantee and/or the Company attaining specified performance criteria. To date, the Committee has not granted stock options to any NEO.

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For a discussion of our policies related to employee and director hedging of economic risk of owning our securities, please see "Security“Security Ownership of Certain Beneficial Owners and Management"Management” beginning on page 40.38.

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Other Benefits

Main Street'sStreet’s NEOs generally participate in the same benefit plans and programs as the Company'sCompany’s other employees, including comprehensive medical, dental and vision insurance, short term and long termlong-term disability insurance and life insurance. Main Street reimburses senior executives (including NEOs) for certain approved concierge medical expenses and additional medical testing, general health, nutrition and preventative services (collectively, “Concierge Medical Services”).

Main Street maintains a 401(k) plan for all full-time employees who are at least 21 years of age through which the Company makes non-discretionary matching contributions to each participant'sparticipant’s plan account on the participant'sparticipant’s behalf. For each participating employee, the Company'sCompany’s contribution is a 100% match of the employee'semployee’s contributions up to a 3% contribution level and a 50% match of the employee'semployee’s contributions from a 3% to a 6% contribution level, with a maximum annual regular matching contribution of $12,600$ 13,050 during 2019.2021. All contributions to the plan, including those made by the Company, vest immediately. The Board of Directors may also, at its sole discretion, provide that the Company will make additional contributions to employee 401(k) plan accounts, which would also vest immediately.

In November 2015, our Board of Directors approved and adopted the 2015 Deferred Compensation Plan to allow non-employee directors and certain key employees, including each of the NEOs, to defer receipt of some or all of their cash compensation, subject to certain limitations. Although not currently anticipated and subject to prior Compensation Committee approval, discretionary employer contributions are also permitted to the 2015 Deferred Compensation Plan. Individuals participating in the 2015 Deferred Compensation Plan receive distributions of their respective balances based on predetermined payout schedules or other events as defined by the plan and are also able to direct investments made on their behalf among investment alternatives permitted from time to time under the plan, including phantom Main Street stock units for which shares of Main Street common stock will be issued upon distribution. The 2015 Deferred Compensation Plan became effective on January 1, 2016.

        In November 2018, our Board of Directors approved a policy to allow certain individuals, including members of our Board of Directors, certain senior officers and NEOs, to personally use Company aircraft when such aircraft is not being used by the Company. All such personal usage, as well as any request to bring a family member or guest on a business trip, is subject to approval by the Company's CEO or Chairman of the Board and reimbursement of the Company by the individual in an amount equal to the aggregate incremental cost to the Company for such usage. The Company retains authority to determine what flights may be scheduled based on the business needs of the Company, and the business needs of the Company take priority in any scheduling conflicts.Perquisites

Perquisites

The Company provides no other material benefits, perquisites or retirement benefits to the NEOs.

Potential Payments Upon Change in Control or Termination of Employment

Unless the terms of an award provide otherwise, in the event of a specified transaction involving a "change“change in control"control” (as defined in the 2015 Equity and Incentive Plan) in which there is an acquiring or surviving entity, the Board of Directors may provide for the assumption of some or all outstanding awards, or for the grant of substitute awards, by the acquirer or survivor. In the event no such assumption or substitution occurs, each stock-based award, subject to its terms, will become fully vested or exercisable prior to the change in control on a basis that gives the holder of the award a reasonable opportunity, as determined by the Board, of Directors, to participate as a stockholder in the change in control following vesting or exercise. The award will terminate upon consummation of the change in control.

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Transactions involving a "change“change in control"control” under the 2015 Equity and Incentive Plan include the following, other than where Main Street'sStreet’s stockholders continue to have substantially the same proportionate ownership in an entity which owns substantially all of Main Street'sStreet’s assets immediately following such transaction:

•

●

a single person or entity or group of persons and/or entities, other than Main Street, any of its employee benefit plans, a company owned by Main Street’s stockholders in substantially the same proportions as their ownership in Main Street or an underwriter temporarily holding securities pursuant to an offering by Main Street, becomes the beneficial owner of more than 30% of the combined voting power of Main Street’s voting securities then outstanding;

●

a change in the membership of the Board such that the individuals who, as of the effective date of the 2015 Equity and Incentive Plan, constitute the Board (the “Continuing Directors”), and any new director whose election or nomination to the Board was approved by a vote of at least a majority of the Continuing Directors, cease to constitute at least a majority of the Board;

