UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
Amendment No. 1
(Mark One)
x
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended December 31, 2013
or
o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from to
Commission file number: 001-33437
KKR FINANCIAL HOLDINGS LLC
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of
incorporation or organization)
|
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11-3801844
(I.R.S. Employer
Identification No.)
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555 California Street, 50
th
Floor
San Francisco, CA
(Address of principal executive offices)
|
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94104
(Zip Code)
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Registrants telephone number, including area code:
(415) 315-3620
Securities registered pursuant to Section 12(b) of the Act:
Shares representing limited liability company membership interests listed on the New York Stock Exchange
Securities registered pursuant to section 12(g) of the Act:
None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
x
Yes
o
No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
o
Yes
x
No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
x
Yes
o
No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
x
Yes
o
No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.
x
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer
x
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Accelerated filer
o
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Non-accelerated filer
o
(Do not check if a
smaller reporting company)
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Smaller reporting company
o
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
o
Yes
x
No
The aggregate market value of the common shares held by non-affiliates of the registrant as of June 30, 2013 was $2,095,884,047, based on the closing price of the common shares on such date as reported on the New York Stock Exchange.
The number of shares of the registrants common shares outstanding as of April 17, 2014 was 204,824,159.
DOCUMENTS INCORPORATED BY REFERENCE
None.
guidelines observed by the Affiliated Transactions Committee when evaluating investment opportunities is included below in Certain Relationships and Related TransactionsRelationships with KKR; Other Relationships and Related Transactions .
Our Board has determined that each of the directors on the Affiliated Transactions Committee satisfies the independence requirements of NYSE.
Audit Committee
The members of the Audit Committee are Tracy L. Collins, Robert L. Edwards, R. Glenn Hubbard, Ross J. Kari and Scott A. Ryles. Ross J. Kari chairs the Audit Committee. Among other things, the Audit Committee is responsible for:
·
our accounting and financial reporting processes;
·
the integrity and audits of our consolidated financial statements;
·
our compliance with legal and regulatory requirements;
·
the qualifications and independence of the independent registered public accounting firm;
·
the performance of the independent registered public accounting firm and any internal auditors;
·
engaging an independent registered public accounting firm;
·
reviewing with the independent registered public accounting firm the plans and results of the audit engagement;
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approving professional services provided by the independent registered public accounting firm;
·
considering the range of audit and non-audit fees; and
·
reviewing the adequacy of our internal accounting controls.
Our Board has determined that all of the Audit Committee members satisfy the applicable independence and financial literacy requirements of the NYSE for audit committee members. Our Board has also determined that each of Ross J. Kari and Robert L. Edwards is an audit committee financial expert as such term is defined in Item 407(d)(5) of Regulation S-K.
Compensation Committee
The members of the Compensation Committee are Tracy L. Collins, Vincent Paul Finigan, Deborah H. McAneny and Willy R. Strothotte. Deborah H. McAneny chairs the Compensation Committee.
The principal functions of the Compensation Committee are to:
·
review the compensation payable to the directors;
·
oversee the annual review by our independent directors of the fees that we pay to our Manager under the Amended and Restated Management Agreement, or the Management Agreement, among the Manager and us; and
·
administer our 2007 Share Incentive Plan, as amended, or our 2007 Share Incentive Plan, and approve the grant of awards under that Plan to our directors and our Manager.
The Compensation Committee has authority to determine the compensation payable to our directors and to grant awards under our 2007 Share Incentive Plan and solicits recommendations from our executive officers and outside compensation consultants in determining the amount or form of such director compensation or awards. The Compensation Committee also oversees risk when it considers granting options and restricted shares to our Manager under the Management Agreement. In particular, the factors considered by the Compensation Committee in making grants to our Manager may include performance related factors such as achievement of specified levels of net income. In evaluating investments and other management strategies, the opportunity to earn incentive compensation based on net income may lead our Manager to
9
ITEM 11. EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION
Because our Management Agreement provides that our Manager is responsible for managing our affairs, our executive officers, who are employees of our Manager or one or more of its affiliates, do not receive compensation from us or any of our subsidiaries for serving as our executive officers. Accordingly, we do not have employment agreements with our executive officers, we do not provide pension or retirement benefits, perquisites or other personal benefits to our executive officers and we do not have arrangements to make payments to our executive officers upon their termination or in the event of a change in control of the Company.
