United States

Securities and Exchange Commission

Washington, D.C.

WASHINGTON, DC 20549

SCHEDULE 14A

(Rule 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

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Securities Exchange Act of 1934

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Hannon Armstrong Sustainable Infrastructure

Capital, Inc.

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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

TO BE HELD ON JUNE 1, 2017

4, 2020

To the Stockholders of Hannon Armstrong Sustainable Infrastructure Capital, Inc.:

The 20172020 annual meeting of stockholders (the “Annual Meeting”) of Hannon Armstrong Sustainable Infrastructure Capital, Inc., a Maryland corporation (the “Company”), will be held via a live webcast at the Westin (Annapolis) Hotel located at 100 Westgate Circle, Annapolis, MD 21401, http://web.lumiagm.com/259337958 (password: hannon2020) on June 1, 2017,4, 2020, beginning at 9:30 am, Eastern Time,time, to consider and vote on the following matters:

(1)The election of seven directors to serve on the Company’s board of directors until the Company’s 20182021 annual meeting of stockholders and until their respective successors are duly elected and qualify;

(2)The ratification of the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2017;2020;

(3)A non-binding advisory vote onresolution to approve our executive compensation;

(4)A non-binding advisory vote oncompensation as more fully set forth in the frequency of holding an advisory vote on executive compensation,accompanying proxy statement; and

(5)
(4)The transaction of such other business as may properly come before the Annual Meeting or any postponements or adjournments thereof.

Pursuant to rules adopted by the Securities and Exchange Commission (“SEC”), we have provided access to our proxy materials over the Internet. Accordingly, we are sending a Notice of Internet Availability of Proxy Materials (the “Notice”) to our stockholders of record as of the close of business on April 6, 20179, 2020 (the “Record Date”). The Notice contains instructions for your use of this process, including how to access our proxy statement and annual report over the Internet, how to authorize your proxy to vote online and how to request a paper copy of the proxy statement and annual report.

If you


All stockholders are unablecordially invited to attend the Annual Meeting virtually, which will be conducted via a live webcast. By hosting the Annual Meeting online, we are able to communicate more effectively with our stockholders, enable increased attendance and participation from locations around the world, and reduce costs, which aligns with our broader sustainability goals. The virtual meeting has been designed to provide the same rights to participate as you would have at an in-person meeting. During the upcoming virtual meeting, you may ask questions and will be able to vote your shares online from your home or any remote location with Internet connectivity. We will respond to as many inquiries at the Annual Meeting as time allows.

If you plan to attend the Annual Meeting online, you will need the control number included in person, ityour Notice, on your proxy card or on the instructions that accompany your proxy materials. The Annual Meeting will begin online promptly at 9:30 a.m., Eastern time. Online check-in will begin at 9:00 a.m., Eastern time, and you should allow ample time for the online check-in procedures.

It is very important that your shares be represented and voted at the meeting. You may authorize your proxy to vote your shares over the Internet as described in the Notice. Alternatively, if you received a paper copy of the proxy card by mail, please complete, date, sign and promptly return the proxy card in the self-addressed stamped envelope provided. You may also vote by telephone as described in your proxy card. If you authorize a proxy to vote your shares over the Internet, by mail or by telephone prior to the Annual Meeting, you may nevertheless revoke your proxy and cast your vote personally atonline during the virtual meeting.





Your proxy is being solicited by our board of directors. Our board of directors recommends that you vote (1) FOR the election of the nominees listed in the accompanying proxy statement to serve on our board of directors until our 20182021 annual meeting of stockholders and until their respective successors are duly elected and qualify, (2) FOR the ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2017,2020, and (3) FOR the approval of the compensation of the Named Executive Officers as described in the Compensation Discussion and Analysis, the compensation tables and other narrative disclosure in thisour proxy statement and (4) FOR the option of “One” year as the frequency for future advisory votes on compensation of our Named Executive Officers.

statement.
By Order of theour Board of Directors,

/s/ Jeffrey W. Eckel

Jeffrey W. Eckel
President and Chief Executive Officer

/s/ Steven L. Chuslo
Steven L. Chuslo
Secretary

Annapolis, Maryland

April 10, 2017

14, 2020

Notice Regarding the Availability of Proxy Materials for the Annual Meeting to be held June 1, 2017.4, 2020. The proxy statement and our 20162019 Annual Report on Form 10-K are available at: http://investors.hannonarmstrong.com

LOGO




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PROXY STATEMENT

FOR ANNUAL MEETING OF STOCKHOLDERS

TO BE HELD ON JUNE 1, 2017

4, 2020

This proxy statement is being furnished to stockholders in connection with the solicitation of proxies by and on behalf of the board of directors of Hannon Armstrong Sustainable Infrastructure Capital, Inc., a Maryland corporation (the “Company,” “we,” “our” or “us”), for use at the Company’s 20172020 annual meeting of stockholders (the “Annual Meeting”) to be held via a live webcast at the Westin (Annapolis) Hotel located at 100 Westgate Circle, Annapolis, MD 21401, http://web.lumiagm.com/259337958(password: hannon2020) on June 1, 2017,4, 2020, at 9:30 am, Eastern Time,time, or at any postponements or adjournments thereof.

MEETING INFORMATION
Pursuant to the rules adopted by the Securities and Exchange Commission (“SEC”), we have provided access to our proxy materials over the Internet. Accordingly, we are sending a Notice of Internet Availability of Proxy Materials, (the “Notice”) to our stockholders of record as of the close of business on April 6, 2017.9, 2020 (the "Record Date"). We believe that posting these materials on the Internet enables us to provide stockholders with the information that they need more quickly. It also lowers our costs of printing and delivering these materials and reduces the environmental impact of the Annual Meeting. The Notice and this proxy statement summarize the information you need to know to vote by proxy or in persononline during the Annual Meeting via a live webcast.

All stockholders are cordially invited to attend the Annual Meeting virtually, which will be conducted via a live webcast. By hosting the Annual Meeting online, we are able to communicate more effectively with our stockholders, enable increased attendance and participation from locations around the world, and reduce costs, which aligns with our broader sustainability goals. The virtual meeting has been designed to provide the same rights to participate as you would have at an in-person meeting. During the upcoming virtual meeting, you may ask questions and will be able to vote your shares online from your home or any remote location with Internet connectivity. We will respond to as many inquiries at the Annual Meeting.

Meeting as time allows.


If you plan to attend the Annual Meeting online, you will need the control number included in your Notice, on your proxy card or on the instructions that accompany your proxy materials. The Annual Meeting will begin promptly at 9:30 a.m., Eastern Time. Online check-in will begin at 9:00 a.m., Eastern Time, and you should allow ample time for the online check-in procedures.

You may attend the virtual Annual Meeting if you are a stockholder of record, a proxy holder for a stockholder of record, or a beneficial owner of our common stock with evidence of ownership.

If you are a registered holder of shares of common stock, par value $0.01 per share (the “Common Stock”), as of the close of business on the record date,Record Date, the Notice was sent directly to you and you may vote your shares of Common Stock in person atduring the Annual Meeting ormeeting by proxy.attending via live webcast. If you hold shares of Common Stock in “street name” through a brokerage firm, bank, broker-dealer or other intermediary, the Notice was forwarded to you by such intermediary and you must follow the instructions provided by such intermediary regarding how to instruct such intermediary to vote your shares of Common Stock.

Shares of Common Stock represented by properly submitted proxies received by us prior to the Annual Meeting will be voted according to the instructions specified on such proxies. Any stockholder of record submitting a proxy retains the power to revoke such proxy at any time prior to its exercise at the Annual Meeting by (i) delivering prior to the Annual Meeting a written notice of revocation to our secretary at Hannon Armstrong Sustainable Infrastructure Capital, Inc., 1906 Towne Centre Boulevard, Suite 370, Annapolis, MD 21401 prior to the Annual Meeting, (ii) submitting a later dated proxy or (iii) voting in person atonline during the Annual Meeting.meeting via live webcast. Attending the Annual Meeting via webcast will not automatically revoke a stockholder’s previously submitted proxy unless such stockholder votes in person atonline during the Annual Meeting.

If your shares are held in street name and you desire to vote online during the virtual Annual Meeting, you must first obtain a valid legal proxy from your broker, bank or other agent and then register in advance to attend the virtual Annual Meeting. Follow the instructions from your broker or bank included with these proxy materials, or contact your broker or bank to request a legal proxy form. After obtaining a valid legal proxy from your broker, bank or other agent, to then register to attend the virtual Annual Meeting, you must submit proof of your legal proxy reflecting the number of your shares along with your name and email address to American


Stock Transfer & Trust Company, LLC. Requests for registration should be directed (i) to proxy@astfinancial.com, (ii) to facsimile number 718-765-8730, or (iii) written requests mailed to:
American Stock Transfer & Trust Company LLC
Attn: Proxy Tabulation Department
6201 15th Avenue
Brooklyn, NY 11219

Requests for registration must be labeled as “Legal Proxy” and be received no later than 5:00 p.m., Eastern Time, on May 28, 2020. You will receive a confirmation of your registration by email after we receive your registration materials. You may attend the virtual Annual Meeting and vote your shares during the meeting at http://web.lumiagm.com/259337958 by using the password hannon2020 and following the instructions provided to vote. We encourage you to access the meeting prior to the start time leaving ample time for the check in.

If you encounter any difficulties accessing the virtual Annual Meeting during the check-in or meeting time, please access the frequently asked questions portal online at https://go.lumiglobal.com/faq.
If your shares are held in street name and you desire to change your vote, you should contact the nominee holding shares for you (i.e., a brokerage firm, bank, broker-dealer or other intermediary) for instructions on how to do so. If a proxy is properly authorized without specifying any voting instructions and not revoked prior to the Annual Meeting, the shares of Common Stock represented by such proxy will be voted (1) FOR the election of the nominees named in this proxy statement as directors, to serve on our board of directors until our 20182021 annual meeting of stockholders and until their successors are duly elected and qualify, (2) FOR the ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2017,2020 and (3) FOR the approval of a non-binding advisory resolution approving the compensation of the Named Executive Officers as described in the Compensation Discussion and Analysis, the compensation tables and other narrative disclosure in this proxy statementstatement. If you hold your shares in street name and (4) FORdo not give the optionnominee holding shares for you (i.e., a brokerage firm, bank, broker-dealer or other intermediary) specific voting instructions on the election of “One” year asdirectors or the frequencynon-binding advisory vote to approve our executive compensation, your shares will not be voted on these items, and a broker non-vote will occur. Broker non-votes and abstentions are each included in the determination of the number of shares of Common Stock present at the Annual Meeting for future advisory votespurposes of determining whether a quorum is present but will have no effect on compensationthe voting results for any of our Named Executive Officers.the proposals.As to any other business which may properly come before the Annual Meeting or any postponements or adjournments thereof, the persons named as proxy holders on your proxy card will vote the shares of Common Stock represented by properly submitted proxies in their discretion.

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This proxy statement, the Notice of Annual Meeting of Stockholders and the related proxy card are first being made available to stockholders on or about April 10, 2017.

14, 2020.

ANNUAL REPORT

This proxy statement is accompanied by our Annual Report on Form 10-K as supplemented by theForm 10-K/A (excluding exhibits) for the year ended December 31, 2016,2019 filed with the SEC on February 24, 2020 as supplemented by the Form 10-K/A (excluding exhibits), filed with the SEC on March 27, 2020, collectively, the “Form 10-K”10-K”.

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VOTING SECURITIES AND RECORD DATE

Stockholders will be entitled to cast one vote for each share of Common Stock held of record at the close of business on April 6, 2017 (the “the Record Date,”) April 9, 2020, with respect to (i) the election of seven directors to serve on our board of directors until our 20182021 annual meeting of stockholders and until their successors are duly elected and qualify, (ii) the ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2017,2020, (iii) a non-binding advisory vote on theresolution approving compensation of the Named Executive Officers as described in the Compensation Discussion and Analysis, the compensation tables and other narrative disclosure in this proxy statement (iv) a non-binding advisory vote on the frequency of holding an advisory vote on executive compensation and (v)(iv) any other proposal for stockholder action that may properly come before the Annual Meeting or any postponements or adjournments thereof.

Abstentions

Stockholders who instruct their proxy to abstain, abstentions and broker non-votes are each included in the determination of the number of sharesstockholders present at the Annual Meeting for the purpose of determining whether a quorum is present. A broker non-vote occurs when a nominee holding shares for a beneficial owner (i.e., a brokerage firm, bank, broker-dealer or other intermediary) returns a properly-executed proxy but does not vote on a particular proposal because such nominee does not have discretionary voting power for that particular matter and has not received instructions from the beneficial owner. Under the rules of the New York Stock Exchange (the “NYSE”), the only item to be acted upon at the Annual Meeting with respect to which such nominee will be permitted to exercise voting discretion is the ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2017.2020. Therefore, if you hold your shares in street name and do not give the nominee specific voting instructions on the election of directors the non-binding advisory vote on our executive compensation, or the non-binding advisory vote on the frequency of holding an advisory vote onresolution approving our executive compensation, your shares will not be voted on these items, and a broker non-vote will occur. Broker non-votes and abstentions will have no effect on the voting results for any of the proposals.

The presence, in personby attending online during the Annual Meeting via webcast or by proxy, of holders of Common Stock entitled to cast a majority of all the votes entitled to be cast at the Annual Meeting shall constitute a quorum. The disposition of business scheduled to come before the Annual Meeting, assuming a quorum is present, will require the following affirmative votes:

for the election of a director, a plurality of all the votes cast in the election of directors at the Annual Meeting,

for the ratification of the appointment of our independent registered public accounting firm, a majority of all the votes cast on the proposal and

for the approval of the non-binding advisory resolution to approve the compensation of the Named Executive Officers, a majority of all the votes cast on the proposal andproposal.

for the non-bindingThe vote on the frequency of holding an advisory vote on executive compensation every one, two or three years, a majority of the votes cast on the proposal. In the event that no option receives a majority of the votes cast on the proposal, we will consider the option that receives the most votes to be the option selected by stockholders.

The votes on compensation and the frequency of holding an advisory vote on executive compensation areis advisory and not binding on our board of directors. However, our board of directors and the Compensation Committee value all stockholder feedback and will consider the outcome of the votes in reviewing executive compensation and deciding on the frequency of future advisory votes to approve executive compensation.

The

Our board of directors knows of no other matters that may properly be brought before the Annual Meeting. If other matters are properly introduced, the persons named in the proxy as the proxy holders will vote on such matters in their discretion.

If any nominee named in this proxy statement is unwilling or unable to serve as a director, our board of directors may nominate another individual for election as a director at the Annual Meeting, and the persons named as proxy holders will vote for the election of any substitute nominee.

As of April 7, 2017,9, 2020, we had issued and outstanding 51,745,33272,538,046 shares of Common Stock (which includes 1,551,243459,571 shares of unvested restricted common stock)Common Stock).

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1. ELECTION OF DIRECTORS

Board of Directors

Our board of directors is currently comprised of seven directors: Jeffrey W. Eckel, Rebecca A. Blalock, Teresa M. Brenner, Mark J. Cirilli,Michael T. Eckhart, Simone F. Lagomarsino, Charles M. O’Neil, Richard J. Osborne and Steven G. Osgood. In accordance with our charter (the “Charter”) and Amended and Restated Bylaws (the “Bylaws”), each director will hold office until our next annual meeting of stockholders and until his or her successor has been duly elected and qualifies, or until the director’s earlier resignation, death or removal.

We seek highly qualified director candidates from diverse business, professional and educational backgrounds who combine a broad spectrum of experience and expertise with a reputation for the highest personal and professional ethics, integrity and values. We believe that, as a group, the nominees bring a diverse range of perspectives that contribute to the effectiveness of our board of directors as a whole. The table below represents some of the key skills that our board of directors has identified as particularly valuable to the effective oversight of the Company and the execution of our corporate strategy, and the number of directors that have that skill. This director skills matrix is not intended to be an exhaustive list of each of our director nominees’ skills or contributions to our board of directors. Further information on each director nominee, including some of their specific experience, qualifications, attributes and skills, is set forth in the biographies in this proxy statement.
proxytablev2.jpg
The procedures and considerations of the Nominating, Governance and Corporate Responsibility Committee of our board of directors (the “Nominating, Governance and Corporate Responsibility Committee”) in recommending qualified director candidates are described below under “Corporate Governance and Social and Environmental Responsibility—Identification of Director Candidates” in this proxy statement. The Nominating, Governance and Corporate GovernanceResponsibility Committee and our board of directors concluded that each of our director nominees should be nominated for election based on the qualifications and experience described in the biographical information below under “Information Regarding the Nominees for Election as Directors.”

Upon the recommendation of the Nominating, Governance and Corporate GovernanceResponsibility Committee, of our board of directors (the “Nominating and Corporate Governance Committee”), each of our current directors, Messrs. Eckel, Cirilli,Eckhart, O’Neil, Osborne, and Osgood and Mses. BlalockBrenner and BrennerLagomarsino have been nominated by our board of directors to stand for election as directors by the stockholders at the Annual Meeting to serve until our 20182021 annual meeting of stockholders and until their respective successors are duly elected and qualify. It is intended that the shares of Common Stock represented by properly submitted proxies will be voted by the persons named therein as proxy holders FOR the election of Messrs. Eckel, Cirilli,Eckhart, O’Neil, Osborne, and Osgood and Mses. BlalockBrenner and BrennerLagomarsino as directors, unless otherwise instructed. If the candidacy of Messrs. Eckel, Cirilli,Eckhart, O’Neil, Osborne, or Osgood and Mses. BlalockBrenner and BrennerLagomarsino should, for any reason, be withdrawn prior to the Annual Meeting, the proxies will be voted by the proxy holders in favor of such substituted candidates (if any) as shall be nominated by our board of directors. Our board of directors has no reason to believe that, if elected, any of Messrs. Eckel, Cirilli,Eckhart, O’Neil, Osborne, or Osgood and Mses. BlalockBrenner and BrennerLagomarsino will be unable or unwilling to serve as a director.

Information Regarding the Nominees for Election as Directors

The following information is furnished as of April 7, 20179, 2020 regarding the nominees for re-election as directors.

Jeffrey W. Eckel, 58,61, has served as our president, chief executive officer, and chairman of our board of directors since 2013 and has servedwas with the predecessor of our company as our president and chief executive officer since 2013. He was president and chief executive officer since 2000 and prior to that from 1985 to 1989 as a senior vice president, of Hannon Armstrong Capital, LLC, the entity that operated our historical business prior to the consummation of our April 2013 initial public offering (our “IPO”) and which we refer to as our “Predecessor.” He previously held senior executive positions such as chief executive officer of EnergyWorks, LLC and Wärtsilä Power Development.president. Mr. Eckel is a member of the board of directors of the Alliance To Save Energy and is a member of the President’s Council of Ceres, Inc., the Cornell University Program in Infrastructure Policy advisory board and a member of the Johns HopkinsSmithsonian Environmental Energy, SustainabilityResearch Center’s Corporate Leaders program, and Health Institute advisory council.on the Board of Trustees of The Nature Conservancy of Maryland and DC. He was appointed by the governor of Maryland to the board of directors of the Maryland Clean Energy Center in 2011, where he served until 2016 while also serving as its chairman from 2012 to


2014. He was also a member of the board of directors of HA EnergySource Holdings LLC (“HA EnergySource”) from 2012 to 2016. Mr. Eckel has over 3035 years of experience in financing, owning and operating infrastructure and energy assets. Mr. Eckel received a Bachelor of Arts degree from Miami

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University in 1980 and a Master of Public Administration degree from Syracuse University, Maxwell School of Citizenship and Public Affairs, in 1981. He holds Series 24, 63 and 79 securities licenses. We believe Mr. Eckel’sEckel's extensive experience in managing companies operating in the energy sector and expertise in energy investments makesmake him qualified to serve as our president and chief executive officer and as chairman of our board of directors.

Rebecca A. Blalock, 61, has served as one of our independent directors since March 15, 2017. Ms. Blalock has been a partner at Advisory Capital LLC, which provides strategic consulting in the areas of energy and information technology since 2011. Previously, Ms. Blalock served in a variety of roles for over 30 years at Southern Company and its subsidiaries, most recently as its Senior Vice President and Chief Information Officer from 2002 to 2011. Ms. Blalock currently serves on the Board of Directors of Aspen Aerogels, Inc., an energy efficiency technology company and the Electric Power Research Institute, a non-profit electric industry research institute. She also serves on the Advisory Boards of Catavolt, Gigabark and Sol America. Ms. Blalock is also a Trustee of the Woodruff Arts Foundation and serves on the Board of Councilors of The Carter Center. Ms. Blalock also served on the Board of Directors of the Atlanta Community Foundation from 2011 to 2016. Ms. Blalock holds a BBA in Marketing from the State University of West Georgia, an MBA in Finance from Mercer University and completed the Program for Management Development (PMD) at Harvard Business School. We believe that Ms. Blalock’s over 30 years of experience in the energy sector and information technology makes her qualified to serve as a member of our board of directors.

Teresa M. Brenner, 53,56, has served as one of our independent directors since April 2016.2016 and has served as our Lead Independent Director since July 2019. Ms. Brenner retired from Bank of America Corporation in 2012, where she had served in a variety of roles for approximately 20 years, including most recently as a Managing Director and Associate General Counsel. Ms. Brenner served on the Board of Directors of Residential Capital, LLC from March 2013 to December 2013, during its restructuring and through the confirmation of its bankruptcy proceeding. Ms. Brenner has also held a variety of philanthropic roles, having served as a trustee of Temple Israel from 2012 to 2014 and as a director for Right Moves for Youth from 2006 to 2013, includingwell as serving as its chairperson from 2010 to 2012.Treasurer and its First Vice President. Ms. Brenner received a Bachelor of Arts degree from Alma College in 1984 and a Juris Doctorate from Wake Forest University School of Law in 1987. We believe Ms. Brenner’s extensive experience in corporate governance, law and finance makes her qualified to serve as a member of our board of directors.

Mark J. Cirilli


Michael T. Eckhart, 45,71, has served as one of our independent directors since 2013 and2019. Mr. Eckhart has served as a directorClinical Professor of Sustainable Finance at the University of Maryland School of Public Policy since 2020, and also as an Adjunct Professor at Columbia University’s Graduate School of International and Policy Affairs, teaching Environmental Finance since 2016. In 2019, Mr. Eckhart retired as Managing Director and Global Head of Environmental Finance from Citigroup, Inc., where he led Citigroup Inc.’s work in establishing the Green Bond Principles. Prior to joining Citigroup in 2011, Mr. Eckhart was the founding President of the Predecessor from 2007. Mr. CirilliAmerican Council on Renewable Energy, a Washington DC-based 501(c)(3) non-profit organization that unites finance, policy and technology to accelerate the transition to a renewable energy economy. He previously led the SolarBank Initiative in Europe, India and South Africa, and worked in power generation and advanced technology with United Power Systems, Aretê Ventures, General Electric Company and Booz, Allen & Hamilton. Prior to that, he also served in the U.S. Navy Submarine Service. He has been the managing director of MissionPoint Partners, LLC, an impact investment advisor and asset management firm he co-founded, since 2016. Additionally Mr. Cirilli has been a managing director of MissionPoint Capital Partners, LLC (“MissionPoint”), a private equity firm he co-founded that specializes in clean energy, since 2006. MissionPoint was the majority investorreceived several awards including Renewable Energy Man of the Predecessor from 2007 untilYear of India, the IPO. Mr. Cirilli serves on MissionPoint’s Investment CommitteeSkoll Award for Social Entrepreneurship, and the International Solar Energy Society’s Global Policy Leadership Award. He is a memberVice Chairman of the board of directors for RE Community Holdings, LP, MPH Energy Holdings LP, Just Greens LLC,Oyster Recovery Partnership in Maryland and is a board observer for OptiRTC Holdings LLC, all of which are MissionPoint’s portfolio companies, Voltaix Inc. prior to its sale in September of 2013, Amonix, Inc. prior to resigning in August of 2013 and APX, Inc (formerly NYSE Blue, Inc) prior to its sale in August 2015. Additionally, Mr. Cirilli is on the investment advisory committee for Bigelow Tea and served on the board of directorsDirector of the state of Connecticut’s CleanInternational Solar Energy Finance and Investment Authority from September 2011 to April 2012 and the board of HA EnergySource from 2012 to 2016. Prior to forming MissionPoint, Mr. Cirilli served as chief investment officer of Marshall Street Management, LLC, a private investment firm, and was the founder and managing member of MSM Capital Partners, LLC, where he developed and executed the firm’s investment strategySociety headquartered in clean technology and environmental finance sectors. Mr. Cirilli also worked at Coopers & Lybrand’s Financial Advisory Services Group. Mr. CirilliFrieberg Germany. He received a Bachelor of ArtsScience degree in AccountingElectrical & Electronic Engineering from FordhamPurdue University in 1994 and a MastersMaster in Business Administration from Columbia University in 2002.Harvard Business School. We believe Mr. Cirilli’sEckhart’s extensive experience in investment management, corporaterenewable energy and finance accounting and business operations makes him qualified to serve as a member of our board of directors.

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Simone F. Lagomarsino, 58, has served as one of our independent directors since 2019. Ms. Lagomarsino has served as President and Chief Executive Officer of Luther Burbank Corporation and Luther Burbank Savings since January 2, 2019, and has also served on the board of directors of Luther Burbank Corporation since November 30, 2018. Additionally, Ms. Lagomarsino has served on the board of directors of the Federal Home Loan Bank of San Francisco since 2013, where she is currently the Vice Chair of the Board and Chair of the Risk Committee, and has previously provided leadership as the Chair of the Audit Committee. As of January 2020, Ms. Lagomarsino serves as one of twelve members of the Federal Reserve Bank of San Francisco’s Community Depository Institution Advisory Council. Prior to joining Luther Burbank Corporation, Ms. Lagomarsino was President and Chief Executive Officer of the Western Bankers Association and a director of Pacific Premier Bancorp and Pacific Premier Bank. From 2011 to 2016, she served as Chief Executive Officer of Heritage Oaks Bank, and President and Chief Executive Officer and a director of Heritage Oaks Bancorp. Ms. Lagomarsino also previously held executive positions with Hawthorne Financial Corporation, Ventura County National Bank, and Kinecta Federal Credit Union. Ms. Lagomarsino received a Bachelor of Arts degree in Economics from Claremont McKenna College and a Masters in Business Administration from Claremont Graduate University. We believe Ms. Lagomarsino’s extensive experience in leadership roles in the Federal Home Loan Bank of San Francisco and numerous other financial institutions, including public companies, gives her valuable insight and enables her to make significant contributions as a member of our board of directors.
Charles M. O’Neil, 64,67, has served as one of our independent directors since 2013. Mr. O’Neil retired from ING Capital, LLC, at the end of 2015, where he served in a variety of executive and management roles for over 20 years, including as President, Chief Executive Officerpresident, chief executive officer and Chairmenchairman of the Boardboard of ING Capital, LLC and Head of Structured Finance, Americas, the largest operating unit of ING Capital. Prior to joining ING Capital, Mr. O’Neil worked at Swiss Bank Corporation, serving as executive director and regional head of Project Finance Americas. Mr. O’Neil received a Bachelor of Science degree in Finance from The Pennsylvania State University in 1974 and a Master in Business Administration degree in International Finance from Fordham University in 1978. We believe Mr. O’Neil’s experience of over 35 years in structured and project finance focusing on energy related projects, combined with his senior management role with a large international bank’s wholesale banking activities in the Americas, makes him qualified to serve as a member of our board of directors.