Table of persons and/or entities, other than Main Street, any of its employee benefit plans, a company owned by Main Street's stockholders in substantially the same proportions as their ownership in Main Street or an underwriter temporarily holding securities pursuant to an offering by Main Street, becomes the beneficial owner of more than 30% of the combined voting power of Main Street's voting securities then outstanding;

Our restricted stock awards also provide that upon a participant'sparticipant’s death, disability, involuntary termination without cause or voluntary termination with good reason (each as defined in the award agreement), the unvested shares of restricted stock will fully vest. The number of shares and value of unvested restricted stock for each NEO as of December 31, 20192021 that would have vested under the acceleration scenarios described above is shown under "Compensation“Compensation of Executive Officers—Officers — Outstanding Equity Awards at Fiscal Year-End."”

In addition, NEOs who participate in the 2015 Deferred Compensation Plan could receive a distribution of their balances in that plan in connection with their death, disability or termination of employment, depending on their distribution elections under the plan. The aggregate balance in the 2015 Deferred Compensation Plan of each NEO as of December 31, 20192021 is shown under "Compensation“Compensation of Executive Officers—Officers — Nonqualified Deferred Compensation."”

Other than the accelerated vesting of restricted stock and amounts due under the 2015 Deferred Compensation Plan, we currently would not incur any other payment obligations to our NEOs in the event of a change in control or any of the aforementioned causes of termination of employment.

1940 Act Restrictions on Company Performance Based Compensation

The 1940 Act provides that a BDC such as Main Street may maintain either an equity incentive plan or a "profit-sharing plan"“profit-sharing plan”, but not both, for its NEOs and other employees. For example, a BDC cannot maintain a compensation plan that awards employees shares of common stock based solely on operating or financial results, because such plan would have features of both an equity incentive plan and a “profit-sharing plan”. The Compensation Committee believes that equity incentives closely align the interests of NEOs and employees with those of the Company'sCompany’s stockholders. Accordingly, Main Street has adopted and maintained equity incentive plans for its NEOs and employees since 2008. As a result, the 1940 Act prohibits Main Street from having a "profit-sharing“profit-sharing plan."

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The term "profit-sharing plan"“profit-sharing plan” is very broadly defined in the 1940 Act but in this context is generally viewed as referring to incentive and other compensation being directly tied to a company'scompany’s gross or net income or any other indicia of the company'scompany’s overall financial performance, such as realized gains or losses and unrealized appreciation or depreciation on investments. In this regard, the SEC has indicated that a compensation program possesses profit-sharing characteristics if a company is obligated to make payments under the program based on company performance metrics.

Due to these restrictions imposed by the 1940 Act, the Compensation Committee is not permitted to use nondiscretionary or formulaic Company performance goals or criteria to determine executive incentive compensation. Instead, the Committee considers overall Company performance along with other factors, including individual performance criteria, and uses its discretion in determining the appropriate compensation for NEOs and other key employees. The Compensation Committee'sCommittee’s objective is to work within the 1940 Act regulatory framework to establish appropriate compensation levels, maintain pay-for-performance alignment and implement compensation best practices.

Tax Deductibility of Compensation

Section 162(m) of the Internal Revenue Code of 1986, as amended, generally disallows a tax deduction to public companies to the extent compensation paid to any "covered employee"“covered employee” exceeds $1 million in a given year. Prior toTo the passageextent

Table of the 2017 Tax Cuts and Jobs Act, the $1 million limitation on deductibility did not apply to performance-based compensation, such as certain performance-based annual cash bonuses and equity awards. The Tax Cuts and Jobs Act generally eliminated this previously-available exclusion for performance-based compensation for taxable years beginning after 2017. Therefore, to the extent Contents

any of our "covered employees"“covered employees” receives compensation in excess of $1 million for any year, Main Street generally cannot deduct such excess compensation for U.S. federal income tax purposes. For purposes of Section 162(m), a "covered employee"“covered employee” includes our CEO, our CFO and each of our other NEOs; in addition, once a person is determined to be a covered employee, such person continues to be a covered employee regardless of whether such person remains an NEO.

While the Compensation Committee considers the deductibility of compensation as one factor in determining executive compensation, the Compensation Committee also considers other factors in making compensation decisions as noted herein and retains the flexibility to authorize amounts and forms of compensation that it determines to be consistent with the goals of our executive compensation program even if such compensation is not deductible by the Company for tax purposes.