Additionally, the Management Agreement does not require our executive officers to dedicate a specific amount of time to fulfilling our Managers obligations to us under the Management Agreement. Accordingly, our Manager has informed us that it cannot identify the portion of the compensation awarded to our executive officers that relates solely to their services to us, as our Manager and its affiliates do not compensate its employees specifically for such services.
Because our executive officers do not receive compensation from us or any of our subsidiaries and because our Manager has informed us that it cannot identify the portion of the compensation awarded to our executive officers that relates solely to their services to us, we do not provide executive compensation disclosure pursuant to Item 402 of Regulation S-K. As a result, the say-on-pay and say-on-when provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 are inapplicable to us.
The Management Agreement
We are party to the Management Agreement with our Manager pursuant to which our Manager will provide for the day-to-day management of our operations.
The Management Agreement requires our Manager to manage our business affairs in conformity with the investment guidelines that are approved by a majority of our independent directors. Our Manager is under the direction of our Board of Directors. Our Manager is responsible for (1) the selection, purchase and sale of our investments, (2) our financing and risk management activities and (3) providing us with investment advisory services.
The Management Agreement expired on December 31, 2013, was automatically renewed for a one-year term expiring on December 31, 2014 and will be automatically renewed for a one-year term on each anniversary date thereafter. Our independent directors review our Managers performance annually and the Management Agreement may be terminated annually (upon 180 day prior written notice) upon the affirmative vote of at least two-thirds of our independent directors, or by a vote of the holders of a majority of our outstanding common shares, based upon (1) unsatisfactory performance by the Manager that is materially detrimental to us or (2) a determination that the management fees payable to our Manager are not fair, subject to our Managers right to prevent such a termination under this clause (2) by accepting a mutually acceptable reduction of management fees. We must provide a 180 day prior written notice of any such termination and our Manager will be paid a termination fee equal to four times the sum of the average annual base management fee and the average annual incentive fee for the two 12-month periods preceding the date of termination, calculated as of the end of the most recently completed fiscal quarter prior to the date of termination.
We may also terminate the Management Agreement without payment of the termination fee with a 30 day prior written notice for cause, which is defined as:
·
our Managers continued material breach of any provision of the Management Agreement following a period of 30 days after written notice thereof;
·
our Managers fraud, misappropriation of funds, or embezzlement against us;
·
our Managers gross negligence in the performance of its duties under the Management Agreement;
·
the commencement of any proceeding relating to our Managers bankruptcy or insolvency;
·
the dissolution of our Manager; or
·
a change in control of our Manager.
Cause does not include unsatisfactory performance, even if that performance is materially detrimental to our business. Our Manager may terminate the Management Agreement, without payment of the termination fee, in the event we become regulated as an investment company under the Investment Company Act of 1940, as amended, or the Investment Company Act. Furthermore, our Manager may decline to renew the Management Agreement by providing us with a 180 day prior written notice. Our Manager may also terminate the Management Agreement upon 60 days prior written notice if we default
11
in the performance of any material term of the Management Agreement and the default continues for a period of 30 days after written notice to us, whereupon we would be required to pay our Manager the termination fee described above.
We do not employ personnel and therefore rely on the resources and personnel of our Manager to conduct our operations. For performing these services under the Management Agreement, our Manager receives a base management fee and incentive compensation based on our performance. Our Manager also receives reimbursements for certain expenses, which are made on the first business day of each calendar month.
Base Management Fee
We pay our Manager a base management fee monthly in arrears in an amount equal to
1
/
12
of our equity, as defined in the Management Agreement, multiplied by 1.75%. We believe that the base management fee that our Manager is entitled to receive is generally comparable to the base management fee received by the managers of comparable externally managed specialty finance companies. Our Manager uses the proceeds from its management fee in part to pay compensation to its officers and employees who, notwithstanding that certain of them also are officers of us, receive no compensation directly from us.