Richard J. Osborne, 66,69, has served as one of our independent directors since 2013 and has served as our Lead Independent Director sincefrom April 2014.2014 to July 2019. Mr. Osborne retired from Duke Energy Corporation in 2006, having served in a variety of executive roles including chief financial officer, chief risk officer, treasurer and group vice president for Public & Regulatory Affairs


during his 31 years with the organization. Mr. Osborne also served as a director of Duke Energy Field Services, a joint venture between Duke Energy Corporation and ConocoPhillips, and as a director of TEPPCO Partners, LP, a master limited partnership managing mid-stream energy assets. He also chaired the Finance Divisions of the Southeastern Electric Exchange and Edison Electric Institute, and was a founding board member of the Committee of Chief Risk Officers. Subsequent to leaving Duke Energy, Mr. Osborne has executed consulting assignments for clients in, or serving, the energy industry. Mr. Osborne presently serves on the boards of Chautauqua Institution, Johnson C. Smith University, Charlotte Ballet and the Penland School of Crafts. Mr. Osborne received a Bachelor of Arts degree in History and Economics from Tufts University in 1973 and a Master of Business Administration from the University of North Carolina at Chapel Hill in 1975. We believe that Mr. Osborne’s over 35 years of experience in energy sector finance makes him qualified to serve as a member of our board of directors.

Steven G. Osgood, 60,63, has served as one of our independent directors since January 2015. Mr. Osgood has served as the chief executive officer of Square Foot Companies, LLC, a Cleveland, Ohio based private real estate company focused on self-storage and single-tenant properties since 2008. Mr. Osgood is also a trustee for National Storage Affiliates Trust, a real estate investment trust (“REIT”) focused on the ownership ofself-storage properties, since its public offering in April 2015. Mr. Osgood was a managerserves as chair of All Stor Storage, LLC, athe Investment Committee for the company that has been liquidated. From 2007 to 2008, Mr. Osgood served as chief financial officer of DuPont Fabros Technology, Inc., a Washington, DC based REIT that owns, operates and develops data center properties. From 2006 to 2007, he also previously served as chief financial officer of Global Signal, Inc., a Sarasota, Florida based REIT that was acquired by Crown Castle International Corp. in 2007.on its Audit Committee. Prior to Global Signal,his current position, Mr. Osgood served as president and chief financial officer of U-Store-It Trust (now named CubeSmart), a Cleveland based self-storage REIT from the company’s initial public offering in 2004 to 2006. Mr. OsgoodHe also served as chief financial officer of the Amsdell Companies, the predecessor of U-Store-It, from 1993 until 2004.several other REITs. Mr. Osgood is a former Certified Public Accountant and was a member of the auditing staff of Touche Ross & Co. from 1978 to 1982.Accountant. He graduated from Miami University with a Bachelor of Science degree in 1978 and graduated from the University of San Diego with a Masters in Business Administration in 1987. Mr. Osgood also serves on the National Board of the Alzheimer’s Association. We believe that Mr. Osgood’s REIT experience and over 20 years of experience in corporate finance make him qualified to serve as a member of our board of directors.

Our board of directors recommends a vote FOR the election of Messrs. Cirilli, Eckel, Eckhart, O’Neil, Osborne, and Osgood and Mses. BlalockBrenner and BrennerLagomarsino as directors.

A plurality of all of the votes cast on the proposal at the Annual Meeting at which a quorum is present is necessary to elect a director. Proxies solicited by our board of directors will be voted FOR Messrs. Cirilli, Eckel, Eckhart, O’Neil, Osborne, and Osgood and Mses. BlalockBrenner and Brenner,Lagomarsino, unless otherwise instructed. Abstentions and broker non-votes will not be counted as votes cast and will have no effect on the result of the vote, although they will be considered present for the purpose of determining the presence of a quorum.

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We have a majority vote policy for the election of directors. In an uncontested election, any nominee for director who receives a greater number of votes “withheld” from his or her election than votes “for” such election is required to tender his or her resignation to our board of directors. The Nominating, Governance and Corporate GovernanceResponsibility Committee is required to promptly consider the resignation and make a recommendation to our board of directors with respect to the tendered resignation. Our board of directors is required to take action with respect to this recommendation. Any director who tenders his or her resignation to our board of directors will not participate in the committee’s consideration or board action regarding whether to accept such tendered resignation. The policy is more fully described below under the “Corporate Governance and Social and Environmental Responsibility—Corporate Governance Guidelines—Majority Vote Policy” section of this proxy statement.


In accordance with our Charter and Bylaws, any vacancies occurring on our board of directors, including vacancies occurring as a result of the death, resignation, or removal of a director, or due to an increase in the size of theour board of directors, may be filled only by the affirmative vote of a majority of the remaining directors in office, even if the remaining directors do not constitute a quorum, and any director elected to fill a vacancy will serve for the remainder of the full term of the directorship in which the vacancy occurred and until a successor is duly elected and qualifies.

There is no familial relationship, as defined under the SEC regulations, among any of our directors or executive officers. See “Corporate Governance and Social and Environmental Responsibility—Director Independence.”

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2. RATIFICATION OF APPOINTMENT OF INDEPENDENT

REGISTERED PUBLIC ACCOUNTING FIRM

The Audit Committee of our board of directors (the “Audit Committee”) has appointed Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2017.2020. Our board of directors is requesting that our stockholders ratify this appointment of Ernst & Young LLP.

Ernst & Young LLP has audited our or our predecessor's consolidated financial statements since 2013 and previously audited the financial statements of the Predecessor for more than 20 years1983 and has also provided certain tax and other services to us and to the Predecessor.

us.

Neither our Bylaws nor other governing documents or law require stockholder ratification of the Audit Committee’s appointment of Ernst & Young LLP as our independent registered public accounting firm. However, our board of directors is submitting the appointment of Ernst & Young LLP to the stockholders for ratification as a matter of good corporate practice. In the event that ratification of this appointment of independent registered public accounting firm is not approved at the Annual Meeting, the Audit Committee will review its future selection of our independent registered public accounting firm. Even if the selection is ratified, the Audit Committee, in its discretion, may direct the appointment of a different independent registered public accounting firm at any time during the year if it determines that such a change would be in our best interests.

Representatives of Ernst & Young LLP are expected to be present at the Annual Meeting and will be provided with an opportunity to make a statement if so desired and to respond to appropriate inquiries from stockholders.

Independent Registered Public Accounting Firm Fees

The following table summarizes the aggregate fees (including related expenses) billed to us for professional services provided by Ernst & Young LLP for 20162019 and 2015.

   For the Year
Ended
December 31,
2016		   For the Year
Ended
December 31,
2015		 
   (in $000’s) 

Audit Fees(1)

  $1,777   $1,045 

Audit-Related Fees(1)

   59    240 

Tax Fees(2)

   120    120 
  

 

 

   

 

 

 

Total

  $1,956   $1,405 
  

 

 

   

 

 

 

2018.
 For the Year Ended December 31, 2019 For the Year Ended December 31, 2018
 (in thousands)
Audit fees (1)   
$2,085
 $1,944
Audit-related fees (2)   
234
 82
Tax fees (3)   
212
 201
Total   
$2,531
 2,227
(1)Audit Feesfees include fees and expenses related to the annual audit of the financial statements of the Company and its subsidiaries and our internal controls over financial reporting, the review of the consolidated financial statements included in our quarterly reports on Form 10-Q and for services associated with our public offerings, including review of the registration statement and related issuances of comfort letters and consents and other services related to SEC matters. For 2016, audit
(2)Audit-related fees also include the costs related to the opinion that became required in 2016 on the effectiveness of the Company’s internal controls over financial reporting based on criteria established in 2013 by the Committee of Sponsoring Organizations of the Treadway Commission. Audit-Related Fees include fees and expenses related to agreed uponagreed-upon procedures performed on certain of our securitization transactions.
(2)
(3)Tax Feesfees include fees and expenses related to tax compliance and tax return preparation services, as well as tax planning and advisory services.

The Audit Committee’s charter provides that the Audit Committee shall review and pre-approve the engagement fees and the terms of all auditing and non-auditing services to be provided by the external auditors and evaluate the effect thereof on the independence of the external auditors. The chair of the committee is authorized to pre-approve any audit or non-audit service on behalf of the committee up to an amount of $50,000, with such decisions presented to the full committee at its next meeting.

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Our board of directors recommends a vote FOR the ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for our fiscal year ending December 31, 2017.

2020.

A majority of all of the votes cast on this proposal at the Annual Meeting at which a quorum is present is required for its approval. Proxies solicited by our board of directors will be voted FOR this proposal, unless otherwise instructed. Abstentions and broker non-votes will not be counted as votes cast and will have no effect on the result of the vote, although they will be considered present for the purpose of determining the presence of a quorum.

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3. STOCKHOLDER ADVISORY (NON-BINDING) VOTE ONTO APPROVE OUR EXECUTIVE COMPENSATION

The Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”) enacted in July 2010 includes a provision, which is further required by Section 14A of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), commonly referred to as “Say on Pay,” that entitles our stockholders to cast an advisory (non-binding) vote to approve the resolution approving the compensation of our Named Executive Officers as disclosed in this proxy statement.

At the 2017 Annual Meeting of Stockholders, our stockholders voted for a one-year interval for the advisory vote on executive compensation.

We believe that our compensation policies and practices are strongly aligned with the long-term interests of our stockholders. Stockholders are urged to read the Executive Compensation section of this proxy statement, and especially the Compensation Discussion and Analysis, which discusses our compensation philosophy and how our compensation policies and practices implement our philosophy.

As described more fully in that discussion, our compensation programs are designed to achieve the following objectives:

aligning our management team’s interests with stockholders’ expectations;expectations, including our continued investment in solutions that reduce carbon emissions or increase resilience to climate change;

motivating and rewarding our management team to grow our assets and earnings in a manner that is consistent with prudentappropriate risk-taking and based on sound corporate governance practices; and

attracting and retaining an experienced and effective management team while also maintaining an appropriate expense structure.

One of the guiding principles underlying the Compensation Committee’s executive compensation philosophy is that compensation should encourage and reward strong financial and managementoperational performance. In furtherance of this philosophy, the Compensation Committee established the 20162019 annual incentive plan with quantitative and qualitative performance goals based upon the Company’s strategic goals. The quantitative goals were intended to focus the our named executive officers (“NEOs”) on the key financial metrics that impact the Company’s results and stockholder value, including Core Earnings (as defined below) (1), Originations and Credit Losses incurred. Depending on the employee, theCore ROE (as defined below) (2). The qualitative goals included successful completion of the Company’s first audit of internal control over financial reporting required under Section 404 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), the achievement of certain goals in the finance plan and, for the Named Executive Officers other than the chief executive officer, a qualitativean evaluation of overall performance of the Named Executive Officer.each NEO. Set forth below is graphical illustration of our growth in Core Earnings per share and Originations growth from 2015 to 2016:

LOGO

attractive and stable Core ROE.
coremetricsv2.jpg
(1)
Core Earnings and Core Earnings per share are not financial measures calculated in accordance with GAAP. A reconciliation of 2019 Core Earnings to GAAP net income is located on page 65 of our Form 10-K for the year ended December 31, 2019. A reconciliation of 2018 Core Earnings to GAAP net income is located on page 62 of our Form 10-K for the year ended December 31, 2018, filed with the SEC on February 22, 2019. We refer to this metric as "Core Earnings". In accordance with our Sustainable Investment Policy, we will only invest in assets that are either neutral or negative on incremental carbon emissions or have some other tangible environmental benefit such as reducing water consumption. As a result, our Core Earnings and other performance metrics that are based on Core Earnings are linked to the positive contributions we make to the environment. We believe that Core Earnings provides an additional measure of our core operating performance by eliminating the impact of certain non-cash expenses and facilitating a comparison of our financial results to those of other comparable companies with fewer or no non-cash charges and comparison of our own operating results from period to period. Our management team uses Core Earnings in this way. We believe that our investors also use Core Earnings, or a comparable supplemental performance measure, to evaluate and compare our performance to that of our peers, and as such, we believe that the Core Earnings metric is useful to our investors.


(2)
Core Return on Equity is not a financial measure calculated in accordance with GAAP. A reconciliation ofIt is calculated as annual Core Earnings toas described above divided by the average of our GAAP net incomestockholders' equity as of the last day of the four quarters during the year. GAAP stockholders' equity as of December 31, 2019, is located on pages 72-74page on page 81 of our Form 10-K for the year ended December 31, 2016, filed with2019. GAAP stockholders' equity as of March 31, June 30, and September 30, 2019 are located on page 1 of the SEC on February 24, 2017.respective quarter's Form 10-Q. We refer to this metric as "Core ROE".

We realized no Credit Losses in 2016. The Compensation Committee determined that the quantitative measures had been achieved for the successful completion of the audit of internal controls over financial reporting and for the finance plan. Based on this achievement and the results achieved against the targets for

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Core Earnings, Originations and Credit Losses, as described above, the Compensation Committee awarded incentive compensation, which was paid in 2017, equal to approximately 93% of the incentive compensation targets. It was also determined that the Named Executive Officers had performed at expected levels on their individual performance measures, other than the chief executive officer who was not subject to an individual performance measure.

In addition, during 2016,2019, we achieved the following milestones that we believe position us for future success:

Grew balance sheet to more than $1.7 billion, over 130 separate investments.

Increased quarterly dividend by 10% to $0.33Delivered $1.24 annual GAAP Earnings per share for an annualized yieldon a fully diluted basis in 2019, compared to $0.75 in 2018
Delivered $1.40 annual Core Earnings per share in 2019, compared to $1.38 in 2018
Closed $1.3 billion of 6.5% based on our closing stock pricetransactions in 2019, including $475 million in Q4 2019
Grew Portfolio to $2.1 billion as of $20.18 on April 7, 2017.the end of 2019

Achieved 67% fixed-rate debt, with target increasedSuccessfully completed inaugural issuances totaling $500 million in corporate unsecured green bonds
Reported a Portfolio Yield of 7.6% as of the end of 2019, compared to 60% to 85% from 50% to 70%.

Completed6.8% at the year withend of 2018
•
Increased GAAP Net Investment Income by 58% to $38 million in 2019, compared to $24 million in 2018 and increased Core Net Investment Income (as defined below) (1) by 21% to $82 million in 2019, compared to $68 million in 2018
Reported a debt to equity ratio of 1.71.5x and fixed-rate debt level of 98% as of the end of 2019
Appointed Teresa M. Brenner as Lead Independent Director
Received Ethical Corporation's Responsible Investment Award, ACORE's Renewable Energy Leadership Award and CR Magazine's Responsible CEO of the Year Award for ESG leadership
Estimated that 385 thousand metric tons of annual carbon emissions will be avoided by our 2019 transactions equating to 1.

Maintained a diversified pipelineCarbonCount® score of over $2.5 billion.0.30 metric tons per $1,000 invested. For additional details related to these carbon emissions standards, see “Corporate Governance and Social and Responsibility—Environmental Impact”

—
(1)    Core Net Investment Income is not a financial measure calculated in accordance with GAAP. It is calculated as GAAP net investment income (interest income and rental income less interest expense) as reported on page 82 of our Form 10-K for the year ended December 31, 2019 plus Core Earnings from our equity method investments when allocating cash distributions between a return on and return of invested capital plus amortization of real estate intangibles, both reported on page 65 of our Form 10-K for the year ended December 31, 2019. We refer to this metric as "Core Net Investment Income". We utilize this metric in operating our business and believe it is useful information for our investors for the same reasons discussed for Core Earnings above.

In 2019, we generated higher Core Net Investment Income coupled with strong gain on sale and other fee income. The increase in Core Net Investment Income was a result of strong origination volumes, a higher yielding balance sheet and a reduction in our financing costs due to lower cost and outstanding balance of debt. This resulted in Core Earnings per share meeting our predetermined target and Core ROE exceeding our predetermined target which, when taken together, entitled the NEOs to receive 111% of their target corporate performance bonus amounts, which was 70% of NEO incentive compensation. The remaining 30% was based on an evaluation of individual performance. The calculated corporate performance combined with individual performance resulted in the NEOs receiving an average of 106% of their target incentive compensation, a decrease from approximately 135% for 2018.
Overall, we believe these 20162019 results provide us a solid foundation to achieve longer-term future success. Our compensation decisions for 20162019 have taken into accountconsidered the challenges faced and results achieved by our management team in 2016.2019. See “Executive Compensation—Compensation, Discussion and Analysis” for additional details related to our compensation policies and practices and the achievement of our performance goals.

We are requesting your non-binding vote on the following resolution:

“RESOLVED, that our stockholders approve, on an advisory basis, the compensation of the Named Executive Officers as described in the proxy statement for the 20172020 Annual Meeting of Stockholders pursuant to the compensation disclosure rules of the SEC, including the Compensation Discussion and Analysis, the Summary Compensation Table and the other related tables and narrative disclosure.”



Because your vote is advisory, it will not be binding upon us or our board of directors. However, the Compensation Committee, which is responsible for designing and administering our executive compensation programs, values your opinion and will take into account the outcome of the vote when considering future executive compensation arrangements.

Our board of directors recommends a vote FOR approval of the non-binding advisory resolution approving the compensation of the Named Executive Officers as described in the Compensation Discussion and Analysis, the compensation tables and other narrative disclosure in this proxy statement.

If a quorum is present, the affirmative vote of a majority of the votes cast at the Annual Meeting is required to approve, on an advisory basis, the resolution approving the compensation of our Named Executive Officers. Abstentions and broker non-votes will not be counted as votes cast and will have no effect on the result of the vote.

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4. STOCKHOLDER ADVISORY (NON-BINDING) VOTE ON THE FREQUENCY OF AN ADVISORY VOTE ON EXECUTIVE COMPENSATION

The Dodd-Frank Act also provides our stockholders with an opportunity to vote on a proposal, on an advisory (non-binding) basis, regarding how frequently we should seek an advisory vote on the compensation of our Named Executive Officers, as disclosed pursuant to the SEC’s compensation disclosure rules, such as “3. Stockholder Advisory (Non-Binding) Vote On Executive Compensation” included on pages 10 and 11 of this proxy statement. By voting on this matter, stockholders may indicate whether they would prefer an advisory vote on executive compensation every one, two, or three years.

After careful consideration of this proposal, our board of directors has determined that an advisory vote on executive compensation that occurs every year is the most appropriate alternative for our Company, and therefore our board of directors recommends that you vote for a one-year interval for the advisory vote on executive compensation.

In formulating its recommendation, our board of directors considered that an annual advisory vote on executive compensation will allow our stockholders to provide us with their direct input on our compensation philosophy, policies, and practices as disclosed in our annual proxy statement every year. Additionally, an annual advisory vote on executive compensation is consistent with our policy of seeking input from, and engaging in discussions with, our stockholders on corporate governance matters and our executive compensation philosophy, policies, and practices. We understand that our stockholders may have different views as to what is the best approach for our Company and we look forward to hearing from our stockholders on this proposal.

You may cast your vote on your preferred voting frequency by choosing the option of every year, every two years, or every three years, or abstain from voting.

Our board of directors recommends a vote FOR the option of “One” year as the frequency for future advisory votes on compensation of our Named Executive Officers.

If a quorum is present, the option of every year, every two years, or every three years that receives a majority of the votes cast by stockholders will be the frequency for the advisory vote on executive compensation that has been selected by stockholders. For purposes of this advisory vote, abstentions and broker non-votes will not be counted as votes cast and will have no effect on the result of the vote. In the event that no option receives a majority of the votes cast, we will consider the option that receives the most votes to be the option selected by stockholders. In either case, this vote is advisory and not binding on us or our board of directors and our board of directors may decide that it is in the best interests of our stockholders and our Company to hold an advisory vote on executive compensation more or less frequently than the option selected by our stockholders.

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BOARD AND COMMITTEE MATTERS

Board of Directors

Our board of directors is responsible for overseeing our affairs. Our board of directors conducts its business through meetings and actions taken by written consent in lieu of meetings. Our board of directors intends to hold at least four regularly scheduled meetings per year, generally one per calendar quarter, and additional special meetings as necessary. For the period from January 1, 20162019 through December 31, 2016,2019, our board of directors held twelveten meetings. All of our directors attended at the least 75% of the meetings of our board of directors and of the committees of our board of directors on which they served during this period (during the period that they served), either in person or telephonically. All the directors then serving on our board of directors attended our 2019 annual meeting of stockholders and all directors currently serving on our board of directors intend to attend our 2020 annual meeting of stockholders via a live webcast. Our board of directors’ policy, as set forth in our Corporate Governance Guidelines (the “Guidelines”), is to encourage and promote the attendance by each director at all scheduled meetings of our board of directors and all meetings of our stockholders.

Committees of theour Board of Directors

Historically, our

Our board of directors has threefour standing committees: the Audit Committee, the Compensation Committee, and the Nominating, Governance and Corporate Governance Committee. On March 15, 2017, our board of directors created aResponsibility Committee and the Finance and Risk Committee as a fourth standing committee.

Committee.

Audit Committee

Steven Osgood (Chair), Charles O’NeilSimone Lagomarsino and Richard Osborne are the current members of the Audit Committee. Charles O'Neil previously served as a member of the Audit Committee until July 30, 2019. Our board of directors has determined that all of the members of the Audit Committee are independent as required by the NYSE listing standards, SEC rules governing the qualifications of Audit Committee members, the Guidelines, the Independence Standards (as defined below) and the written charter of the Audit Committee. Our board of directors has also determined, based upon its qualitative assessment of their relevant levels of knowledge and business experience (see “Election of Directors” in this proxy statement for a description of our directors’ respective backgrounds and experience), that Mr. OsborneOsgood, Ms. Lagomarsino and Mr. OsgoodOsborne each qualify as an “audit committee financial expert” for purposes of, and as defined by, the SEC rules and each has the requisite accounting or related financial management expertise required by NYSE listing standards. In addition, our board of directors has determined that all of the members of the Audit Committee are financially literate as required by the NYSE listing standards.

The Audit Committee is responsible for engaging our independent registered public accounting firm, reviewing with the independent registered public accounting firm the plans and results of the audit engagement, approving professional services provided by the independent registered public accounting firm, reviewing the independence of the independent registered public accounting firm, considering the range of audit and non-audit fees and reviewing the adequacy of our internal accounting controls.

The Audit Committee met seven times during 2016.2019. These meetings were designed, among other things, to discharge our board of directors’ responsibilities relating to our and our subsidiaries’ corporate accounting and reporting practices, the quality and integrity of our consolidated financial statements, our compliance with applicable legal and regulatory requirements, the performance, qualifications and independence of our external auditors, and the staffing, performance, budget, responsibilities and qualifications of our internal audit function. The Audit Committee also has responsibility for reviewing our policies with respect to risk assessment and risk management, which responsibility is shared with the new Finance and Risk Committee. The Audit Committee is also responsible for reviewing with management and external auditors our unaudited interim and audited annual financial statements as well as approving the filing of our interim financial statements, meeting with officers responsible for certifying our Annual Report on Form 10-K or any quarterly report on Form 10-Q prior to any such certification and reviewing with such officers disclosures related to any significant deficiencies or material weaknesses in the design or operation of internal controls. The Audit Committee is charged with periodically discussing with our external auditors such auditors’ judgments about the quality, not just the acceptability, of our accounting principles as applied in our consolidated financial statements.

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The specific responsibilities of the Audit Committee are set forth in its written charter, which is available for viewing on our website atwww.hannonarmstrong.com.

Compensation Committee

Mark Cirilli

Richard Osborne (Chair), Teresa Brenner, and Charles O’NeilSteven Osgood are the current members of the Compensation Committee. Rebecca Blalock will replace Mr. O’Neil as a member of the Compensation Committee effective May 15, 2017 and Steven Osgood will also join the committee at the same time. Our board of directors has determined that each of the members of the Compensation Committee is independent as required by the NYSE listing standards, SEC rules, the Guidelines, the Independence Standards (as defined below) and the written charter of the Compensation Committee. The Compensation Committee, which met eightseven times during 2016,2019, is responsible for, among other things, overseeing the approval, administration and evaluation of our compensation plans, policies and programs, and reviewing the


compensation of our directors and executive officers. The specific responsibilities of the Compensation Committee are set forth in its written charter, a copy of which is available for viewing on our website atwww.hannonarmstrong.com.

In 2015 and for a portion of 2016,


Since 2018, the Compensation Committee has engaged Frederic W. Cook & Co., Inc. (“Cook & Co.”Pay Governance LLC ("Pay Governance"), a compensation consulting firm, to assist the Compensation Committee on the setting of certain annual bonus targets for our NEOs. In July 2019, the Compensation Committee also engaged Pay Governance to provide analysis and recommendations regarding (1) base salaries, annual bonuses and long-term incentive compensation for our executive management team, and (2) the director compensation program for independent members of our board of directors. In September, 2016, the Compensation Committee replaced Cook & Co. withdirectors, replacing FTI Consulting, Inc. (“FTI”), as a result of a seniorthe Company’s compensation consultant who had worked with the Compensation Committee leaving Cook & Co. and joining FTI. FTIfor such matters. Pay Governance reports directly to the Compensation Committee and it has not performed, and does not currently provide, any other services to management or the Company. The Compensation Committee has determined that FTIPay Governance is independent pursuant to the Company's Compensation Committee charter.

Nominating, Governance and Corporate GovernanceResponsibility Committee

Teresa Brenner (Chair), Michael Eckhart, and Mark CirilliCharles O’Neil are the current members of the Nominating, Governance and Corporate GovernanceResponsibility Committee. Our board of directors has determined that all of the members of the Nominating, Governance and Corporate GovernanceResponsibility Committee are independent as required by the NYSE listing standards, the Guidelines, the Independence Standards (as defined below) and the written charter of the Nominating, Governance and Corporate GovernanceResponsibility Committee. The Nominating, Governance and Corporate GovernanceResponsibility Committee, which met twelveseven times during 2016,2019, is responsible for, among other things, reviewing periodically and making recommendations to our board of directors on the range of qualifications that should be represented on our board of directors and eligibility criteria for individual board membership, as well as seeking, considering and recommending to theour board qualified candidates for election as directors and approving and recommending to the full board of directors the appointment of each of our officers and, if necessary, a lead independent director. For a discussion of the consideration of diversity in the process by which candidates for director are considered for nomination by the Nominating, Governance and Corporate GovernanceResponsibility Committee, and the process for identifying and evaluating nominees for director, including nominees recommended by security holders, please see “Corporate Governance and Social and Environmental Responsibility—Identification of Director Candidates” in this proxy statement. The Nominating, Governance and Corporate GovernanceResponsibility Committee reviews and makes recommendations on matters involving the general operation of our board of directors and our corporate governance and annually recommends to the board of directors nominees for each committee of our board of directors. The committee also monitors our Company’s commitment to environmental sustainability. The Nominating and Corporate Governance Committee also had responsibility for reviewingperiodically reviews the Company’s directorstrategies, activities, policies, and officer insurance plans, which responsibility was delegatedcommunications regarding sustainability and other environmental, social and governance (“ESG”) related matters and makes recommendations to our board of directors. In this capacity, the new Financecommittee reviews our CarbonCount® score discussed in the “Corporate Governance and Risk Committee.Social and Responsibility—Environmental Impact” section below. In addition, the committee annually facilitates the assessment of our board of directors’ performance as a whole and that of the individual directors and reports thereon to our board of directors.