Stockholder Advisory Vote on Executive Compensation

At our 20192021 Annual Meeting of Stockholders, our stockholders provided an advisory vote with 88%92% of the votes cast approving our compensation philosophy, policies and procedures and the 20182020 fiscal year compensation of our NEOs (the "Advisory Vote"“Advisory Vote”). Subsequently, the Compensation Committee considered the results of the Advisory Vote in determining compensation policies and decisions of the Company. The Advisory Vote affected the Company'sCompany’s executive compensation decisions and policies by reaffirming the Company'sCompany’s compensation philosophies, and the Compensation Committee will continue to use these philosophies and past practice in determining future compensation decisions.

20192021 Compensation Determination

The Compensation Committee analyzed the competitiveness of the components of compensation described above on both an individual and aggregate basis. The Committee believes that the total compensation paid to the NEOs for the fiscal year ended December 31, 2019,2021, is consistent with the overall objectives of Main Street'sStreet’s executive compensation program.

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Base Salary

The Compensation Committee annually reviews the base salary of each executive officer, including each NEO, and determines whether or not to increase it in its sole discretion. Increases to base salary can be awarded to recognize, among other things, relative performance, changes in roles and responsibilities, relative cost of living and competitive market pressures.

In 2019,2021, the Compensation Committee approved base salary increases for each NEO except for Mr. Morris who joinedat levels the Company in July 2019, in recognition of each NEO's and the Company's performanceCompensation Committee concluded were appropriate for the prior yearroles and alsoresponsibilities for each NEO and to more closely align each NEO'sNEO’s compensation with similar executive officers of comparable companies. The Compensation Committee’s goal in setting the base salary levels for the NEOs is to adequately compensate the NEOs for expected base levels of performance and provide for the adequate retention of the NEOs.

The amount of annual base salary paid to each NEO for 20192021 is presented under the caption entitled "Compensation“Compensation of Executive Officers—Officers — Summary Compensation Table."” The Committee believes that the salary changesincreases and resulting base salaries were competitive in the marketplace and appropriate for Main Street executives as a keythe base component of antheir overall compensation package.packages.

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Annual Cash Incentive Bonus

Cash bonuses are determined annually by the Compensation Committee and are based on individual and corporate performance objectives coupled with Committee discretion as appropriate. The 20192021 performance criteria used for determining the cash bonuses for NEOs included, among other things, the following:

•

Achievement

●

significant overperformance of corporate financial objectives for 2021 versus both budget and historical periods, including record performance levels on all key financial metrics, including total investment income, distributable net investment income, net investment income, net unrealized appreciation, net realized gains and net income return on equity;

●

significant overperformance of corporate objectives for investment activity in 2021 versus both budget and historical periods, including record levels of gross and net investment activity in Main Street’s lower middle market and private loan investment strategies;

●

significant increases in value delivered to Main Street’s stockholders in 2021 through the combination of significant increases in Main Street’s monthly dividends paid to stockholders, supplemental dividends paid in December 2021 and declared for the first quarter of 2022 and significant growth in Main Street’s net asset value (NAV) per share;

●

significant overperformance of long-term corporate objectives, particularly those related to the Company’s long-term goals of:

●

maintaining and growing monthly dividends, and generating distributable net investment income in excess of such monthly dividends,

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delivering Main Street’s superior financial results while maintaining a conservative leverage profile and overall capital structure,

●

maintaining Main Street’s investment grade rating, and

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strategically accessing the debt and equity capital markets to allow for the continued future growth of Main Street’s investment portfolio;

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contributions to the significant growth of the Company’s asset management business through the Company’s wholly owned investment adviser, MSC Adviser I, LLC (the “External Investment Manager”) and strong performance of the funds and assets managed for third parties by the External Investment Manager;

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individual performance and achievement of individual goals, as well as the contribution to corporate objectives;

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contributions to the Company’s efforts to navigate the significant challenges and negative impacts caused by the COVID-19 pandemic to the Company’s performance and the performance of the Company’s portfolio companies;

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maintaining liquidity and capital flexibility, and when appropriate working to increase such liquidity and capital flexibility, to accomplish the Company’s business objectives and mitigate the potential impacts of unexpected economic volatility;

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maintaining the highest ethical standards, internal controls and adherence to regulatory requirements; and

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appropriate and planned development of personnel.