For purposes of calculating the base management fee, our equity means, for any month, the sum of:
·
the net proceeds from any issuance of our common shares, after deducting any underwriting discount and commissions and other expenses and costs relating to the issuance;
·
the net proceeds of any issuances of preferred shares or trust preferred stock;
·
the net proceeds of any issuances of convertible debt issuances or other securities determined to be equity by our Board of Directors, provided that such issuances are approved by our Board of Directors; and
·
our retained earnings at the end of such month (without taking into account any non-cash equity compensation expense incurred in current or prior periods), which amount shall be reduced by any amount that we pay for the repurchases of our common shares.
The foregoing calculation of the base management fee is adjusted to exclude special one-time events pursuant to changes in accounting principles generally accepted in the United States of America, or GAAP, as well as non-cash charges, after discussion between our Manager and our independent directors and approval by a majority of our independent directors in the case of non-cash charges.
Our Manager is required to calculate the base management fee within 15 business days after the end of each month and deliver that calculation to us promptly. We are obligated to pay the base management fee within 20 business days after the end of each month. We may elect to have our Manager allocate the base management fee among us and our subsidiaries, in which case the fee would be paid directly by each entity that received an allocation.
During the year ended December 31, 2013, certain related party fees received by affiliates of our Manager were credited to us via an offset to the base management fee (Fee Credits). Specifically, as described in further detail under The Collateral Management Agreements below, a portion of the CLO management fees received by an affiliate of our Manager for certain of our CLOs were credited to us via an offset to the base management fee. For some of these CLOs, we hold less than 100% of the subordinated notes, with the remainder held by third parties. As a result, the amount of Fee Credits for each applicable CLO was calculated by taking the product of (x) the total CLO management fees received by an affiliate of our Manager during the period for such CLO multiplied by (y) the percentage of the subordinated notes of such CLO held by us. The remaining portion of the CLO management fees paid by each of these CLOs was not credited to us, but instead resulted in a dollar-for-dollar reduction in the interest expense paid by us to the third party holder of the CLOs subordinated notes.
In addition, during 2013, we invested in a transaction that generated placement fees paid to a minority-owned affiliate of KKR. In connection with this transaction, our Manager agreed to reduce the base management fee payable to our Manager for the portion of these placement fees that were earned by KKR as a result of this minority-ownership. Separately, certain third-party expenses were accrued by us in the fourth quarter of 2013 in connection with the KKR acquisition proposal and were used to reduce the base management fees payable to our Manager in an amount equal to such third-party expenses. For the year ended December 31, 2013, $25.0 million of net base management fees were earned by our Manager.
12
Our Manager is waiving base management fees related to the $230.4 million common share offering and $270.0 million common share rights offering that occurred during the third quarter of 2007 until such time as our common share closing price on the NYSE is $20.00 or more for five consecutive trading days. Accordingly, our Manager permanently waived approximately $8.8 million of base management fees during the year ended December 31, 2013.
Reimbursement of Expenses
Because our Managers employees and affiliates perform certain legal, accounting and due diligence tasks and other services that outside professionals or outside consultants otherwise would perform, our Manager is paid or reimbursed for the documented cost of performing such tasks, provided that such costs and reimbursements are no greater than those which would be paid to outside professionals or consultants on an arms-length basis.
We also pay all operating expenses, except those specifically required to be borne by our Manager under the Management Agreement. Our Manager is required to calculate its reimbursable expenses within 20 business days after the end of each month and deliver that calculation to us promptly. We are obligated to repay such expenses on the first business day of the month immediately following delivery, although such amount may be offset against amounts owed to us by our Manager. The expenses required to be paid by us include, but are not limited to, rent, issuance and transaction costs incident to the acquisition, disposition and financing of our investments, legal, tax, accounting, consulting and auditing fees and expenses, the compensation and expenses of our directors, the cost of directors and officers liability insurance, the costs associated with the establishment and maintenance of any credit facilities and other indebtedness of ours (including commitment fees, accounting fees, legal fees and closing costs), expenses associated with other securities offerings of ours, expenses relating to making distributions to our shareholders, the costs of printing and mailing proxies and reports to our shareholders, costs associated with any computer software or hardware, electronic equipment, or purchased information technology services from third party vendors, costs incurred by employees of our Manager for travel on our behalf, the costs and expenses incurred with respect to market information systems and publications, research publications and materials, and settlement, clearing, and custodial fees and expenses, expenses of our transfer agent, the costs of maintaining compliance with all federal, state and local rules and regulations or any other regulatory agency, all taxes and license fees and all insurance costs incurred by us or on our behalf. In addition, we will be required to pay our pro rata portion of rent, telephone, utilities, office furniture, equipment, machinery and other office, internal and overhead expenses of our Manager and its affiliates required for our operations. Except as noted above, our Manager is responsible for all costs incident to the performance of its duties under the Management Agreement, including compensation of our Managers employees and other related expenses, except that we may elect to have our Manager allocate expenses among us and our subsidiaries, in which case expenses would be paid directly by each entity that received an allocation.