The specific responsibilities of the Nominating, Governance and Corporate GovernanceResponsibility Committee are set forth in its written charter, which is available for viewing on our website atwww.hannonarmstrong.com.

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Finance and Risk Committee

Charles O’Neil (Chair), Michael Eckhart, and Rebecca BlalockSimone Lagomarsino are the current members of the Finance and Risk Committee which was established by the board of directors on March 15, 2017.Committee. Our board of directors has determined that all of the members of the Finance and Risk Committee are independent under the NYSE listing standards, the Guidelines, the Independence Standards (as defined below) and the written charter of the Finance and Risk Committee. The Finance and Risk Committee, which met five times during 2019, has responsibility for the assessment, monitoring and oversight of matters relating to the Company’s financings. The Finance and Risk Committee also discusses and reviews policies and guidelines with respect to our risk assessment and risk management for various risks, including, but not limited to, guidelinesour interest rate, counter-party, credit, capital availability, refinancing and policies to govern the process by which risk assessmentcertain environmental risks. The Finance and risk management is undertaken,Risk Committee also reviews and assesses the adequacy of our insurance coverage and our interest rate risk management, our counter-partycybersecurity policies and credit risks, our capital availability and refinancing risks.

programs.

The specific responsibilities of the Finance and Risk Committee are set forth in its written charter, which is available for viewing on our website atwww.hannonarmstrong.com.

Report of the Audit Committee

The Audit Committee has furnished the following report for the fiscal year ended December 31, 2016:

2019:

The Audit Committee is responsible for monitoring the integrity of our consolidated financial statements, our system of internal controls, our risk management, the qualifications, independence and performance of our independent registered public accounting firm and our compliance with related legal and regulatory requirements. The Audit Committee has the sole authority and responsibility to


select, determine the compensation of, evaluate and, when appropriate, replace our independent registered public accounting firm. The Audit Committee operates under a written charter adopted by our board of directors.

Management is primarily responsible for our financial reporting process including the system of internal controls and for the preparation of consolidated financial statements in accordance with accounting principles generally accepted in the United States. Ernst & Young LLP, our independent registered public accounting firm, is responsible for performing an independent audit of our annual consolidated financial statements and expressing an opinion as to their conformity with accounting principles generally accepted in the United States and on the effectiveness of the company’s internal controls over financial reporting based on criteria established in 2013 by the Committee of Sponsoring Organizations of the Treadway Commission. The Audit Committee’s responsibility is to oversee and review the financial reporting process. The Audit Committee is not, however, professionally engaged in the practice of accounting or auditing and does not provide any expert or other special assurance as to such financial statements concerning compliance with laws, regulations or accounting principles generally accepted in the United States or as to auditor independence. The Audit Committee relies, without independent verification, on the information provided to it and on the representations made by our management and our independent registered public accounting firm.

Representatives of Ernst & Young LLP were in attendance atattended the Audit Committee meetings on at least a quarterly basis. These meetings were designed, among other things, to facilitate and encourage communication among the Audit Committee, management and Ernst & Young LLP, our independent registered public accounting firm. The Audit Committee reviewed and discussed the Company’s audited financial statements with management and Ernst & Young LLP. The Audit Committee also discussed with Ernst & Young LLP matters that independent accounting firms must discuss with audit committees under generally accepted auditing standards and standards of the Public Company Accounting Oversight Board (the “PCAOB”), including, among other things, matters related to the conduct of the audit of our consolidated financial statements and the matters required to be discussed by Auditing Standard No. 16,1301, Communications with Audit Committees, which included a discussion of Ernst & Young LLP’s judgments about the quality (not just the acceptability) of our accounting principles as applied to financial reporting. The Audit Committee met with Ernst & Young LLP, with and without management present, to discuss the results of their audit.

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The Audit Committee also discussed with Ernst & Young LLP their independence from us. Ernst & Young LLP provided to the Audit Committee the written disclosures and the letter required by applicable requirements of the PCAOB regarding the independent accountant’s communication with audit committees concerning independence and represented that it is independent from us. The Audit Committee also received regular updates on the amount of fees and scope of audit, audit-related and tax services provided by Ernst & Young LLP.

Based on the Audit Committee’s review and these meetings, discussions and reports, and subject to the limitations on the Audit Committee’s role and responsibilities referred to above and in its written charter, the Audit Committee recommended to our board of directors that our audited consolidated financial statements for the fiscal year ended December 31, 20162019 be included in our Annual Report on Form 10-K filed with the SEC. The Audit Committee has also appointed Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 31, 20172020 and is presenting this selection to our stockholders for ratification.

Steven G. Osgood

Charles O’Neil

Simone Lagomarsino
Richard Osborne

The foregoing Report of the Audit Committee shall not be deemed under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, to be (i) “soliciting material” or “filed” or (ii) incorporated by reference by any general statement into any filing made by us with the SEC, except to the extent that we specifically incorporate such report by reference.

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COMPENSATION OF INDEPENDENT DIRECTORS

A director who is also an employee of ourthe Company is referred to as an executive director. Executive directors do not receive compensation for serving on our board of directors. We pay directors’ fees only to those directors who are independent under the NYSE listing standards.standards, as more fully described elsewhere in this section under "Corporate Governance and Social and Environmental Responsibility-Director Independence". We have approved and implemented a compensation program for our independent directors that consists of an annual cash retainer fee and long-term equity awards as described below. We also reimburse each of our independent directors for his or her expenses incurred in connection with his or her board responsibilities. The following table summarizes the annual compensation received by our independent directors for 2016.

Summary2019.

Director Compensation Table

Name

  Fees Paid or
Earned in
Cash ($)		   Stock
Awards
($)(1)		   Total 

Teresa M. Brenner

  $37,500   $65,890   $103,390 

Mark J. Cirilli

  $72,500   $64,998   $137,498 

Charles M. O’Neil

  $57,500   $64,998   $122,498 

Richard J. Osborne

  $77,500   $64,998   $142,498 

Steven G. Osgood

  $67,500   $64,998   $132,498 

Jackalyne Pfannenstiel(2)

  $30,000   $64,998   $94,998 

for 2019
Name 
 Fees Paid or Earned in Cash ($) 
Stock Awards ($) (1)
 
Total ($)
Rebecca B. Blalock 65,000 103,538 168,538
Teresa M. Brenner 84,167 103,538 187,705
Mark J. Cirilli 80,000 103,538 183,538
Michael T. Eckhart 10,083 63,799 73,882
Simone F. Lagomarsino 10,083 63,799 73,882
Charles M. O’Neil 80,000 103,538 183,538
Richard J. Osborne 88,333 103,538 191,871
Steven G. Osgood 85,000 103,538 188,538
(1)
In 2019, Each of Messrs. Cirilli, O’Neil, Osborne and Osgood, and Osborne,Mses. Blalock and Ms. PfannenstielBrenner were granted 3,461 shares of restricted common stock4,010 long-term incentive plan ("LTIP") units in 2016Hannon Armstrong Sustainable Infrastructure Capital Partnership, LP, the Company's operating partnership (our "Operating Partnership") valued at $18.78$25.82 per share, the closing price per share of our Common Stock on the NYSE at the date of grant. In addition to being eligible to receive the cash retainer as described above, upon joining the board on April 7, 2016, Ms. Brenner wasMr. Eckhart and Ms, Lagomarsino were granted 3,533 shares of restricted common stock2,385 LTIP units in 2019 valued at $18.65$26.75 per share, the closing price of our Common Stock on the NYSE at the date of grant. The shares of Common Stockgrant dates fair value was computed in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718 and the assumptions and methodologies set forth in our Form 10-K for the year ended December 31, 2019 (Note 2 and Note 11, Equity). The LTIP units granted in 20162019 to Messrs. O'Neil, Osborne and Osgood and Ms. Brenner vest on March 5, 2018.May 15, 2020. The LTIP units granted in 2019 to Mr. Eckhart and Ms. Lagomarsino vest on August 15, 2020. The LTIP units granted in 2019 to Ms. Blalock and Mr. Cirilli vested on July 30, 2019. As of December 31, 2016,2019, Ms. Brenner and each of Messrs. Cirilli O’Neil, Osborne, and OsborneOsgood held 4,3723,401 shares of unvested restricted common stock,Common Stock and 4,010 unvested LTIP units. Each of Mr. Osgood held 6,071 shares of unvested restricted common stock,Eckhart and Ms. BrennerLagomarsino held 3,533 shares of2,385 unvested restricted common stock.LTIP units.
(2)As previously announced, Ms. Pfannenstiel left the board in April 2016, and was replaced by Ms. Brenner. In appreciation for Ms. Pfannenstiel’s service, the board accelerated the vesting on 4,510 shares

The components of Ms. Pfannenstiel’s unvested Common Stock. Ms. Pfannenstiel forfeited her 4,372 remaining shares of unvested restricted common stock.

Effective April 2016, based on the recommendation of the former compensation consultant, Cook & Co., following a review of comparable companies, the board of directors approved the following changes to the independent director compensation:

compensation are as follows:
cash retainer increased toof $65,000 annually per director from $50,000 annually.director;

cash retainer to the Lead Independent Director of $25,000 annually;
cash retainer to the Chair of the Audit Committee increased toof $20,000 annually from $15,000.annually;

$25,000 fee was established for the Lead Independent Director.

The cash retainer to each of the ChairChairs of the Compensation Committee, and Chair of the Nominating, Governance and Corporate GovernanceResponsibility Committee remained at annual amounts of $15,000 and $10,000, respectively.

Effective March 2017, to better align the fees paid to committee chairs, the board of directors approved the following changes to the independent director compensation:

cash retainer to the Chair of the Nominating and Corporate Governance Committee increased to $15,000 annually.

cash retainer to the Chair of the Finance and Risk Committee was established atof $15,000 annually.annually; and

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equity grant of $100,000 annually per director in the form of LTIP units. LTIP units are described in more detail as set forth below under "Executive Compensation —Compensation Discussion and Analysis—Equity Incentive Plan."
All cash fees described above are paid quarterly in arrears.

Upon joining the board in March 2017, Ms. Blalock became eligible to receive the cash retainer as described above in her roles as a member of the board. For 2017, the board targeted the annual stock grant to be $65,000 and awarded each independent director, including Ms. Blalock, 3,426 shares of restricted common stock valued at $18.97 per share, the closing price of our Common Stock on the NYSE at the date of grant in March 2017. The 2017 independent director awards vest on March 5, 2019.

Our directors are also subject to stock ownership guidelines, which are described in more detail as set forth below under “Executive Compensation —Compensation Discussion and Analysis—Stock Ownership Guidelines for Named Executive Officers and Directors”

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Directors.”


Changes to our Director Compensation for 2020
Our board of directors permitted directors to make an election, on or before December 31, 2019, to receive equity in the form of LTIP units in lieu of all or a portion of their cash compensation for 2020.


CORPORATE GOVERNANCE AND SOCIAL AND ENVIRONMENTAL RESPONSIBILITY


We make investments in climate change solutions by providing capital to leading companies in energy efficiency, renewable energy and other sustainable infrastructure markets. Under the direction of our chief executive officer and the board of directors, we are focused on achieving a high level of environmental and social responsibility and strong corporate governance. The Nominating, Governance and Corporate Responsibility Committee of our board of directors is responsible for our ESG oversight, including for our policies and communications. Additionally, we have structureda committee, comprised of employees from across the organization, that is focused on implementing various ESG strategies, policies, and communications and reports to our corporate governancechief executive officer. In 2019, we issued our inaugural ESG report that illustrates our progress towards implementing these strategies and policies.
Our business is focused on reducing the impact of greenhouse gases that have been scientifically linked to climate change. We refer to these gases, which are often for consistency expressed as carbon dioxide equivalents, as carbon emissions. We estimate the carbon impact of each of our investments. In addition, we operate our business in a manner intended to reduce our own environmental impact, including by purchasing 100 percent renewable electricity for our office, encouraging recycling and composting, and offering clean transportation employee incentives for electric and hybrid vehicles.

We have also adopted policies focused on minimizing the environmental impact of our operations. We continue to implement the recommendations of the Task Force on Climate-related Financial Disclosures (“TCFD”), which are located in our Form 10-K.

We are also a signatory to the United Nations Global Compact, an initiative focused on responsible business practices related to human rights, labor, the environment and anti-corruption. We participate in a number initiatives and with coalitions that share our commitment to climate change mitigation, sustainability , and the expansion of clean energy, including the Paris Climate Agreement, the United Nations Global Compact campaign entitled Business Ambition for 1.5°- Only Our Future, Climate Action 100+, The Principles for Responsible Investment (“PRI”), the “We Are Still In” coalition, and the reporting framework established by an international consortium of business and environmental NGOs referred to as the Climate Disclosure Standards Board.

We are also focused on our social responsibility within our workforce and our community. We have evaluated and adopted certain human capital and human rights management policies to further our commitment to social responsibility. Our culture is focused on hiring and retaining diverse and highly talented employees and empowering them to create value for our stockholders. In our employee selection process and operation of our business we adhere to equal employment opportunity policies and encourage the participation of our employees in training programs that will enhance their effectiveness in the performance of their duties. Our chief executive officer periodically leads employee meetings intended to encourage employees to understand why sustainability matters and regularly meets with small groups of employees to receive their feedback on the business.
We provide attractive benefits that promote the health of our employees and their families and design compelling job opportunities, aligned with our mission, in an energizing work environment. We also encourage our employees to continue to develop in their careers, including by obtaining advanced degrees or professional certifications. We compensate our employees according to our fair remuneration policies and believe closely alignsdeeply in paying for performance. Therefore, employees generally receive a portion of their compensation in the form of equity grants tied to performance. We encourage our employees to contribute their time to support various community and charitable activities and sponsor several local community organizations with a primary focus on environmental organizations.
Our corporate governance philosophy is based on maintaining a close alignment of our interests with those of our stockholders. Notable features of our corporate governance structure include the following:

our board of directors is not staggered, with each of our directors subject to re-election annually;

our board of directors has determined that six of our seven directors are independent for purposes of the NYSE corporate governance listing standards and Rule 10A-3 under the Exchange Act;

•two of our directors each qualify as an “audit committee financial expert” as defined by the SEC;

we have a Lead Independent Director, who convenes and chairs executive sessions of the independent directors to discuss certain matters without management present, as described in greater detail below;
three of our directors each qualify as an “audit committee financial expert” as defined by the SEC;
two of our directors, including our Lead Independent Director, are women, in furtheranceconstituting 29% of our board diversity policy;of directors and 33% of our independent directors;

our Guidelines provide for a majority vote policy for the election of directors pursuant to which any nominee who receives a greater number of votes “withheld” from his or her election than votes “for” such election shall promptly tender his or her resignation to our board of directors, which shall consider whether or not to accept such resignation, as described in greater detail below;



we have established a target retirement age of 75 for our directors;
we have an active stockholder outreach program;program, including annually providing our stockholders the opportunity to vote on an advisory basis on the compensation of executives;

•we have opted out of the control share acquisition statute in the Maryland General Corporations Law (the “MGCL”) and have exempted from the business combinations statute in the MGCL transactions that are approved by our board of directors; and

our Statement of Corporate Policy Regarding Equity Transactions prohibits our directors and officers from hedging our equity securities, holding such securities in a margin account or pledging such securities as collateral for a loan;
we have a Clawback Policy that provides for the possible recoupment of performance or incentive-based compensation in the event of an accounting restatement due to material noncompliance by us with any financial reporting requirements under the securities laws (other than due to a change in applicable accounting methods, rules or interpretations);
we have opted out of the control share acquisition statute in the Maryland General Corporation Law (the “MGCL”) and have exempted from the business combinations statute in the MGCL transactions that are approved by our board of directors;
we do not have a stockholder rights plan.plan; and

Our culture is focused on hiring

our Nominating, Governance and retaining highly talented employeesCorporate Responsibility Committee oversees and empowering them to create value fordirects our stockholders. We believe in a diverse workforceESG strategies, activities, policies and encourage employees to understand why sustainability matters in investing. We provide competitive benefits that help our employees and their families be healthy and design compelling job opportunities aligned with our mission in an energizing work environment. We also encourage our employees to continue to develop in their careers, including by obtaining advanced degrees or professional certifications and approximately 10% of our employees have obtained an advanced degree or professional certification over the last four years. We believe deeply in paying for performance. Therefore, employees receive a portion of their compensation in the form of stock grants tied to performance.

communications.

In order to foster the highest standards of ethics and conduct in all business relationships, we have adopted a Code of Business Conduct and Ethics policy (the “Code of Conduct”). This policy, which covers a wide range of business practices and procedures, applies to our officers, directors and employees. In addition, we have implemented Whistleblowing Procedures related to accounting and auditing matters as well as codeCode of conduct and ethicsConduct matters (the “Whistleblower Policy”) that sets forth procedures by which any Covered Persons (as defined in the Whistleblower Policy) may raise, on a confidential basis, concerns regarding, among other things, any questionable or unethical accounting, internal accounting controls or auditing matters with our Audit Committee as well as any potential code of conduct or ethics violations with our Nominating, Governance and Corporate GovernanceResponsibility Committee or our General Counsel.

We have adoptedreview these policies on a Statement of Corporate Policy Regarding Equity Transactions that governs the process to be followed in the purchase or saleperiodic basis with our employees.

Role of our securities by any of our directors, officers, employees and consultants and prohibits any such persons from buying or selling our securities on the basis of material nonpublic information. We amended and restated our Statement of Corporate Policy Regarding Equity Transactions in 2017 to prohibit our directors and officers from hedging equity securities of the Company, holding such securities in a margin account or pledging such securities as collateral for a loan.

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Role of the Board of Directors and Risk Oversight

Pursuant to our Charter and Bylaws and the MGCL, our business and affairs are managed under the direction of our board of directors. Our board of directors has the responsibility for establishing broad corporate policies and for our overall performance and direction but is not involved in our day-to-day operations which are managed by our senior management team. Members of our board of directors keep informed of our business by participating in meetings of our board of directors and its committees, by reviewing analyses, reports and other materials provided to them and through discussions with the chairman of our board of directors, president and chief executive officer and other executive officers.

officers and other employees of the Company.

Currently, Mr. Eckel serves as the chairman of our board of directors and chief executive officer. In addition, our board of directors has an active Lead Independent Director, Richard J. Osborne.Teresa M. Brenner. Our board of directors believes that this leadership structure is best for the Company and its stockholders at this time. In his dual role, Mr. Eckel uses his extensive experience in managing companies operating in the energy sector and expertise in energy investments for over 3035 years through many business cycles to effectively and efficiently guide ourthe Company and our board of directors.directors, including overseeing the Company’s strategies relating to ESG matters. He fulfills his responsibilities as chairman of theour board of directors through close interaction with Mr. Osborne, who has served as our Lead Independent Directors since April 2014.

Ms. Brenner and the committee chairs.

In reaching the conclusion that the roles of the chairman and chief executive officer should be held by one person, our board of directors has considered the performance of ourthe Company since its IPO as well as the views expressed by our stockholders and other constituents, both through stockholder votes and through direct outreach by management and our board of directors. Our board of directors concluded that Mr. Eckel is a well-seasoned leader with a proven track record of leading the Company over a long period of growth both before and after our IPO. Based on his and our track record, theour board of directors determined that Mr. Eckel is the best person to continue to lead ourthe Company and our board of directors. Our board of directors also considered the actual board relationships and determined that there is actual and effective independent oversight of management by our supermajority independent board led by Mr. OsborneMs. Brenner in hisher capacity as our Lead Independent Director.

In connection with their oversight of risk to our business, our board of directors considers feedback from management concerning the risks related to our business, operations and strategies. In March 2017, the board of directors created theThe Finance and Risk Committee withof our board of directors has the responsibility to discuss and review policies with respect to our risk assessment and risk management, including, but not limited to, guidelines and policies to govern the process by which risk assessment and risk management is undertaken, the adequacy of our insurance coverage, our interest rate risk management, our counter-party and credit risks, our capital availability, our refinancing risks, and refinancing risks. Prior to the creation of the Finance and Risk Committee, these risk assessments and reviews were conducted by our cybersecurity risk. Our Audit Committee who continues to consultalso consults with the Finance and Risk Committee on certain of these matters. Management regularly reports to our board of directors on our leverage policies, our asset acquisition process, any asset impairments


and our compliance with applicable REIT and Investment Company Act of 1940 rules. Members of our board of directors routinely meet with management in connection with their consideration of matters submitted for the approval of our board of directors and the risks associated with such matters.

Our board of directors believes that its composition protects stockholder interests and provides sufficient independent oversight of management. A majoritysupermajority of our current directors are “independent” under NYSE listing standards, as more fully described elsewhere in this section under “Corporate Governance and Social and Environmental Responsibility—Director Independence.” The independent directors, led by Mr. Osborne,Ms. Brenner, our Lead Independent Director, meet separately from management on at least four times a quarterly basisyear and are active in the oversight of ourthe Company. The independent directors oversee such critical matters as the integrity of our financial statements, the evaluation and compensation of executive officers and the selection and evaluation of directors. Each independent director has the ability to add items to the agenda of our board of directors meetings or raise subjects for discussion that are not on the agenda for that meeting.

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Mr. Osborne

Ms. Brenner works with the chairman of our board of directors to establish the agenda for regular meetings of our board of directors, serves as chair of regular meetings of our board of directors when our chairman is absent, presides at executive sessions, serves as a liaison between our chairman and chief executive officer and our independent directors, and encourages dialogue between our independent directors and management. HeShe also establishes the agenda for meetings of our independent directors and performs such other duties as our board of directors may establish or delegate.

Our board of directors believes that its majoritysupermajority independent composition and the roles that our independent directors perform provide effective corporate governance at theour board of directors’ level and independent oversight of both our board of directors and management. The current governance structure, when combined with the functioning of the independent director component of our board of directors and our overall corporate governance structure, strikes an appropriate balance between strong and consistent leadership and independent oversight of our business and affairs.

Code of Business Conduct and Ethics

Our board of directors has adopted a Code of Conduct that applies to our directors, executive officers, and employees. The Code of Conduct was designed to assist in complying with the law, in resolving moral and ethical issues that may arise and in complying with our policies and procedures. Among the areas addressed by the Code of Conduct are compliance with applicable governmental, state and local laws, compliance with securities laws, the use and protection of company assets, data privacy, the protection of our confidential corporate information, dealings with the press and communications with the public, internal accounting controls, improper influence of audits, records retention, fair dealing, discrimination and harassment, health and safety, and conflicts of interest, including payments and gifts by third parties, outside financial interests that might be in conflict with our interests, access to our confidential records, corporate opportunities, and loans. The Code of Conduct is available for viewing on our website atwww.hannonarmstrong.com. We will also provide the Code of Conduct, free of charge, to stockholders who request it. Requests should be directed to Steven L. Chuslo, our general counsel, executive vice president and secretary, at Hannon Armstrong Sustainable Infrastructure Capital, Inc., 1906 Towne Centre Blvd, Suite 370, Annapolis, Maryland 21401.

Corporate Governance Guidelines

Our board of directors has adopted the Guidelines that address significant issues of corporate governance and set forth procedures by which our board of directors carries out its responsibilities. Among the areas addressed by the Guidelines are the composition of our board of directors, its functions and responsibilities, its standing committees, director qualification standards, access to management and independent advisors, director compensation, management succession, director orientation and continuing education and the annual performance evaluation and review of our board of directors and committees. The Guidelines are available for viewing on our website atwww.hannonarmstrong.com. We will also provide the Guidelines, free of charge, to stockholders who request it. Requests should be directed to Steven L. Chuslo, our general counsel, executive vice president and secretary, at Hannon Armstrong Sustainable Infrastructure Capital, Inc., 1906 Towne Centre Blvd, Suite 370, Annapolis, Maryland 21401.

Majority Vote Policy

The Guidelines provide for a majority vote policy for the election of directors. Pursuant to this policy, in any uncontested election of directors, any nominee who receives a greater number of votes “withheld” from his or her election than votes “for” such election shall promptly tender his or her resignation to our board of directors following certification of the stockholder vote. The Nominating, Governance and Corporate GovernanceResponsibility Committee shall promptly consider the resignation and make a recommendation to our board of directors with respect to the tendered resignation. In considering whether to accept or reject the tendered resignation, the Nominating, Governance and Corporate GovernanceResponsibility Committee shall consider all factors it deems relevant, which may include the stated

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reasons, if any, why stockholders withheld votes from the director, any alternatives for curing the underlying cause of the withheld votes, the length of service and qualifications of the director, the director’s past and expected



future contributions to ourthe Company, the composition of our board of directors, and such other information and factors as members of the Nominating, Governance and Corporate GovernanceResponsibility Committee shall determine are relevant.

Our board of directors will act on the Nominating, Governance and Corporate GovernanceResponsibility Committee’s recommendation no later than 90 days after the certification of the stockholder vote. Any director who tenders his or her resignation to our board of directors will not participate in the Nominating, Governance and Corporate GovernanceResponsibility Committee’s consideration or board action regarding whether to accept such tendered resignation.

We will promptly disclose our board of director’s decision whether to accept the resignation as tendered (providing a full explanation of the process by which the decision was reached and, if applicable, the reasons for rejecting the tendered resignation) in a press release, a filing with the SEC or in another broadly disseminated means of communication.

Director Independence

The Guidelines provide that a majority of the directors serving on our board of directors must be independent as required by NYSE listing standards. In addition, as permitted under the MGCL, our board of directors has adopted certain independence standards (the “Independence Standards”) to assist it in making determinations with respect to the independence of directors. The Independence Standards are available for viewing on our website atwww.hannonarmstrong.com. Based upon its review of all relevant facts and circumstances, our board of directors has affirmatively determined that six of our seven current directors—Rebecca Blalock, Teresa Brenner, Mark Cirilli,Michael Eckhart, Simone Lagomarsino, Charles O’Neil, Richard Osborne and Steven Osgood—qualify as independent directors under the NYSE listing standards and the Independence Standards.

Identification of Director Candidates

In accordance with the Guidelines and its written charter, the Nominating, Governance and Corporate GovernanceResponsibility Committee is responsible for identifying director candidates for our board of directors and for recommending director candidates to our board of directors for consideration as nominees to stand for election at our annual meetings of stockholders. Director candidates are recommended for nomination for election as directors in accordance with the procedures set forth in the written charter of the Nominating, Governance and Corporate GovernanceResponsibility Committee.

We seek highly qualified director candidates from diverse business, professional and educational backgrounds who combine a broad spectrum of experience and expertise with a reputation for the highest personal and professional ethics, integrity and values. The Nominating, Governance and Corporate GovernanceResponsibility Committee periodically reviews the appropriate skills and characteristics required of our directors in the context of the current composition of our board of directors, our operating requirements and the long-term interests of our stockholders. In accordance with the Guidelines, directors should possess the highest personal and professional ethics, integrity and values, exercise good business judgment, be committed to representing the long-term interests of ourthe Company and our stockholders and have an inquisitive and objective perspective, practical wisdom and mature judgment. The Nominating, Governance and Corporate GovernanceResponsibility Committee reviews director candidates with the objective of assembling a slate of directors that can best fulfill and promote our goals, regardlesstaking into consideration personal factors and professional characteristics of gender, age or race,each potential candidate, and recommends director candidates based upon contributions they can make to our board of directors and management and their ability to represent our long-term interests and those of our stockholders.