Table of corporate objectives, particularly those relatedContents

The Company paid cash bonuses to the maintenanceNEOs for 2021 performance in recognition of Main Street’s record financial results and growth of dividends and preservation of capital through maintenance and growth of net asset value per share;

Main Street’s performance. The Compensation Committee considered a number of major achievements as well asand other positive and negative factors when evaluating the cash bonuses paid to NEOs for 2019.2021. The net result of these considerations resulted in significant decreases from prior yearincreases in the cash bonuses paid to the NEOs and a decrease fromin comparison to prior year and other historical periods and an increase in the total cash bonuses paid to our employees.employees in comparison to prior year and other historical periods. In particular, cash bonuses paid to NEOs for 20192021 performance included recognition of Main Street'sStreet’s ability to generate record results on all key current year metrics, as discussed above, while also maintaining focus on achieving the Company’s long-term goals, resulting in significant growth of the Company’s investment portfolio and overall favorable financial results, key operational achievementsbusiness and significant improvements in the Company’s capital structure and liquidity position. The Company’s record performance in 2021 resulted in strong returns provided tofor the Company’s stockholders.

Other positive factors considered by the Compensation Committee included:

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increased investment income and increased regular monthly dividends per share



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generation of distributable net investment income in excess of our regular monthly dividends



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net unrealized appreciation and realized gains in our lower middle market portfolio



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growth of our investment portfolio and integration of key additions to our senior management team



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continuation of our low total operating cost structure in comparison to peer organizations



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maintenance of our investment grade rating from Standard & Poor's Ratings Services

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efficient use of our at-the-market, or ATM, equity offerings to issue equity as needed while maintaining a conservative leverage ratio



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completion of our first index eligible investment grade note issuance



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relatively low employee turnover and development of talented personnel

Negative factors considered by the Compensation Committee included:

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unrealized depreciation and realized losses in our middle market investment portfolio



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below budgeted new investment activities in our lower middle market investment strategy



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a return on equity ratio below our long-term goals and expectations

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The Compensation Committee did not weight these achievements or the positive and negative factors and used discretion in determining the cash bonus amount allocated to each executive. As approved byIn summary, the Compensation Committee, Mr. Foster's cash bonus related to 2019 performance of the NEO group and management team overall was issuedconsistently at a high level in the form of shares of restricted stock under the 2015 Equity2021 resulting in excellent financial results and Incentive Plan instead of cash, as discussed further in "Compensation of Executive Officers—Summary Compensation Table".operating performance.

The amount of cash bonus paid to each NEO for 20192021 is presented under the caption entitled "Compensation“Compensation of Executive Officers—Officers — Summary Compensation Table."” The Committee believes that these cash bonus awards are individually appropriate based on 20192021 performance. Such bonuses comprise a key component of the Company'sCompany’s overall compensation program.

Long-Term Incentive Awards

The Company granted restricted shares to our NEOs in 20192021 to recognize individual contributions to corporate strategic priorities and to the long-term performance of the Company. Other objectives of restricted stock awards were to assist with retention, align NEO interests with stockholder interests and to provide competitive total direct compensation. Contributions to the future success of the Company include expanded roles of NEOs within the Company, recruitment and development of personnel, advancement of strategic initiatives with benefits beyond the current year, development of appropriate capital structure alternatives and enhancement of the Company'sCompany’s reputation with key constituents.

The number and value of restricted shares granted to each NEO in 20192021 is presented under the caption entitled "Compensation“Compensation of Executive Officers—Officers — Grants of Plan-Based Awards."” The Committee is currently assessing the potential for long-term incentive compensation through grants of restricted shares to our NEOs for 2020,2022, which are expected to be awarded in April 2020.2022.

Risk Management and Compensation Policies and Practices

We believe that risks arising from our compensation policies and practices for our employees are not reasonably likely to have a material adverse effect on the Company. In addition, the Compensation Committee believes that the mix and design of the elements of executive compensation do not encourage management to assume excessive risks.

The Compensation Committee has reviewed the elements of executive compensation to determine whether any portion of executive compensation encourages excessive risk taking and concluded:

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compensation is allocated among base salary and short and long-term compensation opportunities in such a way as to not encourage excessive risk-taking;



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significant weighting towards long-term incentive compensation discourages short-term risk taking;