For the year ended December 31, 2013, we incurred reimbursable expenses to our Manager of $9.8 million.
Incentive Compensation
In addition to the base management fee, our Manager receives quarterly incentive compensation in an amount equal to the product of: (1) 25% of the dollar amount by which: (a) our Net Income, before incentive compensation, per weighted-average share of our common shares for such quarter, exceeds (b) an amount equal to (A) the weighted-average of the price per share of the common stock of KKR Financial Corp. in its August 2004 private placement and the prices per share of the common stock of KKR Financial Corp. in its initial public offering and any subsequent offerings by KKR Financial Holdings LLC multiplied by (B) the greater of (i) 2.00% and (ii) 0.50% plus one-fourth of the Ten Year Treasury Rate for such quarter, multiplied by (2) the weighted average number of our common shares outstanding in such quarter. The foregoing calculation of incentive compensation will be adjusted to exclude special one-time events pursuant to changes in GAAP, as well as non-cash charges, after discussion between our Manager and our independent directors and approval by a majority of our independent directors in the case of non-cash charges. In addition, any shares that by their terms are entitled to a specified periodic distribution, including our 7.375% Series A LLC Preferred Shares, will not be treated as shares, nor included as shares offered or outstanding, for the purpose of calculating incentive compensation, and instead the aggregate distribution amount that accrues to these shares during the fiscal quarter of such calculation will be subtracted from our Net Income, before incentive compensation for purposes of clause (1)(a). The incentive compensation calculation and payment shall be made quarterly in arrears. For purposes of the foregoing: Net Income will be determined by calculating the net income available to shareholders before non-cash equity compensation expense, in accordance with GAAP; and Ten Year Treasury Rate means the average of weekly average yield to maturity for United States Treasury securities (adjusted to a constant maturity of ten years) as published weekly by the Federal Reserve Board in publication H.15 or any successor publication during a fiscal quarter.
13
Our ability to achieve returns in excess of the thresholds noted above in order for our Manager to earn the incentive compensation described in the preceding paragraph is dependent upon various factors, many of which are not within our control.
Our Manager is required to compute the quarterly incentive compensation within 30 days after the end of each fiscal quarter, and we are required to pay the quarterly incentive compensation with respect to each fiscal quarter within five business days following the delivery to us of our Managers written statement setting forth the computation of the incentive fee for such quarter. We may elect to have our Manager allocate the incentive fee among us and our subsidiaries, in which case the fee would be paid directly by each entity that received an allocation.
For the year ended December 31, 2013, $22.7 million of incentive fees were earned by our Manager.
The Collateral Management Agreements
An affiliate of our Manager entered into separate management agreements with the respective investment vehicles for all of our Cash Flow CLOs pursuant to which it is entitled to receive fees for the services it performs as collateral manager for all of these CLOs, except for KKR Financial CLO 2011-1, Ltd (CLO 2011-1). The collateral manager has the option to waive the fees it earns for providing management services for the CLO.
Fees Waived
During the year ended December 31, 2013, the collateral manager waived aggregate CLO management fees totaling $19.7 million for all CLOs, except for KKR Financial CLO 2005-1, Ltd. (CLO 2005-1) and KKR Financial CLO 2012-1, Ltd. (CLO 2012-1), and for partial periods for KKR Financial CLO 2007-1, Ltd. (CLO 2007-1) and KKR Financial CLO 2007-A, Ltd. (CLO 2007-A).