The Nominating, Governance and Corporate GovernanceResponsibility Committee evaluates the skill sets required for service on our board of directors and has developed a list of potential director candidates. If it is determined there is the need for

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additional or replacement board members, the Nominating, Governance and Corporate GovernanceResponsibility Committee will assess potential director candidates included on the list as well as other appropriate potential director candidates based upon information it receives regarding such potential candidates or otherwise possesses, which assessment may be supplemented by additional inquiries. In conducting this assessment, the Nominating, Governance and Corporate GovernanceResponsibility Committee considers knowledge, experience, skills, diversity and such other factors as it deems appropriate in light of our current needs and those of our board of directors. The Nominating, Governance and Corporate GovernanceResponsibility Committee may seek input on such director candidates from other directors, including the chairman of our board of directors and our chief executive officer, and recommends director candidates to our board of directors for nomination. The Nominating, Governance and Corporate GovernanceResponsibility Committee does not solicit director nominations, but it will consider recommendations by stockholders with respect to elections to be held at an annual meeting, so long as such recommendations are sent on a timely basis and in accordance with applicable law. The Nominating, Governance and Corporate GovernanceResponsibility Committee will evaluate nominees recommended by stockholders against the same criteria that it uses to evaluate other nominees. The Nominating, Governance and Corporate GovernanceResponsibility Committee may, in its sole discretion, engage one or more search firms or other consultants, experts or professionals to assist in, among other things, identifying director candidates or gathering information regarding the background and experience of director candidates. The Nominating, Governance and Corporate GovernanceResponsibility Committee will have sole authority to approve any fees or terms of retention relating to these services.



Our stockholders of record who comply with the advanced notice procedures set forth in our current Bylaws and outlined under the “Submission of Stockholder Proposals” section of this proxy statement may nominate candidates for election as directors. Our Bylaws currently provide that stockholder nominations of director candidates for an annual meeting of stockholders must be received no earlier than the 150th day and not later than 5:00 p.m., Eastern Time,time, on the 120th day prior to the first anniversary of the date of the proxy statement for the immediately preceding annual meeting of stockholders; provided, however, in the event that the date of the annual meeting is advanced or delayed by more than 30 days from the first anniversary of the date of the preceding year’s annual meeting, notice by the stockholder, to be timely, must be so delivered not earlier than the 150th day prior to the date of such annual meeting and not later than 5:00 p.m., Eastern time, on the later of the 120th day prior to the date of such annual meeting, as originally convened, or the tenth day following the day on which public announcement of the date of such meeting is first made. Accordingly, to submit a director candidate for consideration for nomination at our 20182021 annual meeting of stockholders, stockholders must submit the recommendation, in writing, by 5:00 p.m., Eastern time on December 11, 2017,15, 2020, but in no event earlier than November 10, 2017.15, 2020. The written notice must set forth the information and include the materials required by our current Bylaws. The advanced notice procedures set forth in our current Bylaws do not affect the right of stockholders to request the inclusion of proposals in our proxy statement pursuant to SEC rules. See “Submission of Stockholder Proposals” for information regarding providing timely notice of stockholder proposals under SEC rules.

Annual Board of Directors and Committee Assessments

Our board of directors and each of its committees conducts an annual self-assessment process, implemented and overseen by our Nominating, Governance and Corporate Responsibility Committee in order to review the effectiveness of our board of directors and its committees. The formal self-evaluation may be in the form of written or oral questionnaires and may be administered by board members and/or by third parties, as determined appropriate by our Nominating, Governance and Corporate Responsibility Committee for the related performance cycle. Director feedback is solicited at both the board and committee levels. The results of our board of directors and committee self-assessments are compiled and presented to our board of directors, and items identified in the self-assessments requiring follow-up are monitored on an ongoing basis by our board of directors and by management. In addition to the formal annual board and committee evaluation process, our Lead Independent Director speaks with each board member at least quarterly, and receives input regarding board and committee practices and management oversight. Throughout the year, committee members also have the opportunity to provide input directly to committee chairs or to management.
Personal Loans to Executive Officers and Directors

We comply with, and operate in a manner consistent with, applicable law prohibiting extensions of credit in the form of personal loans to or for the benefit of our directors and executive officers.

Director Attendance at Annual Meetings of Stockholders

We have scheduled a board meeting in conjunction with the Annual Meeting and, as set forth in the Guidelines, our policy is to encourage and promote the attendance by each director at all scheduled meetings of our board of directors and all meetings of our stockholders.

Communications with theour Board of Directors

Our board of directors has approved a process to enable communications with the independent members of the board of directors or the chair of any of the committees of the board of directors. Communications by email should be sent to generalcounsel@hannonarmstrong.com. Communications by regular mail should be sent to the

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attention of Steven L. Chuslo, our general counsel, executive vice president and secretary, at our office at 1906 Towne Centre Blvd, Suite 370, Annapolis, MD 21401. Each communication received will be reviewed to determine whether the communication requires immediate action. All appropriate communications received, or a summary of such communications, will be sent to the appropriate member(s) of our board of directors. However, we reserve the right to disregard any communication we determine is unduly hostile, threatening, illegal, does not reasonably relate to us or our business, or is similarly inappropriate. Our secretary, or his or her delegate, has the authority to disregard any inappropriate communications or to take other appropriate actions with respect to any such inappropriate communications.

In addition, any of our stockholders and any other person may make a good faith report to the Audit Committee regarding any questionable or unethical accounting or auditing matters via regular mail addressed to the Audit Committee, 1906 Towne Centre Blvd, Suite 370, Annapolis, MD 21401.



Executive Sessions of Independent Directors

The independent directors serving on our board of directors meet in executive sessions at least four times per year at regularly scheduled meetings of our board of directors. These executive sessions of our board of directors will beare presided over by Mr. Osborne, our Lead Independent Director.

Active Stockholder Outreach

We believe that engaging with investors is fundamental to our commitment to good governance and essential to maintaining our industry-leading practices. Throughout the year, we seek opportunities to connect with our investors to gain and share valuable insights into current and emerging business and governance trends. During 2016,2019, we held over 60148 meetings with stockholders whose ownership represent over 40%approximately 37% of shares outstanding as of the end of the year to discuss various key corporate matters, includingmatters. Topics discussed include our investment criteria, interest rate and other risk management practices, political and regulatory matters and our focus on sustainability and strong governance practices.practices, including with respect to allowing our stockholders to amend our bylaws. These meetings were conducted in person, via teleconference or one-on-one at industry conferences. Our engagement activities take place throughout the year and we also conduct quarterly earnings calls where we try to answer many of the new questions that we receive during our investor outreach.

Environmental Impact

We believe that sound investing practices should include analysis of the environmental benefit of the proposed investment. It is our practice to invest in projects that increase energy efficiency, provide cleaner energy, positively impact the environment, or make more efficient use of natural resources. As such, we evaluate the environmental impact of proposed investment as part of our investment process.

We define sustainability as positively impacting the environment while being neutral or reducing greenhouse gas (“GHG”) emissions. In addition to GHG emissions, projects are screened for other environmental benefits, such as water use reduction. The quantification of environmental benefits is part of our investment screening process. This commitment helps us continue to reduce GHG emissions through our investments in clean energy projects, as evidenced by the approximately 486,000 metric tons of GHG emissions estimated to be reduced annually as a result of our 2016 investments.

2017 Corporate Governance Improvements

At a meeting of our board of directors on March 15, 2017, we adopted the following measures to enhance our corporate governance policies and further align the interests of our directors and officers with the interests of our stockholders.

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Finance and Risk Committee of the Board of Directors

As described above, our board of directors formed the Finance and Risk Committee for the purpose of assisting the board of directors in overseeing our financing objectives and related risk exposures, with the committee consisting of the newly appointed Ms. Blalock and chaired by Mr. O’Neil.

Statement of Corporate Policy Regarding Equity Transactions

We amended and restated our Statement of Corporate Policy Regarding Equity Transactions described above to prohibit our directors and officers from hedging equity securities of the Company, holding such securities in a margin account or pledging such securities as collateral for a loan.

Approval and Adoption of Amendments to the 2013 Equity Incentive Plan

Our board of directors approved and adopted an amended and restated 2013 Hannon Armstrong Sustainable Infrastructure Capital, Inc. Equity Incentive Plan, as amended (the “Equity Incentive Plan”) to reflect the following amendments: (1) grants issued under the Equity Incentive Plan must include a minimum vesting period of no less than one year from the date of grant, other than as a result of termination of service or in connection with a change in control, dissolution, transfer of substantially all of our assets or other similar transactions as set forth in the Equity Incentive Plan; and (2) repricing of awards granted under the Equity Incentive Plan will not be permitted without stockholder approval.

Approval and Adoption of Material Modification to the Form of RSU Award Agreement

The Compensation Committee approved and adopted a material modification to the terms of the performance based restricted common stock units (“RSUs”) to be granted under the Equity Incentive Plan. RSUs represent the right to receive one share of our Common Stock for each RSU at vesting. The material modification to the form of RSU Award Agreement (the “RSU Award Agreement”) under the Equity Incentive Plan is as follows: Under the old form of the RSU Award Agreement, the grantee of the performance based RSU had the right to receive dividend equivalents with respect to unvested performance based RSUs. Under the new form of the RSU Award Agreement, dividend equivalents will accrue on the RSUs from the grant date, but the grantee is not entitled to receive dividend equivalents until the RSUs vest. The performance based RSUs granted on or around March 15, 2017 were made pursuant to the new form of the RSU Award Agreement.

Adoption of Clawback Policy

Our board of directors believes that it is in our best interests and the best interests of our stockholders to create and maintain a culture that emphasizes integrity and accountability and that reinforces our overall compensation philosophy. In furtherance of this goal, the board of directors adopted a policy (the “Clawback Policy”), which provides for the possible recoupment of performance or incentive-based compensation in the event of an accounting restatement due to our material noncompliance with any financial reporting requirements under the securities laws (other than due to a change in applicable accounting methods, rules or interpretations), the result of which is that any performance or incentive based compensation paid to such Covered Executive (as defined in the Clawback Policy) during the three-year period preceding the publication of the restated financial statements would have been lower had it been calculated based on such restated financial statements. The Clawback Policy covers performance- or incentive-based compensation that is approved, awarded or granted for fiscal years beginning on or after January 1, 2017.

Board Diversity

Our board of directors believes that it is in our best interests and the best interests of our stockholders to create and maintain a diverse board of directors. In March 2017, we added a second woman to our board of directors to further increase our board of directors’ diversity.

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Corporate Governance Review

In overseeing our corporate policies and our overall performance and direction, our board of directors has adopted the approach of operating in what it believes are the long-term best interests of our companythe Company and our stockholders. In operating under these principles, our board of directors continuously reviews our corporate governance structure and considers whether any changes are necessary or desirable. As part of this review, our board of directors has adopted a number of corporate governance guidelines to better align the interests of our directors with those of our stockholders, including those set forth above. As part of this review, our board of directors also considered an amendment toamending our bylaws to allow our stockholders (without the concurrence of our board of directors) to implement bylaw amendments. After careful consideration of this matter and discussion with some of our larger stockholders, our board of directors concludedhas determined that at this time, it remains in the best interests of our stockholders and ourthe Company ifthat the authority to amend our bylaws iscontinues to remain vested exclusively in our board of directors as is permitted by Maryland law and which has been the case since our initial public offeringIPO in 2013. This arrangement has served our interests well, ourWe continue to monitor and evaluate developments on this issue.
Management Succession Planning

Our board of directors believes, becauserecognizes that management succession planning is a fundamental and ongoing part of its responsibilities. Our Nominating, Governance and Corporate Responsibility Committee has utilized a framework relating to executive succession planning under Maryland law,which the Committee has defined specific criteria for, and responsibilities of, each of the executive officer roles of the Company. The Committee then focuses on the skill set needed to succeed in these roles both on a long-term and an emergency basis. Our Lead Independent Director also meets on this topic separately with our CEO and facilitates additional discussions with our independent directors owe legal dutiesabout executive succession planning throughout the year, including at executive sessions. Succession planning remains a priority for our Nominating, Governance and Corporate Responsibility Committee, which has worked with Mr. Eckel to ensure an appropriate emergency succession protocol and to develop our stockholderslong-term succession plan.
Environmental Impact
With scientific consensus that require themglobal warming trends are linked to acthuman activities and resulting in various extreme weather events, we believe the Company is well positioned to generate attractive risk-adjusted returns by investing in, and managing a portfolio of, assets that address climate-changing greenhouse gas emissions. Further, with increasing weather related events, we see similar investment opportunities in infrastructure assets that mitigate the impact of, and increase the resiliency to, these weather events and other adverse impacts of climate change.
Our climate-positive investment thesis is based on the following theories:
More efficient technologies are more productive and thus should lead to higher economic returns;
Lower portfolio risk is inherent in a reasonable beliefportfolio of smaller investments, generated by trends of increasing decentralization and digitalization of energy assets, compared to larger, centralized utility-scale investments;
Investing in assets aligned with scientific consensus and society’s general beliefs will reduce potential regulatory and social costs through better internalization of externalities; and
Assets that their actionsreduce carbon emissions represent an embedded option that may increase in value if carbon regulations were to set a price on carbon emissions.


As part of our investment process, we calculate the ratio of the estimated first year of metric tons of carbon emissions avoided by our investments divided by the capital invested to understand the impact our investments are having on climate change. In this calculation, which we refer to as CarbonCount®, we use emissions factor data, expressed on a CO2 equivalent basis, from the U.S. Government or the International Energy Administration to an estimate of a project’s energy production or savings to compute an estimate of metric tons of carbon emissions avoided. We estimate that our investments originated in 2019 will reduce annual carbon emissions by approximately 385 thousand metric tons.
In assessing our performance and results of operations, we also consider the impact of our operations on the environment. We utilize the carbon emissions categorizations established by the World Resources Institute Greenhouse Gas Protocol Corporate Standards to set goals and calculate our estimated emissions. The categorizations are as follows:

Scope 1 GHG emissions - Direct emissions - Emissions from operations that are owned or controlled by the reporting company.

Scope 2 GHG emissions - Indirect emissions - Emissions from the generation of purchased or acquired energy such as electricity, steam, heating or cooling, consumed by the reporting company.

Scope 3 GHG emissions - Indirect emissions - All other indirect emissions that occur in the best interestsvalue chain of all stockholdersthe reporting company, including both upstream and the best interests ofdownstream emissions.
The table below illustrates our company. On the other hand, under Maryland law, stockholders are not bound by any such legal dutygoals and are permitted to take or to recommend actions that areperformance for 2019 in their own individual interests as stockholders without taking into account the broader interests of other stockholders or the interests of our Company. Beyond this factor, a significant percentage of our stockholders at any given time could consist of exchange traded or index funds that do not normally exercise independent judgment on matters presented to stockholders. As a result of these factors, we believe that our directors are in the best position to consider possible future bylaw amendments (including those proposed by our stockholders in accordance with the provisions of our bylaws) and will adopt such amendments only after concluding that such amendments are in the best interests of our stockholders and of our company.

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metric tons ("MT").

CategoryGoalPerformance
Verification (3)
Scope 1 GHG emissions0 MT0 MTApex Cos.
Scope 2 GHG emissions0 MT
0 MT (1)
Apex Cos.
Scope 3 GHG emissions
  0 MT2
<600 MT (2)
Apex Cos.

(1)
Performance stated is market-based which includes the impact of purchasing renewable energy credits.
(2)Our stated actual performance for Scope 3 GHG emissions does not include the carbon emissions reductions as a result of our investments. The first year carbon emissions reductions as a result of our investments originated in 2019 are 385 Thousand MT.
(3)In addition to our internal review, Apex Companies, LLC was commissioned as an independent organization to verify our GHG emissions reporting as estimated in accordance with GHG measurement and reporting protocols of the World Resources Institute / World Business Council for Sustainable Development Greenhouse Gas Protocol Corporate Accounting and Reporting Standard (Scope 1, 2) and Corporate Value Chain Accounting and Reporting Standard (Scope 3).


INFORMATION REGARDING OUR EXECUTIVE OFFICERS

Our Named Executive Officers and their ages as of April 7, 20179, 2020 are as follows:

Name

 Age

Jeffrey W. Eckel

 61
58Jeffrey A. Lipson 52

J. Brendan Herron

56

Nathaniel J. Rose

39

Steven L. Chuslo

 59
Nathaniel J. Rose 42

Steven L. Chuslo

62
Daniel K. McMahon

 45

M. Rhem Wooten Jr.

5748

Biographical information with respect to Mr. Eckel is set forth above under “Election of Directors—Information Regarding the Nominees for Election as Directors.”

Jeffrey A. Lipson, 52, joined the Company as our deputy chief financial officer in January 2019. Effective March 1, 2019, Mr. Lipson became an executive vice president and our chief financial officer. From 2013 to 2018, Mr. Lipson was President and Chief Executive Officer and Director of Congressional Bancshares and its subsidiary Congressional Bank. He continues to serve on the Board of Directors of Congressional Bank. Prior to that, Mr. Lipson was the Senior Vice President and Treasurer of CapitalSource Inc. and its subsidiary CapitalSource Bank and Senior Vice President, Corporate Treasury, at Bank of America and its predecessor FleetBoston Financial. Mr. Lipson received a Bachelor of Science degree in Economics from Pennsylvania State University in 1989 and a Masters in Business Administration in Finance from New York University’s Leonard N. Stern School of Business in 1993. Mr. Lipson serves on the Board of Directors of the Jewish Council for the Aging of Greater Washington.
J. Brendan Herron, 56,59, has served as an executive vice president since 2013 and served in a variety of roles at the Predecessorpredecessor of our company and its affiliates from 1994 to 2005, and from 2011 to 2013. Mr. Herron served as our chief financial officer from 2013 and has servedto 2019. Effective March 1, 2019, Mr. Herron took on a leadership role as an executive vice president focused on the company’s strategy and our chief financial officer since 2013.growth initiatives. Mr. Herron has over 2025 years of experience in structuring, executing and operating infrastructure and technology investments. From 2006 to 2011, Mr. Herron was the vice president of Corporate Development & Strategy for Current Group, LLC, a provider of smart grid technology to electric utilities. He formerly served on the U.S. Commerce Secretary’s Renewable Energy and Energy Efficiency Advisory Committee and is presently a member of the Board of Trustees of Calvert Hall College High School (Baltimore, MD). Mr. Herron received a Bachelor of Science degree in accounting and computer science from Loyola University Maryland in 1982 and a Master of Business Administration degree from Loyola University Maryland in 1987 and has passed the CPA and CMA examinations.

Nathaniel J. Rose, CFA, 39,42, has been an executive vice president since 2015 and our chief investment officer since 2017. He served as our chief operating officer from 2015 to 2017, our chief investment officer from 2013 to 2015 and has been with the Company and its Predecessorpredecessor since 2000, in a variety of roles, most recently as a senior vice president since 2007, and has served us as an executive vice president and chief operating officer since 2015.2000. He has been involved with a vast majority of our transactions since 2000. He earned a joint Bachelor of Science and Bachelor of Arts degree from the University of Richmond in 2000, a Master of Business Administration degree from the Darden School of Business Administration at the University of Virginia in 2009, is a CFA charter holder and has passed the CPA examination. He holds a Series 63 and 79 securities licenses.

Steven L. Chuslo, 59, has been with the Predecessor as general counsel since 2008 and62, has served as an executive vice president and our general counsel since 2013.2013 and with the predecessor of our company as general counsel since 2008. Mr. Chuslo is responsible for internal governance matters and is actively involved in structuring, developing, negotiating and closing transactions. He has more than 2530 years of experience in the fields of securities, commercial finance and energy development, U.S. federal regulation and project finance. Previously, Mr. Chuslo was the senior legal and finance advisor to the Assistant Secretary of the U.S. Department of Energy Office of Energy Efficiency and Renewable Energy. His prior experience includes being a legal consultant to the office of the general counsel for AOL, Inc. and the General Counsel to EnergyWorks, LLC. In addition, Mr. Chuslo was an associate attorney with Chadbourne & Parke, LLP practicing in the power project finance group and earlier with Davis Polk & Wardwell LLP, practicing in the corporate finance group. Mr. Chuslo received a Bachelor of Arts degree in History from the University of Massachusetts/Amherst in 1982 and a Juris Doctorate from the Georgetown University Law Center in 1990.

Daniel K. McMahon, CFA, 45, has been with the Company and its Predecessor since 2000 in a variety of roles, most recently as a senior vice president since 2007 and48, has served us as an executive vice president since 2015 and is the head of our portfolio management group. He has been with the Company and its predecessor since 2000 in a variety of roles, including as a senior vice president from 2007 to 2015. He has played a role in analyzing, negotiating, structuring, and structuringmanaging several billion dollars of transactions. Mr. McMahon previously worked with T. Rowe Price from 1997 to 2000. Mr. McMahon received his Bachelor of Arts degree from the University of California, San Diego in 1993, and is a CFA charter holder. He holds Series 24, 63 and 79 securities licenses.

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M. Rhem Wooten Jr., 57, has been with the Company and its Predecessor as a managing director since 2010 and has served us as an executive vice president since 2013. Mr. Wooten has worked in the energy industry for more than 30 years, and has extensive experience in project development, commodity trading/risk management and project finance. Mr. Wooten previously held a number of senior management positions, including serving as President of Duke Energy Corporation’s domestic and international independent power production affiliates, as Managing Director, origination and operations of Duke/Louis Dreyfus, chief executive officer of Merchant Energy Group of the Americas (MEGA), as president and chief executive officer of Pradium, Inc. and as president of Allied Syngas Corporation. Mr. Wooten received a Bachelor of Science degree in Business Administration from the University of North Carolina-Chapel Hill in 1981. He holds Series 63 and 79 securities licenses.

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EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

This Compensation Discussion and Analysis (“CD&A”) describes the executive compensation program that was in place for 20162019 for our “chief executive officer,” or “"CEO,”" our "CFO" and our next fivefour most highly compensated executive officers. We refer to these individuals as our “Named Executive Officers,” or “NEOs.”

This CD&A explains the overall objectives, elements and policies underlying our NEO compensation program for 2016.2019. In general, our 20162019 compensation consisted of a base salary, that was adjusted effective April 2016 after taking into account our budgeted operating expenses, an annual bonus paid in cash and stock based on our 20162019 performance and the 20162019 long-term equity incentive program. We also provide some forward-looking detail in regard to 2017 target compensation, which consists of aeach NEO's 2020 base salary that was adjusted to be effective April 2017, an2020 and annual bonus to be paid in cash and stock (if earned) based on our 2017 performance and the 2017 long-term equity incentive program.2020 performance. This discussion contains forward-looking statements that are based on our current plans, considerations, expectations and determinations regarding future compensation programs. Future compensation programs that we adopt may differ materially from current programs.

The CD&A also details the annual equity bonus awarded in 20162019 for 20152018 performance. We provide this detail in compliance with the SEC Summary Compensation Table reporting rules, which require that all equity award values granted in the fiscal 2016year of 2019 be disclosed, despite the fact that these particular equity awards were made in connection with 20152018 performance.

Executive Summary

We make investments in climate change solutions by providing capital to leading companies in energy efficiency, renewable energy and other sustainable infrastructure markets. We believe that we are one of the first U.S. public companies solely dedicated to climate change investments. Our goal is to generate attractive returns from a diversified portfolio of projects with long-term, predictable cash flows from proven technologies that reduce carbon emissions or increase resilience to climate change.
We are internally managed, and our management team has extensive relevant industry knowledge and experience, having completed its first renewabledating back more than 30 years. We have long-standing relationships with the leading energy financing over 25 years agoservice companies (“ESCOs”), manufacturers, project developers, utilities, owners and its first energy efficiency financing over 15 years ago. We make debtoperators. Our origination strategy is to use these relationships to generate recurring, programmatic investment and equity investments in sustainable infrastructure, including energy efficiencyfee generating opportunities. Additionally, we have relationships with leading banks, investment banks, and renewable energy. We focus on providing preferred or senior level capital to established sponsors and high credit quality obligors for assets that generate long-term, recurring and predictable cash flows. Our investment strategy and the industry ininstitutional investors from which we operate require that we maintain a highly qualified executive management team with strong operational skills.

are referred additional investment and fee generating opportunities.


Executive Compensation Program Objectives

The Compensation Committee of our board of directors is responsible for establishing and administering policy on an annual basis, with respect to the compensation of our NEOs.NEOs on an annual basis. We are committed to providing an executive compensation program that supports the following goals and philosophies:

aligning our management team’s interests with those of our stockholders;stockholders, including our continued investment in solutions that reduce carbon emissions and increase resilience to climate change;

motivating and rewarding our management team for executing our operational plans with a focus on sustainable long-term growth in a manner that is consistent with appropriate risk-taking based on sound corporate governance practices; and

attracting and retaining an experienced and effective management team while also maintaining an appropriate expense structure.

Structure of Our Executive Compensation Program

As discussed in more detail herein, our executive compensation program is comprised of the following primary compensation elements:

base salary, which is an element of compensation set at levels that are commensurate with our NEO’sNEOs positions and provide fixed pay to attract and retain our NEOs, taking into account our budgeted operating expenses;

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incentive compensation (annual bonus) that is payable in cash or equity that vests over a period of time from date of grant and is based on achievement of certain quantitative and qualitative corporate and individual performance objectives, except for our chief executive officer whose annual cash bonus is based 100% on quantitative and qualitative corporate performance objectives;

incentive compensation (annual bonus) that is payable in equity that vests after two years from date of grant and is also based on achievement of certain quantitative and qualitative corporate and individual performance objectives, except for our chief executive officer whose annual bonus is based 100% on quantitative and qualitative corporate performance objectives; and

long term equity-basedlong-term equity incentive program comprised of awards subject to both time-based andperformance-based vesting that are designed to meet both our long-term growth and retention objectives.



For 2016,2019, over 75%70% of our targeted executive compensation was variable or equity-based (as opposed to a fixed cash amount) as shown below:

  Percentage of 20162019 Targeted Compensation

Compensation Element

Type of Compensation

Mr. Eckel
Other Named
Executive Officers

Annual Base Salary

base salaryFixed13%19% to 24%30%

Annual Cash Incentive

cash or equity incentiveVariable / Equity-based24%7%8%23% to 10%37%

Annual Equity Incentive

Long-term equity incentive program		Variable / Equity-basedVariable/ Equity-Based63%13%16%33% to 18%

Long Term Equity-Based Program

Variable/ Equity-Based67%48% to 57%58%

Our Compensation Committee believes having a significant portion of variable or equity basedequity-based compensation achieves our goals of encouraging high performance, promoting accountability, retaining skilled leadership and motivating our executives to achieve our business objectives and aligning their interests with those of our stockholders.

Overview of 20162019 Performance and our Pay for Performance

Philosophy

One of the guiding principles underlying the Compensation Committee’s executive compensation philosophy is that compensation should encourage and reward strong financial and operational performance. Our executive compensation philosophy is also implicitly linked to ESG performance, as our financial performance is driven in part from investments that address climate change. In furtherance of this philosophy, the Compensation Committee established the 20162019 annual incentive plan with quantitative and qualitative performance goals based upon the Company’s strategic goals. The quantitative goals were intended to focus theour NEOs on the key financial metrics that impact the Company’s results and stockholder value, including Core Earnings(1), Originations per share and Credit Losses incurred. Depending on the employee, theCore ROE. The qualitative goals included successful completion of the Company’s first audit of internal control over financial reporting required under Section 404 of the Sarbanes-Oxley Act, the achievement of certain goals in the finance plan and, for the NEOs other than the CEO, a qualitativean evaluation of overall performance of theeach NEO. Set forth below is graphical illustration
coremetricsv2.jpg
Higher Core Net Investment Income coupled with strong gain on sale and other fee income contributed to a successful year. The increase in Core Net Investment Income was a result of strong origination volumes, a higher yielding balance sheet and a reduction in our financing costs due to lower cost and outstanding balance of debt. This resulted in Core Earnings per share meeting our predetermined target and Originations growth from 2015Core ROE exceeding our predetermined target which, when taken together, entitled the NEOs to 2016:

LOGO

(1)Core Earnings is not a financial measure calculated in accordance with GAAP. A reconciliation of Core Earnings to GAAP net income is located on pages 72-74 of our Form 10-K for the year ended December 31, 2016, filed with the SEC on February 24, 2017.