Fees Charged and Fee Credits
During the year ended December 31, 2013, our Manager agreed to credit us for a portion of the CLO management fees received by an affiliate of our Manager from CLO 2007-1, CLO 2007-A and CLO 2012-1 via an offset to the monthly base management fees payable to our Manager. As we own less than 100% of the subordinated notes of these three CLOs (with the remaining subordinated notes held by third parties), we received a Fee Credit equal only to our pro rata share of the aggregate CLO management fees paid by these CLOs. Specifically, the amount of the reimbursement for each of these CLOs was calculated by taking the product of (x) the total CLO management fees received by an affiliate of our Manager during the period for such CLO multiplied by (y) the percentage of the subordinated notes of such CLO held by us. The remaining portion of the CLO management fees paid by each of these CLOs was not credited to us, but instead resulted in a dollar-for-dollar reduction in the interest expense paid by us to the third party holder of the CLOs subordinated notes. During the year ended December 31, 2013, we recorded aggregate collateral management fees expense totaling $17.3 million for CLO 2005-1, CLO 2007-1, CLO 2007-A and CLO 2012-1, of which we received Fee Credits totaling $10.0 million to offset the monthly base management fees payable to our Manager.
2007 Share Incentive Plan
We have adopted the 2007 Share Incentive Plan to provide incentives to employees (should we in the future have any employees), non-Excluded directors (as defined below), our Manager and other service providers. The incentive plan is administered by the Compensation Committee. Unless terminated earlier, the 2007 Share Incentive Plan will terminate in 2015, but will thereafter continue to govern unexpired awards. As of December 31, 2013, we had made the following grants under the 2007 Share Incentive Plan: 5,485,431 restricted common shares that were already issued, 1,932,279 common share options that remained outstanding and 57,500 common share options that were already exercised. As of December 31, 2013, a total of 1,364,415 shares were available for future equity grants under our 2007 Share Incentive Plan. Furthermore, the number of common shares that may be issued during the plans life will increase by 125,000 common shares on an annual basis to provide for annual awards of restricted common shares to our non-Excluded Directors.
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The 2007 Share Incentive Plan permits the granting of options to purchase common shares intended to qualify as incentive stock options under the Internal Revenue Code, and common share options that do not qualify as incentive stock options. The exercise price of each common share option may not be less than 100% of the fair market value of our common shares on the date of grant. The Compensation Committee will determine the terms of each option, including when each option may be exercised and the period of time, if any, after retirement, death, disability or termination of employment during which options may be exercised. Options become vested and exercisable in installments and the exercisability of options may be accelerated by the Compensation Committee.
The 2007 Share Incentive Plan also permits the grant of our common shares in the form of restricted common shares. A restricted common share award is an award of common shares that may be subject to forfeiture (vesting), restrictions on transferability and such other restrictions, if any, as the Compensation Committee may impose at the date of grant. The common shares may vest and 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. Unrestricted common shares, which are common shares awarded at no cost to the participant or for a purchase price determined by the Compensation Committee, may also be issued under the 2007 Share Incentive Plan.
The Compensation Committee may also grant our common shares, common share appreciation rights, performance awards and other common share and non-common share-based awards under the 2007 Share Incentive Plan. These awards may be subject to such conditions and restrictions as the Compensation Committee may determine. Each award under the 2007 Share Incentive Plan may not be exercisable more than 10 years after the date of grant.
Our Board may at any time amend, alter or discontinue the 2007 Share Incentive Plan, but cannot, without a participants consent, take any action that would diminish the rights of such participant under any award granted under the 2007 Share Incentive Plan. To the extent required by law, our Board will obtain approval of the holders of common shares for any amendment that would, other than through adjustment as provided in the incentive plan:
·
increase the maximum number of our common shares available for issuance under the 2007 Share Incentive Plan;
·
change the class of eligible participants under the 2007 Share Incentive Plan; or
·
otherwise require such approval.
The 2007 Share Incentive Plan provides that the Compensation Committee has the discretion to provide that all or any outstanding common share options and common share appreciation rights will become fully exercisable, all or any outstanding common share awards will become vested and transferable and all or any outstanding performance common shares and incentive awards will be earned, all or any outstanding awards may be cancelled in exchange for a payment of cash and/or all or any outstanding awards may be substituted for awards that will substantially preserve the otherwise applicable terms of any affected awards previously granted under the 2007 Share Incentive Plan if there is a change in control of us. A change in control is defined by the plan as our dissolution, the sale or disposition of substantially all of our assets, the acquisition by one person or group of a majority of our voting shares, a change in the majority of the Board or the adoption of a Board resolution that a change of control has effectively occurred, except that no change of control will result from a transaction with our Manager or any affiliate of our Manager.
The Compensation Committee may make additional grants of common share options and restricted common shares in the future. Factors that may be considered by the Compensation Committee in determining to grant additional awards include the following:
·
the total return realized by investors in our common shares;
·
the price to earnings ratio of our common shares compared to that of our peers;
·
the successful completion of future equity offerings;
·
recommendations of compensation consultants retained by the Compensation Committee;
·
the successful completion of significant projects or initiatives;
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·
our results of operations relative to our peers;
·
our management of credit, market and operating risk; and
·
competitive factors including the compensation received by our Manager for managing investment funds with similar investment strategies.
DIRECTOR COMPENSATION
Mr. William C. Sonneborn retired as our President and Chief Executive Officer and a member of the Board in July 2013. Mr. Farr was appointed to our Board in July 2013. Mr. Sonneborn, Mr. Nuttall and Mr. Farr, or the Excluded Directors, did not receive any additional compensation for serving on our Board. The following table sets forth information concerning the compensation of our non-Excluded Directors who served during 2013.
2013 Director Compensation
Name
|
|
Fees Earned or
Paid in Cash
(1)(3)
|
|
Share Awards
(2)(3)
|
|
All Other
Compensation
(3)(4)
|
|
Total
|
|
Tracy L. Collins
|
|
$
|
92,000
|
|
$
|
70,000
|
|
|
|
$
|
162,000
|
|
Robert L. Edwards
|
|
$
|
86,000
|
|
$
|
70,000
|
|
|
|
$
|
156,000
|
|
Vincent Paul Finigan
|
|
$
|
112,500
|
|
$
|
70,000
|
|
$
|
76,075
|
|
$
|
258,575
|
|
Paul M. Hazen
|
|
$
|
203,500
|
|
$
|
120,000
|
|
$
|
15,045
|
|
$
|
338,545
|
|
R. Glenn Hubbard
|
|
$
|
111,000
|
|
$
|
100,000
|
|
$
|
193,335
|
|
$
|
404,335
|
|
Ross J. Kari
|
|
$
|
111,000
|
|
$
|
70,000
|
|
|
|
$
|
181,000
|
|
Ely L. Licht
|
|
$
|
69,500
|
|
$
|
70,000
|
|
|
|
$
|
139,500
|
|
Deborah H. McAneny
|
|
$
|
108,500
|
|
$
|
70,000
|
|
$
|
55,462
|
|
$
|
233,962
|
|
Scott A. Ryles
|
|
$
|
95,000
|
|
$
|
70,000
|
|
|
|
$
|
165,000
|
|
Willy R. Strothotte
|
|
$
|
78,500
|
|
$
|
70,000
|
|
$
|
162,360
|
|
$
|
310,860
|
|
(1)
Consists of the amounts described below under Cash Compensation, including cash compensation deferred by Mr. Hubbard and Mr. Strothotte as described below. In the case of Mr. Hazen, includes an annual retainer of $175,000 for serving as our chairman; in the case of Mr. Hubbard, includes an annual retainer of $25,000 for serving as the Lead Independent Director and $7,500 for serving as chair of our Nominating and Corporate Governance Committee; in the case of Mr. Kari and Mr. Finigan, includes an annual retainer of $25,000 for serving as chairs of our Audit Committee and Affiliated Transactions Committee, respectively; and, in the case of Ms. McAneny, includes an annual retainer of $15,000 for serving as chair of our Compensation Committee. During 2013, Mr. Hubbard and Mr. Strothotte deferred a total of $111,000 and $78,500, respectively, in cash compensation in exchange for 10,448 and 7,402 shares of phantom shares, respectively, pursuant to the KKR Financial Holdings LLC Non-Employee Directors Deferred Compensation and Share Award Plan, or the Deferred Compensation Plan, as described in more detail below under Deferred Compensation Plan.