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We realized no Credit Lossesreceive 111% of their target corporate performance bonus amounts, which was 70% of NEO incentive compensation. The remaining 30% was based on an evaluation of individual performance. The calculated corporate performance combined with individual performance resulted in 2016. The Compensation Committee determined that the quantitative measures had been achieved for the successful completionNEOs receiving an average of the audit106% of internal controls over financial reporting and for the finance plan. Based on this achievement and the results achieved as compared to the predetermined targets for Core Earnings, Originations and Credit Losses, as described above, the Compensation Committee awardedtheir target incentive compensation, which was paid in 2017, equal toa decrease from approximately 93% of the incentive compensation targets. It was also determined based on Compensation Committee evaluation and discussion with the CEO that the NEOs had performed at expected levels on their individual performance measures, other than the CEO who was not subject to an individual performance measure.

135% for 2018.

Our 20162019 results would not have been achieved without the leadership and efforts of the NEOs, and the results had a direct impact on the compensation decisions. In making its compensation decisions to be paid in 2017,2020, the Compensation Committee recognized the 20162019 results and achievements noted above, the performance of the Company and the NEOs, the performance of the Company as compared to other companies in our peer group (as defined below) and the contributions and accomplishments of our NEOs to our continuing growth.

Our Executive Compensation Program Best Practices

Our executive compensation program incorporates the following best practices:

Compensation Committee comprised solely of independent directors.

Independent compensation consultantconsultants that isare engaged directly by the Compensation Committee and providesprovide no other services to management or the Company.



Compensation structure with targeted compensation that is largelypredominately variable based on performance and equity-based.

Compensation Committee reviewed and considered total compensation for each NEO against a peer group (as defined below).

Robust stock ownership guidelines.

Recoupment policy for performance or incentive-based compensation in the event of an accounting restatement due to material noncompliance by the Company with any financial reporting requirements under the securities lawslaws.

Limited executive perquisites.

Hedging, pledging and margin accounts related to our Common Stock not permitted by any of our NEOs.

Equity incentive plan that prohibits repricing of stock options without prior stockholder approval.

Equity incentive plan provides that equity awards are subject to a minimum vesting period.period of no less than one year.

Process for Setting Executive Compensation

The Compensation Committee has primary responsibility for setting and approving the compensation of our chief executive officer and reviewing, approving and recommending to our board of directors, compensation for our other NEOs in a manner that is effective and consistent with our overall executive compensation strategy. As part of that responsibility, the Compensation Committee reviews on an individual basis the performance of our NEOs. As part of its process for reviewing the performance of our NEOs for 2016,2019, the Compensation Committee considered the recommendations of our chief executive officer, with respect to the compensation of our NEOs.

Historically, the

The Compensation Committee has reviewedtypically reviews compensation levels for our NEOs near the beginning of each calendar year in determining base salaries and budgeted amounts for total compensation for the new fiscal year, and then meets again following the end of such fiscal year to review the Company’s and the NEOs’ actual performance, at which time it typically makes determinations with respect to adjustments to base

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salary, annual cash and equity bonuses and our long-term equity incentive program. As part of its annual review of the compensation paid to our NEOs, the Compensation Committee typically considers a number of factors in determining or structuring compensation, including the nature of the executive’s job and the responsibilities related thereto, the executive’s job performance compared to goals and objectives established for the Company and the executive at the beginning of the year, the experience level of the executive in his or her current position, the compensation levels of competitive jobs within our peer group (as defined below), our financial performance and financial condition, the execution of our investment and financing strategy, the impact of compensation determinations on our budgeted operating expense ratios and certain other quantitative and qualitative factors. These factors described above may vary from year to year in importance to, and usage by, the Compensation Committee, depending upon market conditions, corporate priorities and individual circumstances.

The Compensation Committee reviews all elements of compensation payable

From 2016 to each of our NEOs. As part of this review, the Compensation Committee typically considers the compensation practices and levels at other companies that it deems generally comparable in structure and strategy, which includes other internally managed mortgage REITs or specialty-finance companies with market capitalizations in January 2017 ranging from approximately $0.4 billion to $1.9 billion as compared to our market capitalization at the same time of approximately $1.0 billion. We sometimes refer to this group as our “peer group” for purposes of determining compensation.

Arbor Realty Trust Inc.New York Mortgage Trust Inc.
Capstead Mortgage Corporation*NewStar Financial, Inc.
CYS Investments, Inc.*Pattern Energy Group Inc.
Hercules Technology Growth Capital, Inc.PHH Corporation*
HFF, Inc.Redwood Trust, Inc.
iStar Inc.Triangle Capital Corporation
Ladder Capital Corp.Walker & Dunlop, Inc.
Main Street Capital Corporation

*Added to the peer group in 2016. The following companies were removed from the peer group in 2016 due to changes in their business, size or their business model not being comparable to ours: American Capital, Ltd., Dynex Capital Inc., Marlin Business Services Corp., RAIT Financial Trust, Resource America, Inc., and SunEdison, Inc.

In 2015 and for a portion of 2016,July 2019, the Compensation Committee engaged Cook & Co., a compensation consulting firm,FTI to provide advice regarding the executive compensation program for our senior management team. In September 2016, the Compensation Committee replaced Cook & Co. with FTI, as a resultteam and board of a senior compensation consultant who had worked with the Compensation Committee leaving Cook & Co. and joining FTI. Both compensation consultants have reported, and FTI presently reports, directly to the Compensation Committee and they have not performed, and do not currently provide, any other services to management or the Company. The Compensation Committee has requested that the compensation consultants providedirectors, including analysis and recommendations regarding (1) base salaries, annual bonuses, including the mix of cash and equity, and long-term incentive compensation for our executive management team, (2) the director compensation program for independent members of our board of directors, and (3) other matters as requested by the Compensation Committee.

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From 2018, the Compensation Committee also engaged Pay Governance, a compensation consulting firm, to report to the Compensation Committee on the setting of certain annual bonus targets for our NEOs. In July 2019, the Compensation Committee replaced FTI with Pay Governance as its primary compensation consultant. Pay Governance reports directly to the Compensation Committee and they have not performed, and do not currently provide, any other services to management or the Company.

As part of the annual review of compensation payable to each of our NEOs, the Compensation Committee typically considers the compensation practices and levels at other companies that it deems generally comparable in structure and strategy. For 2019, this consideration was based on an July 2018 FTI peer group development report that includes other internally managed mortgage REITs or specialty-finance or renewable energy companies with market capitalizations ranging from approximately $0.6 billion to $2.3 billion as compared to our market capitalization at the same time of approximately $1.1 billion. We sometimes refer to this group as our “peer group” for purposes of determining compensation. Based on an October 2019 Pay Governance report, no changes were made to the peer group for 2020.



Arbor Realty Trust, Inc.Pattern Energy Group Inc.
Capstead Mortgage CorporationRedwood Trust, Inc.
Hercules Capital, Inc.SunPower Corporation
HFF, Inc.Sunrun Inc.
iStar Inc.TPI Composites, Inc.
Ladder Capital Corp.Vivint Solar, Inc.
Main Street Capital CorporationWalker & Dunlop, Inc.
New York Mortgage Trust, Inc.
The Compensation Committee works jointly with management and the compensation consultant to design and implement our performance-based, incentive compensation plan that combines the elements of current cash compensation in the form of a base salary, and an annual bonus (payable in cash incentive and equity) and long-term equity incentive compensation in one plan, which we refer to as the executive compensation program, the components of which are described below. The Compensation Committee and our board of directors approved the program on an annual basis for the purpose of (i) attracting and retaining top performing employees, (ii) motivating employees by tying compensation directly to our financial performance, and (iii) rewarding exceptional individual performance that supports our overall objectives. The Compensation Committee believes that by issuing both cash and equity incentive awards based on an individual’s achievement of the performance criteria, the executive compensation program allows us to more closely match the incentives of our NEOs with both the long and short-term goals of the business while also improving our ability to monitor the results of our compensation program.

The Compensation Committee also reviews and makes recommendations to our board of directors annually with respect to the compensation of our independent directors. In setting director compensation, our board of directors generally considers the compensation practices and levels for directors paid by our peer group, as well as the expected time commitment from the independent directors in such year.

Scope of Authority of Compensation Committee

The Compensation Committee has overall responsibility for approving, evaluating and, in some cases, recommending to theour board of directors, on an annual basis, director and officer compensation plans, policies and programs of the Company, including determining salaries, annual cash bonuses, equity awards, change in control and termination arrangements and director fees. Pursuant to its charter, the Compensation Committee has the sole authority to retain, terminate and pay any compensation consultant to be used to assist in the evaluation of director and senior executive compensation, as well as the authority to retain special legal, accounting or other consultants to advise the committee and may form subcommittees and delegate its authority to such subcommittees. No subcommittees were formed by the Compensation Committee in 2016.

2019.

Executive Compensation Program Components

The following provides an overview of our approach to each primary element of our NEO compensation program and an analysis of the compensation paid under each of these elements.

Equity incentives are granted under the 2013 Hannon Armstrong Sustainable Infrastructure Capital, Inc. Equity Incentive Plan, as amended (the “Equity Incentive Plan”).


Compensation ElementObjectiveKey Features
Base Salary 

Compensation ElementObjectiveKey Features
Base Salary (Cash)• Provides a fixed element of compensation commensurate with each NEO’sNEOs position and responsibility.

• Adjustments are generally considered annually based on individual performance, level of pay relative to the market and our peer group, internal pay equity, and retention issues.

Annual Cash Incentive/Bonus 

Annual Incentive Compensation (Cash and Equity)• Provides an annual cash incentive or bonus based upon our overall corporate and individual performance as well as objective and subjective performance criteria that are aligned with the strategic direction of the Company.

• Compensation Committee approves the overall corporate and individual performance measures as well as objective and subjective performance criteria on an annual basis.

• Compensation Committee determines allocation between cash and stock on an annual basis.

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Compensation ElementObjectiveKey Features
Annual Stock Incentive/Bonus

•    Provides an annual equity incentive based upon our overall corporate and individual performance as well as objective and subjective performance criteria that are aligned with the strategic direction of the Company.

•    The Compensation Committee approves the overall corporate performance measures as well as objective and subjective performance criteria on an annual basis.

•    Compensation Committee determines allocation between cash and stock on an annual basis, as well as the vesting criteria of the annual equity component.

awards.
Long-term incentive program 

Long-term incentive program (Equity)• Provides equity-based incentives in the form of restricted stock or RSUs or other equity awards that contain multi- year vesting and/or performance criteria in order to further our retention objectives and align the interests of our NEOs with those of our stockholders over a longer time period.

• Compensation Committee determines allocation between time-vestedtime-based and performance-vestedperformance-based awards.

• Compensation Committee determines the performance targets and vesting criteria.

Health and Welfare Benefits 

Health Welfare, and Other Benefits• Offers all eligible employees a competitive benefits package, which includes health and welfare benefits, such as 401(k), medical, dental, disability insurance, and life insurance benefits

benefits.

• The plans under which these benefits are offered do not discriminate in scope, terms or operation in favor of officers and are available to all eligible employees.

Perquisites and Other Benefits

• CurrentlyOther than key man life insurance and disability benefits provided to Mr. Eckel as described below, we do not provide any perquisites and do not intend to provide perquisites exceeding $15,000 in the aggregate to our NEOs because we believe that we can provide better incentives for desired performance with compensation in the forms described above.

• N/A

In terms of compensation paid to our NEOs, we have generally provided lower annual base salaries and annual bonuses thanwithin a competitive range of the median of the peer group with a higher level of long-term incentive equity compensation. For example, the 2016 annual base salary and bonus of our chief executive officer that was earned in 2016 was approximately $1.5 million as compared to a median chief executive officer annual base salary and bonus of the peer group of approximately $2.0 million. The total compensation of our chief executive officer including the 2016 long-term incentive grant was approximately $4.6 million, which was approximately 75% of the total 2016 target compensation of the chief executive officers of our peer group which ranged from approximately $2.1 million to approximately $13 million. We do not, however, have a policy of targeting compensation for our NEOs to any specific level within the range of total compensation paid by our peer group (i.e., median, upper or lower); rather, we have attempted to structure our executive compensation program and to compensate our NEOs in a manner that is both competitive enough to retain their services and rewards their performance, hard work and dedication, but is also consistent with our needs to maintain an appropriate expense structure.

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Base Salary

Base salary, which represents the fixed element of our executive compensation program, provides for basic economic security at a level that allows us to retain the executive’s services. The Compensation Committee generally establishes annual base salaries for our NEOs commensurate with the level of experience that the executive brings to the position, the nature of the responsibilities required of the executive, such as whether the executive is performing in multiple roles, how successful the executive is in achieving goals established by the Compensation Committee and the executive’s contributions to the Company, but does not assign any specific weights to these factors. As discussed in other parts of this CD&A, the Compensation Committee also gives significant consideration toconsiders the size of the Company and our budgeted operating expenses in setting annual base salaries and has not historically targeted base salaries for our NEOs to any specific level within the range of base salaries paid by our peer group.salaries. Base salaries are reviewed annually and may be adjusted to better match competitive market levels or to recognize an executive’s professional growth and development, increased responsibility or other discretionary factors. The table below reflects the annual salary of our NEOs with increases effective in April of each of the years:

Name

  2017 Annual
Salary		   2016 Annual
Salary		   2015 Annual
Salary		 

Jeffrey W. Eckel

  $619,500   $619,500   $544,500 

J. Brendan Herron

  $360,000   $360,000   $330,000 

Nathaniel J. Rose

  $343,875   $327,500   $302,500 

Steven L. Chuslo

  $355,000   $355,000   $330,000 

Daniel K. McMahon

  $322,000   $322,000   $297,000 

M. Rhem Wooten Jr.

  $343,500   $343,500   $313,500 

Name 2018 Annual Salary ($) 2019 Annual Salary ($) 2020 Annual Salary ($)
Jeffrey W. Eckel 639,500 639,500 639,500
Jeffrey A. Lipson (1)
 - 350,000 400,000
J. Brendan Herron 380,000 400,000 400,000
Nathaniel J. Rose 363,875 380,000 390,000
Steven L. Chuslo 360,000 360,000 370,000
Daniel K. McMahon 342,000 355,000 365,000
(1) Mr. Lipson joined the Company in 2019 and was appointed chief financial officer and became an NEO on March 1, 2019.     
The determination to increase base salaries in 20162020 for certain of our NEOs was driven in part by the size of the Company, the performance of our NEOs and our desire to establish a base salary that is more competitive with thecomparable base salaries paid byof our peer group. The annual base salaries will remain the same for 2017 with a small adjustment for Mr. Rose due to his additional responsibilities.

peers.

Annual Incentive Compensation

Incentive or Bonuses

Annual incentive compensation, in the form of annual cash incentive compensation and equity incentive awards subject to time-based vesting conditions, (payable in the form of restricted stock), is available to each of the NEOs under our executive compensation program.program, with the Compensation Committee determining the allocation between cash and equity. Incentive compensation serves as a means of linking annual compensation both to our overall performance and to objective and subjective performance criteria that are aligned with the Company’s strategic direction.

We provided our NEOs with the opportunity to earn annual incentive compensation for achieving corporate financial and non-financial goals for performance in 20152018 and 2016.2019. These bonus awards, which provide for no minimum award or guaranteed payment, are comprised of two parts: a quantitative component and a qualitative component. Our NEO’s incentive compensation (other than our chief executive officer) was weighted such that 80% was based on overall corporate performance and 20% was based on an evaluation of individual performance. The 80% corporate performance was evaluated based under the quantitative component as shown in the chart below. The incentive compensation of our chief executive officer is based 100% on the corporate performance. Because Mr. Eckel is our chief executive officer and has ultimate responsibility over our investment portfolio and other business decisions, our success or failure is highly dependent on his ability to manage our portfolio and operate our business. As a result, the Compensation Committee concluded that Mr. Eckel’s incentive compensation should be weighted more heavily on our achievement of the corporate performance criteria.

In part, to better align our NEOs interests with those of our stockholders and to enable them to increase their ownership of our Common Stock, the Compensation Committee has structured the executive compensation program to require the NEOs to receive, subject to the amount of incentive compensation earned, a portion of

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their annual incentive compensation as equity incentive awards subject to time-based vesting conditions. The Compensation Committee believes that these equity incentive awards subject to time-based vesting conditions are important to motivate and reward the NEOs for maximizing stockholder value, and also help create an incentive for talented employees to remain with the Company, while the 2016 cash incentive compensation payable under our executive compensation program provides NEOs with current income for achieving performance criteria.

The following chart summarizes the target bonus %percentage and actual awarded bonus %percentages for 20152018 and 20162019 calculated as a percentage of the base salary at the end of the respective year

Name

  2015 and 2016
Target Bonus		  2015 Actual
Bonus		  2016 Actual
Bonus		 

Jeffrey W. Eckel

   150%   115%   140% 

J. Brendan Herron

   125%   107%   118% 

Nathaniel J. Rose

   125%   107%   118% 

Steven L. Chuslo

   125%   105%   118% 

Daniel K. McMahon

   125%   106%   118% 

M. Rhem Wooten Jr.

   125%   111%   118% 

year.

Name 2018 Target Bonus (%) 2019 Target Bonus (%) 2018 Actual Bonus (%) 2019 Actual Bonus (%)
Jeffrey W. Eckel 175 175 222 186
Jeffrey A. Lipson (1)
 - 125 - 135
J. Brendan Herron 125 125 219 133
Nathaniel J. Rose 150 150 184 158
Steven L. Chuslo 125 125 164 133
Daniel K. McMahon 125 125 164 130
(1) Mr. Lipson joined the Company in 2019 and was appointed chief financial officer and became an NEO on March 1, 2019.     
The target bonus percentagepercentages for 2017 is2020 are unchanged from the prior years.

20152019.



2018 Bonus Awards awarded in 2016

2019

For 2018, our NEOs incentive compensation was weighted such that 70% was based on quantitative corporate performance measures and 30% was based on an evaluation of individual performance. The following table sets forth the 2015 Quantitative Company Performance Measures:

Corporate Performance Objectives

 Weighting  Quantitative
Company
Performance Hurdle		  Payout as a % of
Target Upon
Achievement of
Hurdle(1)		  Actual Performance 

2015 Annual Core Earnings / Share(2)

  70%  $1.06-1.08   50%  
  $1.08   100%   $1.04 
  $1.08-1.12   150%  

Origination Volume(3)

  15%  $0.8 billion   50%  
  $0.9 billion   100%   $0.9 billion 
  $1.0 billion   150%  

Net Credit Losses, as % of Total Assets(4)

  15%   <0.11%   100%   0.0% 

quantitative corporate performance measure hurdles and corresponding incentive compensation payouts for each of the NEOs under the quantitative component of the incentive plan:
Corporate Performance Objectives 
Weighting 
 
Quantitative Company
Performance Hurdle (1)
 
Payout as a % of Target Upon Achievement of Hurdle (1)
 
Actual
Performance 
2018 Core Earnings / share 75% $1.22 - $1.32 50%  
    $1.32 100% $1.38
    $1.32 – $1.39 150%  
         
2018 Core ROE 25% 9.0% - 10.0% 50%  
    10.0% 100% 11.1%
    10.0% - 10.5% 150%  

(1)Actual results were pro-ratedinterpolated between the values below, with exception of the net credit losses.these values.
(2)Core Earnings is not a financial measure calculated in accordance with GAAP. A reconciliation

The calculated achievement of Core Earnings to GAAP net income is located on pages 72-74 of our Form 10-K for the year ended December 31, 2016, filed with the SEC on February 24, 2017.
(3)Origination Volume is the dollar volume of transactions completed in a year as disclosed on page 6 of our Form 10-K for the year ended December 31, 2015, filed with the SEC on March 1, 2016.
(4)Net Credit losses is the dollar amount of any provision for credit losses as disclosed on page 55 of our Form 10-K for the year ended December 31, 2015, filed with the SEC on March 1, 2016.

While the company achieved only 96% of its core earnings target for 2015, the company did achieve a total stockholder return (assuming dividends are reinvested without the payment of commissions) of approximately 41% for the year as well as achieving a number of other corporate goals including fixed rate debt and leverage targets. As a resultwas approximately 145% which, when combined with qualitative measures, resulted in our NEOs receiving an average of the strong stock performance and the other achievements, the Compensation Committee increased the qualitative awards with the entire payout being in the form135% of stock which vests in March 2018.

- 36 -

their targeted bonus. In accordance with the 20152018 Bonus Awards, our NEOs received the following amounts of total incentive compensation for 20152018 that was paid or granted in 2016:

Name

 Incentive
Compensation Paid
Under Quantitative
Component		  Incentive
Compensation Paid
Under Qualitative
Component		  Total 2015
Incentive
Compensation Paid
in 2016		  % of Incentive
Compensation Paid
in Cash		  % of Incentive
Compensation
Paid  in
Restricted
Stock(1)		 

Jeffrey W. Eckel

 $263,402  $362,594  $625,996   0%   100% 

J. Brendan Herron

 $106,425  $246,210  $352,635   0%   100% 

Nathaniel J. Rose

 $97,556  $225,693  $323,249   0%   100% 

Steven L. Chuslo

 $106,425  $240,502  $346,927   0%   100% 

Daniel K. McMahon

 $95,783  $218,164  $313,947   0%   100% 

M. Rhem Wooten Jr.

 $101,104  $246,456  $347,560   0%   100% 

2019:
Name 
 Total Incentive Compensation Earned in 2018 ($) 
% of
Incentive
Compensation
Paid in Cash 
 
% of Incentive
Compensation
Paid in Restricted 
Stock (1)
Jeffrey W. Eckel 1,421,289 100 —
Jeffrey A. Lipson (2)
 — — —
J. Brendan Herron 830,440 75 25
Nathaniel J. Rose 669,985 100 —
Steven L. Chuslo 589,500 100 —
Daniel K. McMahon 561,094 100 —

(1)SharesEach NEO was awarded a dollar value bonus based on the achievement of corporate goals and qualitative measures as described above, which was then allocated between cash and equity using the percentages in this chart. The number of shares of restricted common stock issued as partCommon Stock awarded to each NEO was determined by dividing the equity portion of the annual incentive compensationawarded bonus by $24.01, the closing price of our Common Stock on the NYSE on January 2, 2018. The shares of restricted Common Stock are issued from our Equity Incentive Plan and are valued $18.78at $24.94 per share, the closing price of our Common Stock on the NYSE on the date of grant, and vest in March 2018.May 2020.

2016


(2)Mr. Lipson joined the Company in 2019 and was appointed chief financial officer and became an NEO on March 1, 2019.     













2019 Bonus Awards awarded in 2017

2020

For 2019, our NEO incentive compensation was weighted such that 70% was based on quantitative corporate performance measures and 30% was based on an evaluation of individual performance. The following table sets forth the Quantitative Company Performance Measurequantitative corporate performance measure hurdles and corresponding incentive compensation payouts for each of the NEOs under the quantitative component of the Incentive Plan:

Corporate Performance Objectives

  Weighting  Quantitative
Company
Performance Hurdle		 Payout as a
% of Target
Upon
Achievement
of Hurdle(1)		  Actual
Performance

2016 Annual Core Earnings / Share(2)

   50%  $1.15 – $1.21  50%  
   $1.21  100%  $1.20
   $1.21 – $1.27  150%  

Origination Volume(3)

   15%  $1.0 billion  50%  
   $1.1 billion  100%  $1.1 billion
   $1.2 billion  150%  

Net Credit Losses, as % of Total Assets(4)

   15%  <0.11%  100%  0.0%

Execution of the Finance Plan

   10%  Target  100%  100%

Sarbanes-Oxley Readiness

   10%  Target  100%  100%

incentive plan:
Corporate Performance Objectives 
Weighting 
 
Quantitative Company
Performance Hurdle (1)
 
Payout as a % of Target Upon Achievement of Hurdle (1)
 
Actual
Performance 
2019 Core Earnings / share 75% $1.30 - $1.40 50%  
    $1.40 100% $1.40
    $1.40 - $1.47 150%  
         
2019 Core ROE 
 25% 9.0% - 10.0% 50%  
    10.0% 100% 10.5%
    10.0%-10.5% 150%  
         

(1)Actual results were pro-ratedinterpolated between the values below, with exception of the net credit losses.these values.
(2)Core Earnings is not a financial measure calculated in accordance with GAAP. A reconciliation of Core Earnings to GAAP net income is located on pages pages 72-74 of our Form 10-K for the year ended December 31, 2016, filed with the SEC on February 24, 2017.
(3)Origination Volume is the dollar volume of transactions completed in a year as disclosed on page 6 of our Form 10-K for the year ended December 31, 2016, filed with the SEC on February 24, 2017.
(4)Net Credit losses is the dollar amount of any provision for credit losses as disclosed on page 74 of our Form 10-K for the year ended December 31, 2016, filed with the SEC on February 24, 2017.

- 37 -


The calculated achievement of corporate goals was approximately 93% and there was a 100% payout on111%, which, when combined with qualitative measures.measures, resulted in our NEOs receiving an average of 106% of their targeted bonus. In accordance with the 20162019 Bonus Awards, our NEOs received the following amounts of total incentive compensation for 20162019 that was paid or granted in 2017:

Name

  Incentive
Compensation
Earned Under
Quantitative
Component		   Incentive
Compensation
Earned Under
Qualitative
Component		   Total Incentive
Compensation
Earned in 2016		   % of
Incentive
Compensation
Paid in Cash		  % of Incentive
Compensation
Paid in Restricted
Stock(1)		 

Jeffrey W. Eckel

  $692,353   $172,538   $864,891    35%   65% 

J. Brendan Herron

  $268,224   $156,884   $425,108    35%   65% 

Nathaniel J. Rose

  $244,009   $142,192   $386,201    35%   65% 

Steven L. Chuslo

  $264,499   $154,777   $419,276    35%   65% 

Daniel K. McMahon

  $239,911   $140,078   $379,989    35%   65% 

M. Rhem Wooten Jr.

  $255,930   $149,544   $405,474    35%   65% 

2020:
Name 
 Total Incentive Compensation Earned in 2019 ($) 
% of
Incentive
Compensation
Paid in Cash 
 
% of Incentive
Compensation
Paid in Restricted 
Stock (1)
Jeffrey W. Eckel 1,528,281 50 50
Jeffrey A. Lipson 604,835 50 50
J. Brendan Herron 681,613 50 50
Nathaniel J. Rose 771,913 50 50
Steven L. Chuslo 614,892 50 50
Daniel K. McMahon 594,233 50 50
(1)SharesEach NEO was awarded a dollar value bonus based on the achievement of corporate goals and qualitative measures as described above, which was then allocated between cash and equity using the percentages in this chart. The number of shares of restricted common stock issued as partCommon Stock awarded to each NEO was determined by dividing the equity portion of the annual incentive compensationawarded bonus by $19.78, the closing price of our Common Stock on the NYSE on January 2, 2019. The shares of restricted Common Stock are issued from our Equity Incentive Plan and are valued $18.97at $31.00 per share, the closing price of our Common Stock on the NYSE on the date of grant, and vest in March 2019.May 2021.

Long Term


Long-Term Incentive Program Granted in 2016 and 2017

As noted above, 2019

NEOs wereare eligible to participate in a long-term equity-basedequity incentive program that was based upon(i) our desire to increase the executive’s ownership stake in the Company and better align the executive’s long-term interests with those of our stockholders, (ii) our desire to tie total incentive compensation (including equity incentive awards) to specified quantitative performance measures, (iii) our desire to increase the amount of non-cash, equity incentive compensation earned by our NEOs as a percentage of their total compensation, and (iv) our desire to provide our NEOs with a competitive balance of current cash compensation and equity compensation subject to time-based and performance- based vesting conditions that rewards performance and increases the executive’s incentive to remain with the Company over the longer-term.

To address the goal of aligning the interests of our NEOs with those of our stockholders, the Compensation Committee allocated a portion50% of the award (67% for 2016, 60% for the CEO and 50% for other NEOs for 2017) of the equity awarded to each of our Named Executive Officers in the form of either restricted stock units ("RSUs") or, RSUsat the election of our NEOs, LTIP units which, upon conversion, may becomeRestricted Limited Partnership Units (“OP Units”) that vest only upon achievement of specified performance metrics. These performance awards subject our Named Executive Officers to the downside risk of a decrease in the value of their compensation if:

For 2016, the Company does not achieve specified dividend and, or, core earnings per share targets (neither are publicly disclosed) by the quarter ending December 31, 2019.

For 2017,if the returns to our stockholders do not match the returns of the indicesindex against which our returns are being measured ("Relative TSR") or we do not achieve a specified total stockholder return both("Absolute TSR"). Both Absolute and Relative TSR goals are measured on aan approximate three-year basis.basis or such shorter period upon the occurrence of a

- 38 -



change of control. The number of performance awards that may be earned range from 50% of target for threshold performance achievement, and 200% of target for outperformance achievement. Under the Relative TSR component, target units are earned only if our total stockholder return is equal to or above the 55th percentile of the index. Further, the total units earned will not exceed 100% of the target if the Absolute TSR is below zero.
We believe that growth in core earnings and dividends and shareholderstockholder return areis important to investors and areis an appropriate measuresmeasure of our long-term success. The use of shareholderstockholder return for 2017 was based upon an analysis of the measures used by the other companies in our peer group. The Compensation Committee allocated the remaining portion of the annual award in the form of time-vested restricted common stock.Common Stock or, at the election of the officer, time-restricted LTIP units. This allocation addressedsatisfies the need for a useful retention of our NEOstool, given that in our markets wheremarket there is a demand for experienced executive talent and alsotalent. The service-based award furthers our goal of aligning the long-term interests of theseour NEOs with those of our stockholders as it subjects our NEOs to the downside risk of a decrease in compensation if the price of our Common Stock declines.

Name

  2016
Performance
Based Award
Shares(1)		   2016 Time
Based Award
Shares(2)		   Total Value of
2016 Award(3)		   2017
Performance
Based Award
Units(4)		   2017 Time
Based Award
Shares(5)		   Total Value of
2017 Award(6)		 

Jeffrey W. Eckel

   112,650    55,484   $3,157,557    94,740    63,160   $2,997,258 

J. Brendan Herron

   37,549    18,495   $1,052,506    31,620    31,620   $1,200,295 

Nathaniel J. Rose

   25,033    12,330   $701,677    22,750    22,750   $863,590 

Steven L. Chuslo

   25,033    12,330   $701,677    20,500    20,500   $778,180 

Daniel K. McMahon

   25,033    12,330   $701,677    19,500    19,500   $740,220 

M. Rhem Wooten Jr.

   25,033    12,330   $701,677    19,500    19,500   $740,220 

Name 
 
2019 Performance
Based Award LTIP Units (1)
 
2019 Time Based Award LTIP Units (2)
 
Total Value of 2019 Award ($) (3)
Jeffrey W. Eckel 152,000 76,000 3,991,140
Jeffrey A. Lipson 20,000 10,000 525,150
J. Brendan Herron 63,000 31,500 1,654,223
Nathaniel J. Rose 46,000 23,000 1,207,845
Steven L. Chuslo 40,000 20,000 1,050,300
Daniel K. McMahon 40,000 20,000 1,050,300
(1)Represents performance-based restricted stock awards that vest upon the later of March 5, 2019 and the achievement of specified dividend and, or, core earnings targets over a multi-year period and that are subject to forfeiture if the targets are not achieved by the quarter ending December 31, 2019. In March 2017, the Compensation Committee modified the dividend target applicable to the vesting of restricted stock to allow achievement of the core earnings target for two quarters to meet the vesting requirement as the declaration of dividends is made by the board of directors and not management. The specific targets have not been publicly disclosed for competitive reasons but require continued growth in core earnings.
(2)Represents time-based restricted stock shares that vest on March 5, 2019.
(3)Amounts in this column represent the aggregate grant date fair value of awards of both the time vested and performance vested restricted shares of Common Stock computed in accordance with FASB ASC Topic 718. The grant date fair values of awards have been determined based on the assumptions and methodologies set forth in our Form 10-K for the year ended December 31, 2016 (Note 11, Equity). The March 2016 grants were valued at $18.78 per share, the closing price of our Common Stock on the NYSE on the date of grant.
(4)
Represents the total amount of RSUsLTIP units that have been granted, withwhich reflect maximum performance. 50% of the units are to be earned based on the Total Stockholder Return (“Absolute TSR”) of Hannon Armstrong’s Common Stock over a three yearthree-year time period (“Absolute TSR”), and 50% of the RSUsunits are to be earned based on the relative stockholder return relative to the TSR (“Relative TSR”) of the constituents of the SNL Financial REIT Index over the same time period. The actual shares of Common StockOP units to be earned under such grants of LTIP units, which vest based on the achievement of certain targets, are calculated according to the chart below. The total units earned will not exceed 100% of the target if the Absolute TSR is below zero.

Total Stockholder Return Metrics

  Threshold
50%		  Target
100%		  Outperform
200%		 

Absolute TSR (3 Years)

   25.5%   31.5%   39.0% 

Relative TSR (Percentile)

   30.0%   55.0%   80.0% 

Total Stockholder Return Metrics  Threshold
50%		 Target
100%		 Outperform
200% 
Absolute TSR 18.0% 24.0% 30.0%
Relative TSR 30.0% 55.0% 80.0%
(5)
(2)Represents time-based restricted stock sharesLTIP units that vest in three equal annual amounts on MarchMay 15, 20182020, and March 5, 20192021 and 2020.2022.
(6)
(3)Amounts in this column represent the aggregate grant date fair value of awards of both the time-vested and performance-vested restricted shares of Common StockLTIP units computed in accordance with FASB ASC Topic 718 and the assumptions and methodologies set forth in our Annual Report on Form 10-K for the year ended December 31, 20162019 (Note 2 and Note 11, Equity). The time vested grants were valued at $18.97$25.82 per share,unit, the closing price of our Common Stock on the NYSE on April 1, 2019, the date of grant. The Absolute TSR RSUsunits were valued at $15.22$11.39 per unit and the Relative TSR RSUsunits were valued at $22.76,$15.31, in each case by an independent appraisal.

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Benefits

Benefits are also established based upon a determination of what is needed to aid in attracting and retaining executive talent, as well as providing long-term financial security to our employees and their families. The NEOs are eligible to participate in our health, dental and vision plans, and various insurance plans, including disability and life insurance, and in our 401(k) plan.

Severance Benefits Payable Upon Termination of Employment or a Change in Control

In order to achieve our compensation objective of attracting, retaining and motivating qualified senior executives, we believe that we need to provide our NEOs with severance protections that are consistent with the severance protections offered by companies similar to us. Consistent with this philosophy, we believe that severance should be payable to our NEOs in the event their employments are terminated under certain circumstances. For more information regarding the terms of the employment agreements, see “—Narrative to Summary Compensation Table.” The NEO’s employment agreements are reviewed annually by the Compensation Committee.



Tax Deductibility of Executive Compensation

Section 162(m) of the Internal Revenue Code places a $1,000,000 limit on the amount of compensation that may be deducted annually by the Company on our tax return with respect to each of our NEOs. In general,Historically, compensation paid for achieving pre-established and objective performance goals pursuant to a plan that has been approved by our stockholders ishas not been subject to this limit. Although the performance-based exemption under Section 162(m) was repealed for taxable years beginning after December 31, 2017, performance-based awards that were granted on or before November 2, 2017 or compensation to be paid pursuant to binding written contracts that were in effect on November 2, 2017 will, in many circumstances, remain eligible for the performance-based exemption. Our Equity Incentive Plan is designed so that performance-based restricted stock awards granted to our NEOs under the plan on or before November 2, 2017 can be exempt from the compensation deduction limitation described above. Going forward, when the Company determines whether to use performance-based awards in its grants to NEOs, it will no longer be taking into account the potential tax deduction with respect to compensation for an NEO in excess of $1,000,000 a year, which will no longer be available, and the Company's performance-based pay practices may change accordingly in the future. Time-based awards are subject to the compensation deduction limitation. Although the Compensation Committee generally seeks to preserve the federal income tax deductibility of compensation paid, in order to maintain flexibility in compensating executives, including our NEOs, in a manner designed to promote our corporate goals, including retaining and incentivizing the NEOs, the Compensation Committee has not adopted a policy that all compensation must be deductible.

Adjustment or Recovery of Awards

The Company believes that it is in the best interests of the Company and its stockholders to create and maintain a culture that emphasizes integrity and accountability and that reinforces the Company’s overall compensation philosophy. In furtherance of this goal our board of directors has adopted a policy which applies to performance-performance or incentive-based compensation approved, awarded or granted to a Covered Executive (as defined below) beginning on, or after, January 1, 2017 and which provides for the possible recoupment of performance or incentive-based compensation in the event of an accounting restatement due to material noncompliance by the Company with any financial reporting requirements under the securities laws (other than due to a change in applicable accounting methods, rules or interpretations), the result of which is that any performance orincentive-based compensation paid to such Covered Executive during the three-year period preceding the publication of the restated financial statements would have been lower had it been calculated based on such restated financial statements. For the purposes of this policy, the term “Covered Executive” shall mean any Named Executive Officer as determined by the Committee pursuant to Item 402 of Regulation S-K and other key employees identified by the Committee and includes our NEOs.

Relationship of Compensation Practices to Risk Management

When structuring our overall compensation practices for our employees generally, consideration is given as to whether the structure creates incentives for risk-taking behavior and therefore impacts our risk management practices. Attention is given to the elements and the mix of pay as well as ensuring that employees’ awards align with stockholders’ value.

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The Compensation Committee has assessed the compensation policies and practices for our employees, including our NEOs, and concluded that they do not create risks that are reasonably likely to have a material adverse effect on the Company. The Compensation Committee generally considers whether our compensation programs encourage excessive risk taking during its annual review of such programs, which typically occurs during the first quarter of each year.

Compensation Committee Report

The Compensation Committee has reviewed and discussed the CD&A section of this proxy statement with management and, based on such review and discussion, the Committee recommends that it be included in this proxy statement.

Compensation Committee

Mark Cirilli

Richard Osborne (Chair)

Charles O’Neil

Teresa Brenner
Steven Osgood
April 10, 2017

14, 2020

The foregoing report shall not be deemed incorporated by reference by any general statement incorporating by reference this proxy statement into any filing under the Securities Act of 1933, as amended, or under the Securities Exchange Act of 1934, as amended, except to the extent we specifically incorporate this information by reference, and shall not otherwise be deemed filed under such acts.

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2019 Summary Compensation Table

Name and Principal Position

 Year  Salary
($)(1)		  Stock
Awards
($)(2)		  Non-equity
incentive plan
compensation
($)(3)		  All other
compensation
($)(4)		  Total
($)		 

Jeffrey W. Eckel, Director, President and Chief Executive Officer

  2016  $594,500  $3,783,550  $303,000  $21,331  $4,702,381 
  2015  $528,000  $4,084,968   —    $21,381  $4,634,349 
  2014  $495,000  $2,531,838   —    $18,581  $3,045,419 

J. Brendan Herron, Executive Vice President and Chief Financial Officer

  2016  $350,000  $1,405,138  $149,000  $13,250  $1,917,388 
  2015  $318,333  $1,123,741   —    $13,250  $1,455,324 
  2014  $295,000  $835,900   —    $10,400  $1,141,300 

Nathaniel J. Rose, Executive Vice President and Chief Operating Officer

  2016  $319,167  $1,024,919  $135,000  $13,250  $1,492,336 
  2015  $293,333  $841,109   —    $13,250  $1,147,692 
  2014  $275,000  $634,957   —    $10,400  $920,357 

Steven L. Chuslo, Executive Vice President and General Counsel

  2016  $346,667  $1,048,600  $147,000  $13,250  $1,555,517 
  2015  $320,000  $941,389   —    $13,250  $1,274,639 
  2014  $300,000  $701,698   —    $10,400  $1,012,098 

Daniel K. McMahon, Executive Vice President

  2016  $313,667  $1,015,622  $133,000  $13,250  $1,475,539 
  2015  $288,000  $835,667   —    $13,250  $1,136,917 
  2014  $270,000  $630,983   —    $10,400  $911,383 

M. Rhem Wooten Jr., Executive Vice President

  2016  $333,500  $1,049,239  $142,000  $13,250  $1,537,989 
  2015  $304,000  $929,321   —    $13,250  $1,246,571 
  2014  $285,000  $687,459   —    $10,400  $982,859 

Name and Principal Position 
Year 
 
Salary ($) (1)
 
Stock
Awards
($) (2)
 
Non-equity 
incentive plan compensation 
($) (3)
 
All other compensation ($) (4)
 
Total ($) 
Jeffrey W. Eckel, Director, President and Chief Executive Officer 2019 639,500
 3,991,140
 595,305
 21,555
 5,247,500
 2018 632,833
 3,151,259
 1,421,289
 21,405
 5,226,786
 2017 619,500
 3,559,149
 —
 20,575
 4,199,224
             
Jeffrey A. Lipson, Executive Vice President and Chief Financial Officer (5)
 2019 302,436
 872,100
 235,594
 14,000
 1,424,130
 2018 —
 —
 —
 —
 —
 2017 —
 —
 —
 —
 —
             
J. Brendan Herron, Executive Vice President 2019 393,333
 1,861,225
 265,500
 14,000
 2,534,058
 2018 373,333
 1,381,999
 623,438
 13,750
 2,392,520
 2017 360,000
 1,476,404
 —
 13,500
 1,849,904
             
Nathaniel J. Rose, Executive Vice President and Chief Investment Officer 2019 374,625
 1,207,845
 300,682
 14,000
 1,897,152
 2018 357,208
 1,094,183
 669,985
 13,750
 2,135,126
 2017 338,417
 1,114,791
 —
 13,500
 1,466,708
             
Steven L. Chuslo, Executive Vice President and General Counsel 2019 360,000
 1,050,300
 239,513
 14,000
 1,663,813
 2018 358,333
 1,003,601
 589,500
 13,750
 1,965,184
 2017 355,000
 1,050,456
 —
 13,500
 1,418,956
             
Daniel K. McMahon, Executive Vice President 2019 350,667
 1,050,300
 231,471
 14,000
 1,646,438
 2018 335,333
 970,254
 561,094
 13,750
 1,880,431
 2017 322,000
 987,209
 —
 13,500
 1,322,709
(1)See “—Compensation Discussion and Analysis—Base Salary” for further salary information. In 2014, the salary for each of Messrs. Eckel, Herron, Rose, Chuslo, McMahon and Wooten was $495,000, $295,000, $275,000, $300,000, $270,000 and $285,000, respectively.
(2)Amounts in this column represent the aggregate grant date fair value of awards of restricted shares of Common Stock, RSUs or LTIP units computed in accordance with FASB ASC Topic 718. The grant date fair values of awards have been determined based on718 and the assumptions and methodologies set forth in our Annual Report on Form 10-K for the year ended December 31, 20162019 (Note 2 and Note 11, Equity). The March 2016 grants were valued at $18.78 per share, the closing price of our Common Stock on the NYSE on the date of grant. See Equity Incentive Plan and Grants of Plan-Based Awards below for additional information on share grants.
(3)See “—Compensation Discussion and Analysis—Annual Incentive Compensation—20162018 Bonus Awards awarded in 2017”2019” for further information on the non-equity incentive plan compensation earned for 20162018 and paid in 2017.2019. See “—Compensation Discussion and Analysis—Annual Incentive Compensation—2019 Bonus Awards awarded in 2020” for non-equity incentive compensation earned in 2019 and paid in 2020.
(4)Other compensation includes the Company’s matching contribution to each NEO’s 401(k) matchplan of $13,250$14,000 for 20162019, $13,750 for 2018 and 2015$13,500 for 2017 and $10,400$7,555, $7,655 and $7,075 for 20142019, 2018 and 2017, respectively, for each officer and $8,081, $8,131 and $8,181 for 2016, 2015 and 2014, respectively,$5,000,000 of key man life insurance for Mr. Eckel, approximately 60%$500,000 of which is for the benefit of the Company.

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(5)Mr. Lipson joined the Company in 2019 and was appointed chief financial officer and became an NEO on March 1, 2019.




Grants of Plan-Based Awards

     Estimated future payouts under
non-equity incentive plan awards		  Estimated future payouts
under equity incentive plan
awards		  All other
stock
awards:
number
of shares
of stock
or units
(#)(i)		  Grant date
fair value
of stock
and option
awards(j)		 

Name and Principal Position

 Grant
Date		  Threshold
($)		  Target
($)		  Maximum
($)		  Threshold
($)		  Target
($)		  Maximum
($)		   

Jeffrey W. Eckel, Director, President and Chief Executive Officer

  3/29/2016   —     —     —     —     —     —     33,333  $625,994 
  

 

3/29/2016

 

 

 

  —     —     —     —     —     —     168,134  $3,157,557 

J. Brendan Herron, Executive Vice President and Chief Financial Officer

  3/29/2016   —     —     —     —     —     —     18,777  $352,632 
  

 

3/29/2016

 

 

 

  —     —     —     —     —     —     56,044  $1,052,506 

Nathaniel J. Rose, Executive Vice President and Chief Operating Officer

  3/29/2016   —     —     —     —     —     —     17,212  $323,241 
  

 

3/29/2016

 

 

 

  —     —     —     —     —     —     37,363  $701,677 

Steven L. Chuslo, Executive Vice President and General Counsel

  3/29/2016   —     —     —     —     —     —     18,473  $346,923 
  

 

3/29/2016

 

 

 

  —     —     —     —     —     —     37,363  $701,677 

Daniel K. McMahon, Executive Vice President

  3/29/2016   —     —     —     —     —     —     16,717  $313,945 
  3/29/2016   —     —     —     —     —     —     37,363  $701,677 

M. Rhem Wooten Jr., Executive Vice President

  3/29/2016   —     —     —     —     —     —     18,507  $347,561 
  

 

3/29/2016

 

 

 

  —     —     —     —     —     —     37,363  $701,677 

All Other Stock Awards: Number of Shares of Stock or Units (Columns (i) and (j))

The awards represent restricted stock granted under our Equity Incentive Plan. The first award for each NEO was issued for the 2015 annual incentive compensation and was issued under our Equity Incentive Plan, valued $18.78 per share, the closing price of our Common Stock on the NYSE on the date of grant, and vests in March 2018. The second award for each NEO was granted for the 2016 Long Term Incentive program under our Equity Incentive Plan. A description of the terms and the grant fair value for the second award for each NEO of the restricted stock appears at “CD&A—Long Term Incentive Program Granted in 2016 and 2017” above.

2019

    
Estimated future payouts under
non-equity incentive plan awards 
 
Estimated future payouts
under equity incentive plan awards 
 
All other stock awards: number of shares of stock or units (#) (2)
 
Grant date fair value of stock and option awards ($) (3)
Name and Principal Position Grant
Date		 
Threshold 
($)
 
Target 
($)
 
Maximum 
($) 
 
Threshold 
(#) (1)
 
Target 
(#) (1)
 
Maximum (#) (1) 
 
Jeffrey W. Eckel, Director, President and Chief Executive Officer 4/1/2019 — — — 38,000
 76,000
 152,000
 —
 2,028,820
 4/1/2019 — — — —
 —
 —
 76,000
 1,962,320
                   
Jeffrey A. Lipson, Executive Vice President and Chief Financial Officer 4/1/2019       5,000
 10,000
 20,000
 —
 266,950
 4/1/2019 — — — —
 —
 —
 10,000
 258,200
 2/13/2019 — — — —
 —
 —
 15,000
 346,950
                   
J. Brendan Herron, Executive Vice President 4/1/2019 — — — 15,750
 31,500
 63,000
 —
 840,893
 4/1/2019 — — — —
 —
 —
 31,500
 813,330
 3/13/2019 — — — —
 —
 —
 8,300
 207,002
                   
Nathaniel J. Rose, Executive Vice President and Chief Investment Officer 4/1/2019 — — — 11,500
 23,000
 46,000
 —
 613,985
 4/1/2019 — — — —
 —
 —
 23,000
 593,860
                   
Steven L. Chuslo, Executive Vice President and General Counsel 4/1/2019 — — — 10,000
 20,000
 40,000
 —
 533,900
 4/1/2019 — — — —
 —
 —
 20,000
 516,400
                   
Daniel K. McMahon, Executive Vice
President		 4/1/2019 — — — 10,000
 20,000
 40,000
 —
 533,900
 4/1/2019 — — — —
 —
 —
 20,000
 516,400
(1)Represents OP units that could be earned under awards of LTIP units, which vest based on the achievement of certain targets. See “CD&A—Long-Term Incentive Program Granted in 2019” above.
(2)The awards represent restricted stock and OP units that could be earned under awards of LTIP units, which vest based on the achievement of certain targets, granted under our Equity Incentive Plan. The second award for each NEO was granted for the 2019 Long-Term Incentive program under our Equity Incentive Plan. A description of the terms for the second award for each NEO of the restricted stock appears at “CD&A—Long-Term Incentive Program Granted in 2019” above. The third award for Mr. Herron is a grant of restricted stock for the 2018 annual incentive compensation that vests in May 2020. The third award for Mr. Lipson is a grant of restricted stock made upon his hire that vests in four equal amounts in March 2020, 2021, 2022 and 2023.
(3)Amounts shown in this column represent the estimated grant date fair value calculated in accordance with FASB ASC Topic 718 of shares of restricted Common Stock and RSUs under our Equity Incentive Plan. A description of the terms and the grant fair value for the first and second award for each NEO of the restricted stock appears at “CD&A—Long-Term Incentive Program Granted in 2019” above. A description of the terms and grant date fair value for the third award for Mr. Herron appears at “CD&A—2018 Bonus Awards awarded in 2019.” The third award for Mr. Lipson is valued at $23.13 per share, the closing price of our Common Stock on the NYSE at the date of grant.
Narrative to Summary Compensation Table

We have entered into employment agreements with our NEOs in 2013, providing for Mr. Eckel to serve as the chairmaneach of our board of directors and as our chief executive officer and president, Mr. Herron to serve as our executive vice president and chief financial officer, Mr. Chuslo to serve as our executive vice president and general counsel, Mr. Wooten to serve as our executive vice president, Mr. Rose to serve as our senior vice president and chief investment officer and Mr. McMahon to serve as our senior vice president. In June 2015, Mr. Rose was appointed our executive vice president and chief operating officer and Mr. McMahon was appointed as an executive vice president.

NEOs. The employment agreements withfor Messrs. Eckel, Herron, Rose, Chuslo and McMahon and Wooten have a term of four years. Each employment agreement provideseach provide for automatic one-year extensions thereafter, unless either party provides at least 90 days’ notice of non-renewal. Each employment agreement was extended in 2019. The amended and restated employment agreement for Mr. Lipson, which we entered into on April 13, 2020, provides that the term of Mr. Lipson's employment shall continue until either party provides at least 30 days' notice of termination. These employment agreements require Messrs. Eckel, Herron, Rose, Chuslo, McMahon and Wootenour NEOs to devote substantially all of their time to our affairs.

The employment agreements provide for:

an annual base salary of $495,000 for Mr. Eckel, $295,000 for Mr. Herron, $ 275,000 for Mr. Rose, $300,000 for Mr. Chuslo, $270,000 for Mr. McMahon and $285,000 for Mr. Wooten,no less than those listed in “CD&A—Base Salaries” above, subject to increases at the discretion of our board of directors or the Compensation Committee,

- 43 -



eligibility for annual cash performance bonuses based on the satisfaction of performance goals established by our board of directors or the Compensation Committee, which will be awarded at the discretion of the Compensation Committee,

participation in our long-term incentive program, as well as other incentive, savings and retirement plans applicable generally to our senior executives,

medical and other group welfare plan coverage and fringe benefits provided to our senior executives, and

for Mr. Eckel only, payment of the premiums for a long-term disability insurance policy which provide benefits equal to at least 300% of his annual base salary.

Messrs. Eckel, Herron, Rose, Chuslo, McMahonsalary and Wootenpayment of the premiums for a term life insurance policy in the amount of $5,000,000 for the benefit of his heirs.

Our NEOs are eligible for annual bonuses and regular, annual grants of restricted stock, stock options or other awards pursuant to our Equity Incentive Plan described below. See CD&A above for further information on the annual bonuses and Equity Incentive Plan grants.

The employment agreements for Messrs. Eckel, Herron, Rose, Chuslo and McMahon provide that, if an executive’s employment is terminated by us without “cause” or by the executive for “good reason” (each as defined in the applicable employment agreement), or as a result of our notice of non-renewal of the applicable employment term, the executive will be entitled to the following severance payments and benefits, subject to his execution and non-revocation of a general release of claims:

accrued but unpaid base salary, bonus and other benefits earned and accrued but unpaid prior to the date of termination,

an amount equal to the sum of the executive’s then-current annual base salary plus the greater of his annual average bonus over the prior three years (or such fewer years with respect to which the executive received an annual bonus) and the executive’s target annual bonus for the year of termination, multiplied by three for Mr. Eckel, by two for each of Messrs. Herron, Chuslo, and Wooten,Chuslo, and by 1.5 for each of Messrs. Rose and McMahon,

for Mr. Eckel only, a prorated annual bonus based on the maximum annual bonus that the executive could have earned for the year of termination and the number of days employed in the year of termination,

health benefits for the executive and his eligible family members for two years following the executive’s termination of employment at the same level as in effect immediately preceding such termination, subject to reduction to the extent that the executive receives comparable benefits from a subsequent employer, and

100% of the unvested stock or stock-based awards held by the executive will become fully vested and/or exercisable.