(2)
The amounts shown in this column reflect restricted share awards described below under Equity Compensation, including the restricted share awards deferred by Mr. Hazen, Mr. Hubbard, Ms. McAneny and Mr. Strothotte as described below. These awards vest in one-third increments on the first three anniversaries of the date of grant. The amounts shown in this column reflect the aggregate grant date fair value of restricted share awards granted during 2013 as calculated pursuant to Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation
Stock Compensation
, or ASC 718. See Note 11 to the consolidated financial statements included in our Annual Report for a discussion of the relevant assumptions used in calculating these amounts pursuant to ASC 718. The grant date and number of common shares awarded for each restricted share award are set forth below:
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Name
|
|
Share Award:
Number of
Restricted
Shares
|
|
Grant
Date
Fair Value
per Share
|
|
Grant Date
|
|
Aggregate Number of
Unvested
Restricted Shares
Held as of 12/31/13
|
|
Tracy L. Collins
|
|
6,548
|
|
$
|
10.69
|
|
August 9, 2013
|
|
14,538
|
|
Robert L. Edwards
|
|
6,548
|
|
$
|
10.69
|
|
August 9, 2013
|
|
15,429
|
|
Vincent Paul Finigan
|
|
6,548
|
|
$
|
10.69
|
|
August 9, 2013
|
|
6,548
|
|
Paul M. Hazen
|
|
11,225
|
|
$
|
10.69
|
|
August 9, 2013
|
|
5,057
|
|
R. Glenn Hubbard
|
|
9,354
|
|
$
|
10.69
|
|
August 9, 2013
|
|
|
|
Ross J. Kari
|
|
6,548
|
|
$
|
10.69
|
|
August 9, 2013
|
|
14,538
|
|
Ely L. Licht
|
|
6,548
|
|
$
|
10.69
|
|
August 9, 2013
|
|
14,538
|
|
Deborah H. McAneny
|
|
6,548
|
|
$
|
10.69
|
|
August 9, 2013
|
|
|
|
Scott A. Ryles
|
|
6,548
|
|
$
|
10.69
|
|
August 9, 2013
|
|
14,538
|
|
Willy R. Strothotte
|
|
6,548
|
|
$
|
10.69
|
|
August 9, 2013
|
|
|
|
During 2013, Ms. McAneny and Mr. Strothotte each deferred 6,548 restricted shares awarded as equity compensation in exchange for 6,548 phantom shares pursuant to the Deferred Compensation Plan, as described below under Deferred Compensation Plan. Mr. Hazen and Mr. Hubbard deferred 11,225 and 9,354, respectively, of restricted shares awarded as equity compensation in exchange for 11,225 and 9,354, respectively, of phantom shares pursuant to the Deferred Compensation Plan.
(3)
As of December 31, 2013, each non-Excluded Directors share account under the Deferred Compensation Plan was credited the following number of phantom shares:
Name
|
|
Phantom Shares
Received in Lieu
of Cash
Compensation
(#)
|
|
Phantom Shares
Received in Lieu
of Restricted
Share Awards
(#)
|
|
Phantom Shares
Received as
Distributions on
Phantom Shares
(#)
|
|
Total
Phantom Shares
(#)
|
|
Tracy L. Collins
|
|
|
|
|
|
|
|
|
|
Robert L. Edwards
|
|
|
|
|
|
|
|
|
|
Vincent Paul Finigan
|
|
10,213
|
|
64,816
|
|
12,140
|
|
87,169
|
|
Paul M. Hazen
|
|
|
|
24,183
|
|
1,451
|
|
25,634
|
|
R. Glenn Hubbard
|
|
148,287
|
|
57,239
|
|
27,005
|
|
232,531
|
|
Ross J. Kari
|
|
|
|
|
|
|
|
|
|
Ely L. Licht
|
|
|
|
|
|
|
|
|
|
Deborah H. McAneny
|
|
|
|
59,930
|
|
8,516
|
|
68,446
|
|
Scott A. Ryles
|
|
|
|
|
|
|
|
|
|
Willy R. Strothotte
|
|
103,990
|
|
66,587
|
|
22,992
|
|
193,569
|
|
(4)
The amounts shown in this column represent distributions that were earned on phantom shares held in non-Excluded Directors share accounts under the Deferred Compensation Plan.