Each


Mr. Lipson's employment agreement also provides that if his employment is terminated by us for reasons other than for "cause" or by him for “good reason” (each as defined in the employment agreement), he will be entitled to the following severance payments and benefits, subject to his execution and non-revocation of a general release of claims:

    •     accrued but unpaid base salary, bonus and other benefits earned and accrued but unpaid prior to the date of termination,

•     an amount equal to the sum of eighteen months of his then-current annual base salary and 150% of his annual average bonus over the prior three years (or such fewer years with respect to which he received an annual bonus), and

    •     health benefits for eighteen months following the executive’s termination of employment at the same level as in effect immediately preceding such termination, subject to reduction to the extent that the executive receives comparable benefits from a subsequent employer.
The employment agreements provide that the executive or his estate will be entitled to certain severance benefits in the event of his death or disability. Specifically, each executive or, in the event of the executive’s death, his beneficiaries will receive:

accrued but unpaid base salary, bonus and other benefits earned and accrued but unpaid prior to the date of termination,

for Mr. Eckel upon death or disability, and for Messrs. Lipson, Herron, Rose, Chuslo, McMahon and Wooten,McMahon, upon death only, his prorated annual bonus for the year in which the termination occurs,

for Messrs. Lipson, Herron, Rose, Chuslo, McMahon and Wooten,McMahon, upon disability only, the target annual bonus for the year in which the termination occurs,

- 44 -

for Mr. Eckel upon disability only, proceeds from long-term disability insurance policy of 300% of his annual base salary,
for Mr. Eckel upon death only, proceeds of a term life insurance policy in the amount of $5,000,000,


for Messrs. Eckel, Herron, Rose, Chuslo, and McMahon, health benefits for the executive and/or his eligible family members for two years following the executive’s termination of employment at the same level as in effect immediately preceding executive’s death or disability, and

for Mr. Eckel for all awards, and for Messrs. Herron, Rose, Chuslo, McMahon and Wooten, for the initial restricted stock awards granted upon completion of our IPO and for certain awards granted after such date based upon the terms of the applicable grant agreement, 100% of the unvested stockequity awards held by the executive will become fully vested and/or exercisable. For Messrs. Herron, Rose, Chuslo, McMahon and Wooten, if an award agreement does not otherwise provide for 100% vesting, all other outstanding unvested stock awards, if any, held by the executive, a prorated portion (based on the number of days until death or disability, as applicable, over 365) of any stock that would have vested for the year of the executive’s death or disability, as applicable, will become vested and/or exercisable and any remaining portion of such awards will be forfeited.

The employment agreement for Mr. Eckel includes the occurrence of a “change in control” (as defined in the employment agreement) in the definition of good reason such that the occurrence of a change in control will entitle Mr. Eckel to trigger the severance obligations for any reason following a change in control. The employment agreements for Messrs. Herron, Rose, Chuslo, McMahon and Wooten willMcMahon provide for a modified definition of “good reason” following a change-in-control (as defined in the applicable employment agreement),. The employment agreements for Messrs. Herron, Rose, Chuslo, and McMahon also provide for 100% of the unvested stock (or stock-based) awards held by the executive to become fully vested and/or exercisable upon the effective date of a change in control.

The employment agreement for Mr. Lipson provides for 100% of his unvested time-based stock (or stock-based) awards to become fully vested and/or exercisable in the event his employment is terminated other than for cause within 60 days before or 90 days after a change in control, and for the effect of a termination of employment before or after a change in control on his performance-based stock (or stock-based) awards to be determined in accordance with the applicable agreements under which such awards were granted.

The employment agreements for Messrs. Lipson, Herron, Rose, Chuslo, and McMahon provide that if all, or any portion, of the payments provided under the employment agreements, either alone or together with other payments or benefits that the executive receives or is entitled to receive from us or an affiliate, would constitute a “excess parachute paymentpayments” within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), then these payments may be reduced so that no portion of such compensation shallthe parachute payment would be subject to excise tax under Section 4999 of the Internal Revenue Code.

The employment agreements also contain standard confidentiality provisions, which apply indefinitely, and both non-competition and non-solicitation provisions, which apply during the term of the employment agreements and, for Messrs. Herron, Rose, Chuslo, and McMahon, for a period of 12 months following termination of employment, and, for Mr. Lipson, for a period of 18 months following termination of employment.

The following table sets forth the potential payments to each NEO under the terms of their employment agreements and equity award agreements described above due to various scenarios as of December 31, 2019. Amounts shown do not include (a) payment of any unpaid portion of the NEO’s base salary through the effective date of termination, (b) reimbursement for any outstanding reasonable business expense, and (c) any bonus or incentive compensation that had been accrued through the effective date of termination but not paid.
Name 
 Benefit 
Without Cause/For Good Reason / Non-renewal by Company ($) (1)
 Death ($) 
Disability ($) (2)
 
Change in Control ($) (3)
Jeffrey W. Eckel Cash 6,786,694 6,205,298
 3,123,798
 6,786,694
  Continued Health Benefits 52,187 52,187
 52,187
 52,187
  
Equity (4)
 17,749,008 17,749,008
 17,749,008
 25,241,799
Jeffrey A. Lipson Cash 1,306,790 471,188
 471,188
 1,306,790
  Continued Health Benefits 47,598 —
 —
 47,598
  
Equity (4)
 1,126,300 1,126,300
 1,126,300
 1,448,100
J. Brendan Herron Cash 1,879,690 538,500
 538,500
 1,879,690
  Continued Health Benefits 72,349 72,349
 72,349
 72,349
  
Equity (4)
 6,312,300 6,312,300
 6,312,300
 9,176,191
Nathaniel J. Rose Cash 1,425,000 613,890
 613,890
 1,425,000
  Continued Health Benefits 41,521 41,521
 41,521
 41,521
  
Equity (4)
 4,429,159 4,429,159
 4,429,159
 6,512,041
Steven L. Chuslo Cash 1,631,750 484,650
 484,650
 1,631,750
  Continued Health Benefits 66,987 66,987
 66,987
 66,987
  
Equity  (4)
 4,000,746 4,000,746
 4,000,746
 5,831,402
Daniel K. McMahon Cash 1,198,125 477,919
 477,919
 1,198,125
  Continued Health Benefits 50,819 50,819
 50,819
 50,819
  
Equity  (4)
 3,957,818 3,957,818
 3,957,818
 5,756,294


(1)This column describes the payments and benefits that become payable if the Company elects not to renew the NEO's employment agreement, if employment is terminated by the Company without cause, or if employment is terminated by the NEO for good reason.
For Mr. Eckel, the term "cause" means (i)  conviction of, or plea of nolo contendere to, a felony involving moral turpitude, deceit, dishonesty or fraud (but excluding traffic violations) that is injurious to the business or reputation of the Company; (ii) willful and material misconduct in connection with the performance of his duties, including, without limitation, embezzlement or the misappropriation of funds or property of the Company; (iii) failure to adhere to the lawful directions of the our board of directors, or to devote substantially all of his business time and efforts to the Company, in either event, which continues for a period of 30 business days after written demand for corrective action is delivered by the Company; or (iv) material breach of (x) any covenant contained in the employment agreement; or (y) the other terms and provisions of the employment agreement and, in each case, failure to cure such breach within 10 days following written notice from the Company specifying such breach.
For Messrs. Lipson, Herron, Rose, Chuslo, and McMahon, the term "cause" means the NEO's (i) commission of, and indictment for or formal admission to, a felony involving moral turpitude, deceit, dishonesty or fraud (but excluding traffic violations); (ii) willful and material misconduct in connection with the performance of the NEO's duties, including, without limitation, embezzlement or the misappropriation of funds or property of the Company; (iii) failure to adhere to the lawful directions of the CEO, to adhere to the Company’s policies and practices or to devote substantially all of the NEO’s business time and efforts to the Company, which failure continues for a period of 30 business days after written demand for corrective action is delivered by the Company; or (iv) material breach of (x) any covenant contained in the employment agreement; or (y) the other terms and provisions of the employment agreement and, in each case, failure to cure such breach within 10 days following written notice from the Company specifying such breach.
The term "good reason" means (i) any change in job title or material diminution in the NEO’s roles and responsibilities from those set forth in the employment agreements (including, without limitation, the assignment of duties inconsistent with the NEO's position or, for Mr. Eckel only, no longer being the chairman of our board of directors and the senior-most executive of the Company); (ii) a reduction in the NEO’s annual salary or annual bonus potential; (iii) a relocation of the Company’s headquarters outside a 30 mile radius of Annapolis, MD or moving of the NEO’s office or place of performance from the Company’s headquarters; (iv) a material breach by the Company of the employment agreement or any other material agreement between the NEO and the Company; or (v) for Mr. Eckel only, there shall have occurred a change in control. For Messrs. Herron, Rose, Chuslo, and McMahon, following a change in control the definition of good reason set forth is modified to delete all references to the term "material." For Mr. Lipson, the definition is applicable only following a change in control and does not include references to the term "material."
(2)The term "disability" means that the NEO has become physically or mentally incapable of performing the duties under the employment agreement and such disability has disabled the NEO for a cumulative period of 180 days within any 12-month period.
(3)The term "change in control" is defined in "—Change in Control" below.
(4)Includes the value of accelerated vesting of outstanding equity awards granted to the NEO. The acceleration value of the restricted stock was calculated using the closing price of $32.18 per share on December 31, 2019. For termination without cause, termination for good reason, non-renewal by the Company, death or disability, the number of performance shares reported is based on the target level of performance. For change in control, the number of performance shares reported is based on the actual level of performance through December 31, 2019 for awards granted in 2017, 2018 and 2019 and the target level of performance for awards granted prior to 2017.
Equity Incentive Plan

We have adopted our Equity Incentive Plan to provide equity basedequity-based incentive compensation to members of our senior management team, our independent directors, employees, advisers, consultants and other personnel. Unless terminated earlier or renewed, our Equity Incentive Plan will terminate ten years after its adoption but will continue to govern unexpired awards. Our Equity Incentive Plan allows for grants of stock options, shares of restricted common stock,Common Stock, phantom shares, dividend equivalent rights, RSUs, limited partner profit interests (“LTIP Units”)units (as described below) and other equity-based awards.

Our Equity Incentive Plan is administered by the Compensation Committee. The Compensation Committee, as appointed by our board of directors, has the full authority to (1) authorize the granting of awards to eligible persons, (2) determine the eligibility of directors, members of our senior management team, employees, advisors, consultants and other personnel to receive an equity award, (3) determine the number of shares of Common Stock to be covered by each award (subject to the individual participant limitations


provided in our Equity Incentive Plan), (4) determine the terms, provisions and conditions of each award (which may not be inconsistent with the terms of our Equity Incentive Plan), (5) prescribe the form of instruments evidencing such awards, (6) make recommendations to our board of directors with respect to equity awards that are subject to board approval and (7) take any other actions and make all other determinations that it deems necessary or appropriate in connection with our Equity Incentive Plan or the administration or interpretation thereof. In connection with this authority, the Compensation Committee may, among other things, establish performance goals that must be

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met in order for awards to be granted or to vest, or for the restrictions on any such awards to lapse. In March 2017, we amended our Equity Incentive Plan to provide that equity awards are subject to a minimum vesting period of no less than one year. The Compensation Committee consists solely of independent directors, each of whom is intended to be, to the extent required by Rule 16b-3 under the Exchange Act, a non-employee director and will, at such times as we are subject to Section 162(m) of the Internal Revenue Code and intend for awards to be treated as performance-based compensation for purposes of Section 162(m), qualify as an outside director for purposes of Section 162(m) of the Internal Revenue Code, or, if no committee exists, the board of directors.

director.

Available Shares

Our Equity Incentive Plan provides for grants of stock options, shares of restricted common stock,Common Stock, phantom shares, dividend equivalent rights, LTIP units and other restricted limited partnership units issued by our Operating Partnership and other equity-based awards up to an aggregate of 7.5% of the shares of our Common Stock issued and outstanding from time to time on a fully diluted basis (assuming, if applicable, the exercise of all outstanding options and the conversion of all warrants and convertible securities, including OP units and LTIP units, into shares of Common Stock). If an award granted under our Equity Incentive Plan expires, is forfeited or terminates, the shares of our Common Stock subject to any portion of the award that expires, is forfeited or terminates without having been exercised or paid, as the case may be, will again become available for the issuance of additional awards. Unless previously terminated by our board of directors, no new award may be granted under our Equity Incentive Plan after the tenth anniversary of April 23, 2013. As of April 7, 2017the Record Date, we had aggregate outstanding grants of 1,551,2431,935,929 shares of our restricted common stockCommon Stock under our Equity Incentive Plan, including 1,235,565which includes (i) 160,568 shares of our restricted common stockCommon Stock to our executive officers, 273,272NEOs, 182,580 shares of our restricted common stockCommon Stock to other employees and 42,406116,423 shares of our restricted common stockCommon Stock to our independent directors, all of which are subject to certain vesting requirements. In addition, we had 253,200requirements, (ii) up to 301,250 shares of RSUs outstanding,Common Stock issuable to our NEOs and 43,956 shares of which 208,610 were awardedCommon Stock issuable to executive officersour independent directors upon redemption of OP units that are issuable upon time-based vesting and the remainder were awardedconversion of LTIP units, (iii) up to 602,500 shares of Common Stock issuable to our NEOs upon redemption of OP units that are issuable upon performance-based vesting and conversion of LTIP units and (iv) up to 279,456 shares of Common Stock issuable to our NEOs and 214,838 shares of Common Stock issuable to other employees.

employees upon performance-based vesting of RSUs.

To the extent the Compensation Committee deems appropriate, it will establish performance criteria and satisfy such other requirements as may be applicable in order to satisfy the requirements for performance-based compensation under Section 162(m) of the Internal Revenue Code.

Awards Under the Plan

Stock Options. The terms of specific stock options, including whether stock options shall constitute “incentive stock options” for purposes of Section 422(b) of the Internal Revenue Code, shall be determined by the Compensation Committee. The exercise price of a stock option shall be determined by the Compensation Committee and reflected in the applicable award agreement. The exercise price with respect to stock options may not be lower than 100% (110% in the case of an incentive stock option granted to a 10% stockholder, if permitted under our Equity Incentive Plan) of the fair market value of our Common Stock on the date of grant. Each stock option will be exercisable after the period or periods specified in the award agreement, which will generally not exceed 10 years from the date of grant (or five years in the case of an incentive stock option granted to a 10% stockholder, if permitted under our Equity Incentive Plan). Incentive stock options may only be granted to our employees and employees of our subsidiaries. Stock options will be exercisable at such times and subject to such terms as determined by the Compensation Committee. We may also grant stock appreciation rights, which are stock options that permit the recipient to exercise the stock option without payment of the exercise price and to receive shares of Common Stock (or cash or a combination of the foregoing) with a fair market value equal to the excess of the fair market value of the shares of our Common Stock with respect to which the stock option is being exercised over the exercise price of the stock option with respect to those shares. The exercise price with respect to stock appreciation rights may not be lower than 100% of the fair market value of our Common Stock on the date of grant.

Shares of Restricted Common Stock. A restricted stock award is an award of shares of common stockCommon Stock that are subject to restrictions on transferability and such other restrictions the Compensation Committee may impose at the date of grant. Grants of shares of restricted common stockCommon Stock will be subject to vesting schedules and other

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restrictions as determined by the Compensation Committee. The restrictions may lapse separately or in combination at such times, under such circumstances, including, without limitation, a specified period of employment or the satisfaction of pre-established criteria, in such installments or otherwise, as the Compensation Committee may determine. Except to the extent restricted under the award agreement relating to the shares of restricted common stock,Common Stock, a participant granted shares of restricted common stockCommon Stock has all of the rights of a stockholder, including, without limitation, the right to vote and the right to receive dividends on the shares of restricted common stock.Common Stock. Although dividends will be paid on shares of restricted common stock,Common Stock, whether or not vested, at the same rate and on the same date as on shares of our Common Stock (unless otherwise provided in an award agreement), holders of shares of restricted common stockCommon Stock are prohibited from selling such shares until they vest.

RSUs. A RSU award is an award of units that are converted into common stockCommon Stock at a conversion rate that is based upon the achievement of pre-established criteria and such other restrictions that the Compensation Committee may impose at the date of grant. The restrictions may lapse separately or in combination at such times, under such circumstances, including, without limitation, a specified period of employment or the satisfaction of pre-established criteria, in such installments or otherwise, as the Compensation Committee may determine. A participant granted RSUs does not have the rights of a stockholder, including, without limitation, the right to vote the shares of restricted Common Stock and holders of RSUs are prohibited from selling such units until they vest. The Compensation Committee may elect to provide the right to receive dividends or provide for dividend equivalents. As described elsewhere in this proxy statement, the Compensation Committee approved and adopted a material modification to the terms of the performance based RSUs. Under the old form of the RSU Award Agreement, the grantee of the performance based RSU had the right to receive dividend equivalents with respect to unvested performance based RSUs. Under the newcurrent form of the RSU Award Agreement, dividend equivalents will accrue on the RSUs from the grant date, but the grantee is not entitled to receive dividend equivalents until the RSUs vest. A participant granted RSUs does not haveIn addition, the rights of a stockholder, including, without limitation, the right to vote the shares of restricted common stock and holders of RSUs are prohibited from selling such units until they vest.

Phantom Shares. A phantom share represents a right to receive the fair market value of a share of common stock, or, if provided by the Compensation Committee, the right to receive the fair market value of a share of common stock in excess of a base value established by the Compensation Committee at the time of grant. Phantom shares may generally be settled in cash or by transfer of shares of common stock (as may be elected by the participant or the Compensation Committee or as may be provided by the Compensation Committee at grant). The Compensation Committee may, in its discretion and under certain circumstances (taking into account, without limitation, Section 409Aterms of the Internal Revenue Code), permitperformance based RSUs for a participantchange of control provide that the units shall vest upon a change of control, with the performance period ending immediately prior to receive as settlementthe consummation of the phantom shares installment payments overchange of control and the performance targets prorated on a period not to exceed 10 years.

straight-line basis for such shortened period.



Dividend Equivalents. A dividend equivalent is a right to receive (or have credited) the equivalent value (in cash or shares of common stock)Common Stock) of dividends paid on shares of common stockCommon Stock otherwise subject to an award. The Compensation Committee may provide that amounts payable with respect to dividend equivalents shall be converted into cash or additional shares of common stock.Common Stock. The Compensation Committee will establish all other limitations and conditions of awards of dividend equivalents as it deems appropriate.

Restricted Limited Partnership Units. Limited PartnershipOP Units (“OP units”) may be issued by Hannon Armstrong Sustainable Infrastructure Capital Partnership, LP (our “our Operating Partnership”).Partnership. A restricted limited partnership unit represents an OP unit or may include LTIP units that are structured as profits interests in theour Operating Partnership, providing distributions to the holder of the award based on the achievement of specified levels of profitability by theour Operating Partnership or the achievement of certain goals or events. The Compensation Committee may elect to provide the right to receive dividends or provide for dividend equivalents. Initially, LTIP units will not have full parity with OP units with respect to liquidating distributions. Under the terms of the LTIP units, the Operating Partnership will revalue its assets upon the occurrence of certain specified events, and any increase in valuation from the time of grant until such event will be allocated first to the holders of LTIP units to equalize the capital accounts of such holders with the capital accounts of OP unit holders. Upon equalization of the capital accounts of the holders of LTIP units with other holders of OP units, the LTIP units will achieve full parity with OP units of theour Operating Partnership for all purposes, including with respect to liquidating

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distributions. If such parity is reached, vested LTIP units may be converted into an equal number of OP units, and thereafter enjoy all the rights of OP units.units, including the option to convert to shares of Common Stock. The Compensation Committee will establish all other limitations and conditions of awards of restricted OP units as it deems appropriate.

Other Share-Based Awards. Our Equity Incentive Plan authorizes the granting of other awards based upon shares of our Common Stock (including the grant of securities convertible into shares of Common Stock)Stock, stock options and phantom shares), subject to terms and conditions established at the time of grant.

We have filed with the SEC a Registration Statement on Form S-8 covering the shares of our Common Stock issuable under our Equity Incentive Plan.

Change in Control

Under our Equity Incentive Plan, a change in control is defined as the occurrence of any of the following events: (1) the acquisition of more than 50% of our then outstanding shares of common stockCommon Stock or the combined voting power of our outstanding securities by any person; (2) the sale or disposition of all or substantially all of our assets, other than certain sales and dispositions to entities owned by our stockholders; (3) a merger, consolidation or statutory share exchange where our stockholders immediately prior to such event hold less than 50% of the voting power of the surviving or resulting entity; (4) during any consecutive 24 calendar month period, the members of our board of directors at the beginning of such period, the “incumbent directors,” cease for any reason (other than due to death) to constitute at least a majority of the members of our board of directors (for these purposes, any director whose election or nomination for election was approved or ratified by a vote of at least a majority of the incumbent directors shall be deemed to be an incumbent director); or (5) stockholder approval of a plan or proposal for our liquidation or dissolution.

Upon a change in control, awards may be subject to accelerated automatic or conditional accelerated vesting depending on the terms of the grant agreement establishing the award. In addition, the Compensation Committee may make such adjustments as it, in its discretion, determines are necessary or appropriate in light of the change in control, but only if the Compensation Committee determines that the adjustments do not have an adverse economic impact on the participants (as determined at the time of the adjustments).

Amendments and Termination

Our board of directors may amend, suspend, alter or discontinue our Equity Incentive Plan but cannot take any action that would impair the rights of an award recipient with respect to an award previously granted without such award recipient’s consent unless such amendments are required in order to comply with applicable laws. Our board of directors may not amend our Equity Incentive Plan without stockholder approval in any case in which amendment in the absence of such approval would cause our Equity Incentive Plan to fail to comply with any applicable legal requirement or NYSE or similar requirement, such as an amendment that would:

other than through adjustment as provided in our Equity Incentive Plan, increase the total number of shares of Common Stock reserved for issuance under our Equity Incentive Plan;

materially expand the class of directors, officers, employees, consultants and advisors eligible to participate in our Equity Incentive Plan;

reprice any stock options under our Equity Incentive Plan; or

otherwise require such approval.

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Outstanding Equity Awards at 2019 Fiscal Year End

The following table summarizes all outstanding equity awards held by the NEOs on December 31, 2016.

  Option Awards  Stock Awards 

Name

 Number of
Securities
Underlying
Unexercised
Options
(#)
(Exercisable)		  Number of
Securities
Underlying
Unexercised
Options
(#)
(Unexercisable)		  Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
(#)		  Option
Exercise
Price
($)		  Option
Expiration
Date		  Equity Incentive
Plan Awards:
Number of
Shares or Units
of Common
Stock That
Have Not
Vested
(#)(1)		  Equity
Incentive
Plan Awards:
Market Value of
Shares or Units
of Common
Stock That
Have Not
Vested
($)(2)		 

Jeffrey W. Eckel

  —     —     —     —     —     448,108  $8,509,571 

J. Brendan Herron

  —     —     —     —     —     128,963  $2,449,007 

Nathaniel J. Rose

  —     —     —     —     —     95,181  $1,807,487 

Steven L. Chuslo

  —     —     —     —     —     96,442  $1,831,434 

Daniel K. McMahon

  —     —     —     —     —     94,686  $1,798,087 

M. Rhem Wooten Jr.

  —     —     —     —     —     96,476  $1,832,079 

2019.     
  Option Awards Stock Awards
Name Number of Securities Underlying Unexercised Options (#) (Exercisable) Number of Securities Underlying Unexercised Options (#) (Unexercisable) 
Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#)
 
Option Exercise Price ($) 
 Option Expiration Date 
Equity Incentive Plan Awards: Number of Shares or Units of Common Stock That Have Not Vested (#) (1)
 
Equity Incentive Plan Awards: Market Value of Shares or Units of Common Stock That Have Not Vested ($) (2) 
Jeffrey W. Eckel — — — — — 784,394 25,241,799
Jeffrey A. Lipson — — — — — 45,000 1,448,100
J. Brendan Herron — — — — — 285,152 9,176,191
Nathaniel J. Rose — — — — — 202,363 6,512,041
Steven L. Chuslo — — — — — 181,212 5,831,402
Daniel K. McMahon — — — — — 178,878 5,756,294
(1)The following chart summarizes the vesting of the awards by NEONEO:

Name and Principal Position

 ShareShares Vesting

Jeffrey W. Eckel, Director, President and Chief Executive Officer

 168,134180,260 See Note 3
  33,33321,0543/5/2020
  3/5/2018
180,260189,480 See Note 4
  66,38141,400See Note 5
  4/23/17124,200 See Note 6

J. Brendan Herron,

76,000See Note 7
152,000See Note 8
Jeffrey A. Lipson, Executive Vice President and Chief Financial Officer

10,000See Note 7
  56,04420,000 See Note 8
15,000See Note 9
J. Brendan Herron, Executive Vice President39,570 See Note 3
  18,77710,5403/5/2020
  3/5/2018
39,57063,240 See Note 4
  14,57217,250See Note 5
  4/23/1751,752 See Note 6

31,500See Note 7
63,000See Note 8
8,3005/15/2020
Nathaniel J. Rose, Executive Vice President and Chief OperatingInvestment Officer

 37,36329,677 See Note 3
  17,2127,5843/5/2020
  3/5/2018
29,67745,500 See Note 4
  10,92912,650See Note 5
  4/23/1737,952 See Note 6

23,000See Note 7
46,000See Note 8
Steven L. Chuslo, Executive Vice President and General Counsel

 37,36329,677 See Note 3
  18,4736,8343/5/2020
  3/5/201841,000 See Note 4
 10,925See Note 5
32,776See Note 6
20,000See Note 7
40,000See Note 8
Daniel K. McMahon, Executive Vice President 29,677 See Note 3
6,5003/5/2020
39,000 See Note 4
  10,9294/23/17

Daniel K. McMahon, Executive Vice President

37,36310,925 See Note 35
  16,7173/5/2018
29,67732,776 See Note 46
  10,9294/23/17

M. Rhem Wooten Jr., Executive Vice President

37,36320,000 See Note 37
  18,5073/5/2018
29,67740,000 See Note 48
10,9294/23/17

(2)Valued at $18.99,$32.18, our closing price on the NYSE on December 30, 2016,31, 2019, the last day of trading for 2016.2019.


(3)

These awards consist of two components: (i) 67% of the shares are considered performance-based awards that vest upon the later of March 5, 2019 and the achievement of dividend and earnings growth targets over a multi-year period and (ii) 33% of the shares are time-based awards that vest on March 5, 2019. In March 2017, the Compensation Committee modified the dividend target applicable to the vesting of restricted stock to allow achievement of the core earnings target for two quarters to meet the vesting requirement as the

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declaration of dividends is made by the board of directors and not management. The specific targets have not been publicly disclosed for competitive reasons but require continued growth in core earnings.
(4)(3)These awards are performance-based awards that vest upon the later of December 31, 2017 and the achievement of earnings growth targets over a multi-year period. The specific targets have not been publicly disclosed for competitive reasons but require continued growth in core earnings.our dividend.

2016
(4)These awards are RSUs that represent the right to receive up to two shares per RSU on March 5, 2020 depending on the level of achievement of certain targets. See “CD&A-Long-Term Incentive Program Granted in 2019” above. The table reflects two shares per RSU based on the performance against the targets through December 31, 2019, the last day of trading for 2019.
(5)These awards are time-based awards that vest in two equal annual amounts on March 5, 2020 and 2021.
(6)These awards are RSUs that represent the right to receive up to two shares per RSU on March 5, 2021 depending on the level of achievement of certain targets. See “CD&A-Long-Term Incentive Program Granted in 2019” above. The table reflects two shares per RSU based on the performance against the targets through December 31, 2019, the last day of trading for 2019.
(7)These awards are time-based awards that vest in three equal annual amounts on May 15, 2020 and March 5, 2021 and 2022.
(8)These awards are LTIP units that represent the right to receive up to one OP unit per LTIP unit on March 5, 2022 depending on the level of achievement of certain targets. See “CD&A-Long-Term Incentive Program Granted in 2019” above. The table reflects one OP unit per LTIP unit based on the performance against the targets through December 31, 2019, the last day of trading for 2019.
(9)These awards are time-based awards that vest in four equal amounts on March 5, 2020, 2021, 2022 and 2023.


2019 Option Exercises and Securities Vested

The following table summarizes the restricted stock and RSU awards that vested with respect to the Named Executive Officers during the fiscal year ended December 31, 2016.

   Stock Awards 

Name

  Number of Securities
Acquired on Vesting (#)		   Value Realized on Vesting
($)		 

Jeffrey W. Eckel

   289,034   $5,680,463 

J. Brendan Herron

   85,783   $1,684,699 

Nathaniel J. Rose

   64,528   $1,267,514 

Steven L. Chuslo

   72,499   $1,422,256 

Daniel K. McMahon

   64,088   $1,258,959 

M. Rhem Wooten Jr.

   71,231   $1,397,478 

2019.

  
Stock Awards 
Name Number of Securities
Acquired on Vesting (#)		 Value Realized on Vesting
($)
Jeffrey W. Eckel 276,536
 7,059,742
Jeffrey A. Lipson —
 —
J. Brendan Herron 108,801
 2,782,798
Nathaniel J. Rose 82,697
 2,118,796
Steven L. Chuslo 82,784
 2,120,710
Daniel K. McMahon 79,373
 2,032,545
Pension Benefits and Nonqualified Deferred Compensation

We did not provide any pension benefits or nonqualified deferred compensation plans during 20152018 or 2016.

2019.

Compensation Committee Interlocks and Insider Participation

The Compensation Committee is comprised solely of independent directors. No member of the compensation committee is a current or former officer or employee of ours or any of our subsidiaries. Other than Mr. Eckel’s service both as an executive officer and as a member of our board of director, none of our executive officers serves as a member of the board of directors or compensation committee of any company that has one or more of its executive officers serving as a member of our board of directors or compensation committee.

CEO Compensation Pay Ratio

We believe our executive compensation program must be internally consistent and equitable to motivate our employees to create stockholder value. We monitor the relationship between the compensation of our executive officers and the compensation of our non-managerial employees. For 2016,2019, the total compensation of Jeffrey Eckel, our Presidentpresident and Chief Executive Officerchief executive officer of $4,702,381,$5,247,500, as shown in the Summary Compensation Table above (the“CEO Compensation”), was approximately 19.221 times the total compensation of athe median employee, whose compensation was calculated in the same manner of $245,007.

and was $247,530.

We identified the median employee using the annual base salary and expected bonus, as of December 31, 2016,2019, plus any long termlong-term incentive stockequity awards granted in 20162019 for all individuals, excluding our chief executive officer, who were employed by us on December 31, 2016,2019, the last day of our payroll year (whether employed on a full-time, part-time, or seasonal basis). If suchthe median employee’s total compensation was not comparable to the CEO Compensation, for example, because such median employee was hired at the end of the year and thus did not receive long termlong-term incentive stockequity awards in 2016,2019, we used the next lower employee who was comparable as the median employee. After identifying the median employee, we calculated annual total compensation for such employee using the same methodology we use for our CEO Compensation.

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Stock Ownership Guidelines for Named Executive Officers and Directors

In March 2016, our board of directors adopted stock ownership guidelines for our NEOs and directors, which are intended to further align their interests with the interests of our stockholders. Under the guidelines, each NEO must hold an ownership stake in ourthe Company that is significant in comparison to their base salary and each director must hold an ownership stake in the Company that is significant in comparison to thetheir base cash portion of their fees.retainer. The aggregate value of stock ownership required to be retained is shown below:

Chairman, Chief Executive Officer and President: six times base salary;

all other NEOs: three times base salary; and

all other directors: five times the cash retainer.

Each NEO and director has five years to comply from the later of the date they become covered under this policy or the date the policy was originally adopted. Until the individual is in compliance, NEOs must retain 50%, and directors must retain 100%, of any equity grants, other than shares withheld or sold to satisfy taxes. In March 2017, our board of directors clarified the policy to provide that the 100% requirement was net of any shares withheld or sold to satisfy taxes. Stock ownership for the purpose of these guidelines includes stock, restricted stock, OP units and unvested OP units held by the covered individual but excluding any RSUs. As of April 7, 2017,9, 2020, each of our NEOs, other than Mr. Lipson, and Messrs. Cirilli, O’Neil, Osborneeach of our directors, other than Mr. Eckhart and OsgoodMs. Lagomarsino, were in compliance with the stock ownership guidelines. Mses. BlalockEach of Mr. Lipson, Mr. Eckhart and Brenner haveMs. Lagomarsino has until 2022 and 2021, respectively2024 to achieve compliance.

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SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Exchange Act requires our directors, executive officers and holders of more than 10% of the outstanding shares of Common Stock (“10% Holders”) to file with the SEC and the NYSE initial reports of ownership and reports of changes in ownership of Common Stock and other equity securities of our Company. Directors, executive officers and 10% Holders are required by the SEC’s regulations to furnish us with copies of all Section 16(a) forms and amendments thereto filed during any given year.

Based on the review of copies of the Section 16(a) reports and amendments thereto furnished to us and/or written representations from our directors, executive officers and 10% Holders that no other reports were required to be filed, we believe that for the year ended December 31, 2016 our directors, executive officers and 10% Holders complied with all Section 16(a) filing requirements applicable to them, except that one transaction was reported late for each of Mr. Eckel and Mr. Wooten.

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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Indemnification Agreements for Officers and Directors

We have entered into indemnification agreements with members of our board of directors and our executive officers. These indemnification agreements provide indemnification to these persons by us to the maximum extent permitted by Maryland law and certain procedures for indemnification, including advancement by us of certain expenses relating to claims brought against these persons under certain circumstances.

EnergySource LLC

In December 2013, we recorded an allowance of $11.0 million on the remaining $11.8 million balance of a $24 million loan made in May 2013 to a wholly owned subsidiary of EnergySource LLC (“EnergySource”) to be used for a geothermal project. In November 2014, we entered into a Forbearance and Mutual Release Agreement with EnergySource under which in full satisfaction of the remaining balance of our loan, we would realize a portion of the proceeds from the sale of land held by EnergySource in an estimated amount of $0.8 million. As a result of this agreement, we charged off $9.8 million of the receivable against the allowance, resulting in a remaining allowance of $1.2 million. During the year ended December 31, 2015, we collected the $0.8 million balance, as a final recovery from the EnergySource loan and therefore, we charged off the remaining loan balance of $1.2 million against the allowance of $1.2 million. There was no effect on the statement of operations for this loan during the years ended December 31, 2015 and 2014. Certain of our executive officers and directors owned an indirect minority interest in EnergySource following the distribution of the Predecessor’s ownership interest prior to our IPO. In June 2016, the indirect minority interest in EnergySource was sold and none of our executive officers and directors owned any remaining interest in EnergySource following the sale.

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth information as of April 7, 2017the Record Date regarding the beneficial ownership of our Common Stock by (i) each person known to us to be the beneficial owner of more than 5% of the outstanding Common Stock, (ii) our NEOs as of December 31, 2019, (iii) our directors and (iv) all of our directors and NEOs as a group. Beneficial ownership of our Common Stock includes any shares over which the beneficial owner has sole or shared voting or investment power, and also any shares that the beneficial owner has the right to acquire within 60 days of such date through the exercise of options or other rights.

  Shares of Common
Stock
Beneficially Owned		 

Name(1)

 Number  Percent(2) 

Named Executive Officers and Directors:

  

Jeffrey W. Eckel

  1,213,097   2.3% 

J. Brendan Herron(3)

  349,778   * 

Nathaniel J. Rose(4)

  279,529   * 

Steven L. Chuslo(5)

  259,571   * 

Daniel K. McMahon

  239,690   * 

M. Rhem Wooten Jr.(6)

  300,246   * 

Rebecca A. Blalock(7)

  3,426   * 

Teresa M. Brenner

  6,959   * 

Mark J. Cirilli(8)

  60,843   * 

Charles M. O’Neil

  21,244   * 

Richard J. Osborne

  28,744   * 

Steven G. Osgood

  19,880   * 

All directors and executive officers as a group (12 persons)

  2,783,007   5.4% 

5% or Greater Beneficial Owners:

  

Wellington Management Group LLP(9)

  5,074,624   9.8% 

T. Rowe Price Associates, Inc.(10)

  4,577,374   8.8% 

Blackrock, Inc.(11)

  4,022,719   7.8% 

rights and any shares issuable upon redemption of OP units issuable upon time-based vesting and conversion of LTIP units.
  
Shares of Common Stock Beneficially Owned 
Name (1)
 Number 
Percent (2)
Named Executive Officers and Directors:    
Jeffrey W. Eckel (3)  
 1,224,274
 1.7%
Jeffrey A. Lipson (4)
 50,799
 *
J. Brendan Herron (5)   
 366,337
 *
Nathaniel J. Rose (6)   
 237,917
 *
Steven L. Chuslo (7)   
 285,039
 *
Daniel K. McMahon (8)   
 195,887
 *
Teresa M. Brenner 18,596
 *
Michael T. Eckhart 8,611
 *
Simone F. Lagomarsino 11,659
 *
Charles M. O’Neil 32,881
 *
Richard J. Osborne 41,881
 *
Steven G. Osgood 38,259
 *
All directors and executive officers as a group (12 persons)   
 2,512,140
 3.4%
5% or Greater Beneficial Owners:    
The Vanguard Group (9)  
 7,748,462
 11.9%
Wellington Management Group LLP (10)  
 6,132,931
 9.5%
Blackrock, Inc. (11)  
 5,992,722
 9.1%
*Represents beneficial ownership of less than 1%.
(1)The address for each of the directors and officers named above is 1906 Towne Centre Blvd, Suite 370, Annapolis, Maryland 21401.
(2)Based onAs of the Record Date, there were a total of 52,030,32473,176,605 shares of our Common Stock and OP units outstanding, as of April 7, 2017, which is comprised of 50,194,089 shares of Common Stock, 1,551,243includes 459,571 unvested shares of restricted Common Stock, and 284,992281,903 shares of Common Stock issuable upon redemption of OP units which are or will be redeemable for cash or, at our option, exchangeable on a one-for-one basis intoand 356,656 shares of our Common Stock. In addition, share amounts for all persons assume that allStock issuable upon redemption of OP units held by the person are exchanged forissuable upon time-based vesting and conversion of LTIP units. This amount excludes up to 494,294 shares of our Common Stock issuable upon performance-based vesting of RSUs and that all unvested restricted stock vest. Theup to 625,408 shares of Common Stock issuable upon redemption of OP units issuable upon performance-based vesting and conversion of LTIP units. For the calculation of each holder's percentage, the total number of shares of Common Stock outstanding used in calculating thissuch percentage assumes that none of the RSUs or OP units (which includes LTIP units convertible into OP units) held by other persons are exchangedvested, converted and/or redeemed for shares of our Common Stock. Does not include 253,200 restricted stock units that have been awarded but are not yet convertible within 60 days of above date into shares of Common Stock.
(3)This amount includes 213,84042,000 shares held by the individual’s significant other, 2,536 shares held in trust for the individual's minor relatives, 865,394 shares held by the Jeffrey W. Eckel Revocable Trust of which Mr. Eckel is the sole trustee and beneficiary, 107,661 shares held by Chesapeake Power, LLC of which Mr. Eckel is the sole member and 15,000 shares held by Chesapeake Power Foundation, the activities of which Mr. Eckel has the sole ability to direct. This amount excludes up to 124,200 shares of Common Stock (including unvested restricted common stock)issuable upon performance-based vesting of RSUs and 135,938up to 248,500 shares of Common Stock issuable upon redemption of OP units issuable upon performance-based vesting and conversion of LTIP units. LTIP units included or excluded for this individual are held by HASI Management HoldCo LLC ("HoldCo LLC"). The individual is a member of HoldCo LLC. Such LTIP units represent only the number of LTIP units in which the individual has a pecuniary interest in accordance with his or her proportionate interest in HoldCo LLC.
(4)This amount excludes 43,500 shares of Common Stock issuable upon redemption of OP units issuable upon performance-based vesting and conversion of LTIP units. LTIP units included or excluded for this individual are held by HoldCo LLC. The individual is a member of HoldCo LLC. Such LTIP units represent only the number of LTIP units in which the individual has a pecuniary interest in accordance with his or her proportionate interest in HoldCo LLC.


(5)This amount includes 6,920 shares held by the individual’s spouse and minor children.children and 135,938 shares of Common Stock issuable upon redemption of OP units. This amount excludes up to 51,752 shares of Common Stock issuable upon performance-based vesting of RSUs and up to 103,000 shares of Common Stock issuable upon redemption of OP units issuable upon performance-based vesting and conversion of LTIP units. LTIP units included or excluded for this individual are held by HoldCo LLC. The individual is a member of HoldCo LLC. Such LTIP units represent only the number of LTIP units in which the individual has a pecuniary interest in accordance with his or her proportionate interest in HoldCo LLC.
(4)
(6)This amount includes 10,00010,697 shares held by the individual’s spouse. This amount excludes up to 37,952 shares of Common Stock issuable upon performance-based vesting of RSUs and up to 76,500 shares of Common Stock issuable upon redemption of OP units issuable upon performance-based vesting and conversion of LTIP units. LTIP units included or excluded for this individual are held by HoldCo LLC. The individual is a member of HoldCo LLC. Such LTIP units represent only the number of LTIP Units in which the individual has a pecuniary interest in accordance with his or her proportionate interest in HoldCo LLC.
(5)
(7)This amount includes 4,700 shares held by the individual’s significant other.
(6)This amount includes 29,345 shares held by the individual’s spouse.
(7)Rebecca Blalock became a member of our board of directors in March 2017.
(8)Consists of 58,991excludes up to 32,776 shares of Common Stock (including unvested restricted common stock)issuable upon performance-based vesting of RSUs and 1,852up to 65,500 shares of Common Stock issuable upon redemption of OP units issuable upon performance-based vesting and conversion of LTIP units. LTIP units included or excluded for this individual are held by HoldCo LLC. The individual is a member of HoldCo LLC. Such LTIP units represent only the number of LTIP units in which the individual has a pecuniary interest in accordance with his or her proportionate interest in HoldCo LLC.

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(8)This amount excludes up to 32,776 shares of Common Stock issuable upon performance-based vesting of RSUs and up to 65,500 shares of Common Stock issuable upon redemption of OP units issuable upon performance-based vesting and conversion of LTIP units. LTIP units included or excluded for this individual are held by HoldCo LLC. The individual is a member of HoldCo LLC. Such LTIP units represent only the number of LTIP units in which the individual has a pecuniary interest in accordance with his or her proportionate interest in HoldCo LLC.
(9)Based on information provided in a Schedule 13G/A filed on February 9, 2017, Wellington Management12, 2020, The Vanguard Group LLP reported sole voting power with respect to 69,631 shares of Common Stock beneficially owned by it, sole dispositive power with respect to 7,673,256 shares of Common Stock beneficially owned by it, shared voting power with respect to 3,021,57615,403 shares of Common Stock beneficially owned by it and shared dispositive power with respect to 5,074,62475,206 shares of Common Stock beneficially owned by it. The Schedule 13G/A reports beneficial ownership information, which does not include any shares acquired or sold since the date of such Schedule 13G/A. The business address of Wellington Management Group LLP is 280 Congress Street, Boston, MA 02210.
(10)Based on information provided in a Schedule 13G filed on February 7, 2017, T. Rowe Price Associates, Inc. reported sole voting power with respect to 1,075,654 sharespercent of Common Stock beneficially owned by it and sole dispositive power with respect to 4,577,374 shares of Common Stock beneficially owned by it. The Schedule 13G reports beneficial ownership information, which does not include the impact of any shares acquiredCommon Stock issued or soldequity-based awards granted since the date of suchthe Schedule 13G. T. Rowe Price Associates, Inc.’s13G/A. The Vanguard Group’s address is 100 E. Pratt Street, Baltimore, Maryland 21202.Vanguard Blvd., Malvern, PA 19355.
(11)
(10)Based on information provided in a Schedule 13G/A filed on January 24, 2017, BlackRock, Inc.8, 2020, Wellington Management Group LLP reported soleshared voting power with respect to 3,913,6815,370,797 shares of Common Stock beneficially owned by it and soleshared dispositive power with respect to 4,022,7196,132,931 shares of Common Stock beneficially owned by it. The Schedule 13G/A reports beneficial ownership information, which does not include any shares acquired or sold since the date of such Schedule 13G/A. The percent of Common Stock beneficially owned does not include the impact of any Common Stock issued or equity-based awards granted since the filing date of the Schedule 13G/A. The business address of Wellington Management Group LLP is 280 Congress Street, Boston, MA 02210.
(11)Based on information provided in a Schedule 13G/A filed on February 5, 2020, BlackRock, Inc. reported sole voting power with respect to 5,814,243 shares of Common Stock beneficially owned by it and sole dispositive power with respect to 5,992,722 shares of Common Stock beneficially owned by it. The Schedule 13G/A reports beneficial ownership information, which does not include any shares acquired or sold since the date of such Schedule 13G/A. The percent of Common Stock beneficially owned does not include the impact of any Common Stock issued or equity-based awards granted since the date of the Schedule 13G/A. BlackRock, Inc.’s address is 55 East 52nd Street, New York, New York 10055.

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OTHER MATTERS

Our board of directors knows of no other business to be presented at the Annual Meeting. The proxies for the Annual Meeting confer discretionary authority on the persons named therein as proxy holders to vote on any matter proposed by stockholders for consideration at the Annual Meeting. As to any other business which may properly come before the Annual Meeting, the persons named as proxy holders on your proxy card will vote the shares of Common Stock represented by properly submitted proxies in their discretion.

SUBMISSION OF STOCKHOLDER PROPOSALS

Any stockholder intending to present a proposal at our 20182021 annual meeting of stockholders and have the proposal included in the proxy statement and proxy card for such meeting (pursuant to Rule 14a-8 of the Exchange Act) must, in addition to complying with the applicable laws and regulations governing submissions of such proposals, submit the proposal in writing to us no later than 5:00 p.m., Eastern time, on December 11, 2017,15, 2020, but in no event earlier than November 10, 2017,15, 2020, and must otherwise be in compliance with the requirements of the SEC’s proxy rules.

Our Bylaws currently provide that any stockholder intending to nominate a director or present a stockholder proposal of other business for consideration at the 20182021 annual meeting of stockholders, but not intending for such a nomination or proposal to be considered for inclusion in our proxy statement and proxy card relating to such meeting (i.e., not pursuant to Rule 14a-8 of the Exchange Act), must notify us in writing no earlier than the 150th day and not later than 5:00 p.m., Eastern Time,time, on the 120th day prior to the first anniversary of the date of the proxy statement for the immediately preceding annual meeting of stockholders; provided, however, that in the event that the annual meeting with respect to which such notice is to be tendered is not held within 30 days before or after the anniversary of the date of the preceding year’s annual meeting of stockholders, to be timely, notice by the stockholder must be received no earlier than the 150th day and not later than 5:00 p.m., Eastern Time,time, on the 120th day prior to the first anniversary of the date of the immediately preceding annual meeting of stockholders, as originally convened, or the close of business on the tenth day following the day on which public announcement of the date of such meeting is first made. Accordingly, to submit a director candidate for consideration for nomination at our 20182021 annual meeting of stockholders, stockholders must submit the recommendation, in writing, by 5:00 p.m., Eastern time, on December 11, 2017,15, 2020, but in no event earlier than November 10, 2017.

15, 2020.

Any such nomination or proposal should be sent to Steven L. Chuslo, our general counsel, executive vice president and secretary, at Hannon Armstrong Sustainable Infrastructure Capital, Inc., 1906 Towne Centre Blvd, Suite 370, Annapolis, Maryland 21401, and, to the extent applicable, must include the information and other materials required by our Bylaws.

Our board of directors know of no other matters or business to be presented for consideration at the Annual Meeting. If, however, any other matters properly come before the Annual Meeting or any adjournmentspostponements or postponementsadjournments thereof, it is the intention of the persons named in the enclosed proxy to vote such proxy in accordance with their discretion on any such matters. The persons named in the enclosed proxy may also, if they deem it advisable, vote such proxy to adjourn the Annual Meeting from time to time.

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MISCELLANEOUS

We are bearing all costs associated with the solicitation of proxies in connection with the Annual Meeting. This solicitation is being made primarily through the Internet and by mail but may also be made by our directors, executive officers and employees by telephone, facsimile transmission, electronic transmission, Internet, mail or personal interview. No additional compensation will be given to our directors, executive officers or employees for this solicitation. We will request brokerage firms, banks, broker-dealers and other intermediaries who hold shares of Common Stock in their names to furnish proxy materials to beneficial owners of such shares and will reimburse such brokerage firms, banks, broker-dealers and other intermediaries for their reasonable expenses incurred in forwarding solicitation materials to such beneficial owners.

A COPY OF OUR ANNUAL REPORT ON FORM 10-K (FILED WITH THE SEC AND THE NYSE), WHICH CONTAINS ADDITIONAL INFORMATION ABOUT US, IS AVAILABLE FREE OF CHARGE TO ANY STOCKHOLDER. REQUESTS SHOULD BE DIRECTED TO INVESTOR RELATIONS AT HANNON ARMSTRONG SUSTAINABLE INFRASTRUCTURE CAPITAL, INC., 1906 TOWNE CENTRE BLVD, SUITE 370, ANNAPOLIS, MARYLAND 21401.

By Order of theour Board of Directors,

/s/ Jeffrey W. Eckel

Jeffrey W. Eckel

President and Chief Executive Officer

Annapolis, Maryland

April 10, 2017

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14, 2020




ANNUAL MEETING OF STOCKHOLDERS OF

Hannon Armstrong Sustainable Infrastructure Capital, Inc.

June 1, 2017

4, 2020

9:30 a.m. ET

Eastern Time

GO GREEN

e-Consent makes it easy to go paperless. With e-Consent, you can quickly access your proxy

material, statements and other eligible documents online, while reducing costs, clutter and

paper waste. Enroll today via www.amstock.comwww.astfinancial.com to enjoy online access.

IMPORTANT
NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIAL FOR THE ANNUAL MEETING:

The Notice of Meeting, annual report to stockholders, proxy statement and proxy card are available at:

http://www.astproxyportal.com/ast/18257

Please sign, date and mail

your vote authorization

formproxy card in the envelope

provided as soon as

possible.

i

Please detach along perforated line and mail in the envelope provided.
i

⬛

THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE ELECTION OF ALL OF THE NOMINEES

LISTED BELOW, AND “FOR” PROPOSAL NUMBERSITEMS 2 AND 3 AND “ONE” YEAR FOR PROPOSAL 4.3. PLEASE SIGN,

DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE   ☒

ý
1.The election as directors of all of the Nominees or the individual nominees listed below:below except as marked to the contrary below): FOR AGAINSTABSTAIN
  ALL NOMINEES ☐FOR ALL NOMINEES
☐Jeffrey W. Eckel
☐Teresa M. Brenner ☐WITHHOLD AUTHORITY FOR ALL NOMINEES
☐☐Michael T. Eckhart 
       Jeffrey W. Eckel
☐Simone F. Lagomarsino ☐FOR ALL EXCEPT (See Instructions below)
☐☐Charles M. O’Neil ☐ 
☐
Richard J. Osborne       Rebecca A. Blalock 
INSTRUCTIONS: To withhold authority to vote for any individual nominee(s), mark "FOR ALL EXCEPT" and fill in the circle next to each nominee you wish to withhold as shown here: ☐
☐Steven G. Osgood ☐
 ☐FORAGAINSTABSTAIN 
      Teresa M. Brenner☐☐☐
      Mark J. Cirilli☐☐☐
      Charles M. O’Neil☐☐☐
      Richard J. Osborne☐☐☐
      Steven G. Osgood☐☐☐
2.The ratification of the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2017.2020.☐☐☐ ☐☐
3.The advisory approval of the compensation of the Named Executive Officers as described in the Compensation Discussion and Analysis, the compensation tables and other narrative disclosure in this proxy statement.☐☐☐ ☐☐
4.The frequency in years with which stockholders are provided an advisory vote on executive compensation, pursuant totransaction of any other business that may properly come before the compensation disclosure rules of the SEC.meeting or any adjournment thereof.

ONE

☐

TWO

☐

THREE

☐

ABSTAIN

      ☐

  

The undersigned acknowledges receipt from the CompanyHannon Armstrong Sustainable Infrastructure Capital, Inc. before the execution of this proxy of the Notice of Annual Meeting of Stockholders and a Proxy Statement for the Annual Meeting of Stockholders, the terms of which are incorporated herein by reference, and the 20162019 Annual Report to Stockholders.

If this Proxy is properly executed, the votes entitled to be cast by the undersigned will be cast (i) as directed or, if no direction is given, will be cast “FOR” the election of all of the nominees listed above,herein and “FOR” itemitems 2 toand 3, and “ONE” year for item 4 and(ii) in the discretion of the Proxy holders on any other business that may properly come before the meeting or any postponement or adjournment or postponement thereof.

 I plan to attend the Annual Meeting via live webcast at http://web.lumiagm.com/259337958 (password: hannon2020) ☐
    
  

 
 To change the address on your account, please check the box at the right and indicate your new address in the address space above. Please note that changes to the registered name(s) on the account may not be submitted via this method.  ☐

Signature of Stockholder

    Date:   Signature of Stockholder   Date:  


   Note:

Please sign exactly as your name or names appear on this Proxy and date. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person.                                 ¢

 
⬛  ⬛



Hannon Armstrong Sustainable Infrastructure Capital, Inc.

1906 Towne Centre Blvd., Ste. 370

Annapolis, MD 21401

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned stockholder of Hannon Armstrong Sustainable Infrastructure Capital, Inc., a Maryland corporation (“the Company”), hereby appoints Steven L. Chuslo and Jeffrey W. Eckel, or either of them, as proxies for the undersigned, each with full power of substitution, to attend the Annual Meeting of Stockholders of the Company to be held via a live webcast at the Westin Annapolis Hotel located at 100 Westgate Circle, Annapolis, MD 21401, http://web.lumiagm.com/259337958(password: hannon2020) on June 1, 2017,4, 2020, at 9:30 a.m. easternEastern time, to cast on behalf of the undersigned all votes that the undersigned is entitled to cast at such meeting, and any postponement or adjournment thereof, and otherwise to represent the undersigned at the meeting with all powers possessed by the undersigned if personally present at the meeting.meeting or otherwise attending online. The undersigned revokes any proxy previously given with respect to the meeting.

IF THIS PROXY IS PROPERLY EXECUTED, THE VOTES ENTITLED TO BE CAST BY THE UNDERSIGNED WILL BE CAST AS DIRECTED OR, IF NO DIRECTION IS GIVEN, WILL BE CAST “FOR” THE ELECTION OF ALL OF THE NOMINEES LISTED ON THE REVERSE SIDE OF THIS PROXY CARD, FOR” PROPOSAL NUMBERS 2"FOR” THE RATIFICATION OF ERNST & YOUNG LLP AS THE COMPANY'S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2020, AND 3 AND “ONE” YEAR FOR PROPOSAL 4 AND IN"FOR" THE DISCRETIONADVISORY APPROVAL OF THE COMPENSATION OF THE NAMED EXECUTIVE OFFICERS. THIS PROXY HOLDERS ONALSO DELEGATES DISCRETIONARY AUTHORITY TO VOTE WITH RESPECT TO ANY OTHER MATTERBUSINESS THAT MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT OR POSTPONEMENT THEREOF.

(Continued and to be signed on the reverse side)



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