Cash Compensation
Each non-Excluded Director (other than Mr. Hazen) receives an annual retainer of $50,000, a fee of $1,500 for each full Board meeting attended in person or telephonically and a fee of $1,500 for each committee meeting attended in person or telephonically. Mr. Hazen, in his capacity as our chairman, received an annual retainer of $175,000 for services in such capacity and a fee of $3,000 for each full Board meeting attended in person or telephonically. Our chairman did not serve as a member of any standing committee of the Board in 2013, however, in the event our chairman becomes a member of a standing committee he will receive $3,000 for each committee meeting attended in person or telephonically. The chairperson of the Board receives an annual retainer of $175,000, the Audit Committee and the Affiliated Transactions Committee chairs and the Lead Independent Director each receives an annual retainer of $25,000, the Compensation Committee chair receives an annual retainer of $15,000 and the Nominating and Corporate Governance Committee chair receives an annual retainer of $7,500. We also reimburse the non-Excluded Directors for their travel expenses incurred in connection with their attendance at full Board and committee meetings.
Equity Compensation
The non-Excluded Directors are eligible to receive restricted common shares, common share options and other share-based awards under our 2007 Share Incentive Plan. On August 9, 2013, the Compensation Committee granted certain awards of restricted common shares to our chairman and non-Excluded Directors pursuant to the 2007 Share Incentive Plan. The Compensation Committee granted our chairman 11,225 restricted common shares, Mr. Hubbard 9,354 restricted common shares, and each of Ms. Collins, Mr. Edwards, Mr. Finigan, Mr. Kari, Mr. Licht, Ms. McAneny, Mr. Ryles and Mr. Strothotte 6,548 restricted common shares. Mr. Hazen, Mr. Hubbard, Ms. McAneny and Mr. Strothotte elected to defer receipt of such restricted common shares in exchange for an equal number of phantom shares. These awards vest in one-third increments on the first three anniversaries of the date of grant. Subsequent awards are expected to be granted to the non-
17
Excluded Directors on an annual basis and, in the case of any newly elected non-Excluded Director, at the time of the next annual grant to directors following the election of such director, subject to formal grant by the Compensation Committee.
Deferred Compensation Plan
Effective May 4, 2007, the Board adopted the Deferred Compensation Plan pursuant to which non-employee directors are provided with an opportunity to defer payment of all or a portion of their annual fees and/or receipt of all or a portion of their restricted share awards in accordance with the terms of the plan. Generally, directors who wish to defer all or a portion of their compensation are required to file an election on or before December 31 of the year preceding the year in which such fees and restricted share awards are earned. All deferrals are credited to individual accounts as a bookkeeping entry on our records. Additionally, directors may elect to receive current payment of all or a portion of their fees in common shares.
If a director elects to defer a portion of his or her fees, his or her account is credited, on the fifteenth day after the end of our fiscal quarter (or if such day is not a business day, the immediately preceding business day), with a number of phantom shares equal to the fees deferred divided by the average fair market value of the shares over the applicable fiscal quarter. If a director elects to defer a portion of any restricted share award, his or her account is credited, as of the date on which such award is granted, with the number of phantom shares equal to the number of restricted shares deferred pursuant to the election. A director will become vested in the phantom shares to the same extent that he or she would have become vested in such restricted shares had they been issued under the terms of the 2007 Share Incentive Plan. A directors account will be credited with phantom shares representing distribution equivalents on the phantom shares held in his or her account when distributions are paid with respect to our common shares. The number of phantom shares credited as distribution equivalents is equal to (i) the product of (a) the distribution amount, multiplied by (b) the number of phantom shares in the directors account on the relevant record date, divided by (ii) the fair market value of our common shares on the relevant distribution payment date.
Amounts credited to a directors account will be distributed upon the earlier of (i) the first day of the year following his removal or separation from the Board and (ii) a date previously designated by the director. The amount credited to a directors account will be paid in shares unless we elect to pay such amount in cash. However, in the event of a change in control, all amounts in a directors account will be distributed in a lump sum on the date of the change in control, either in cash or common shares, as previously elected by the director. We may use common shares reserved under the 2007 Share Incentive Plan and/or common shares we purchase on the open market to satisfy our obligations under the Deferred Compensation Plan.
COMPENSATION COMMITTEE MATTERS
Compensation Committee Report
The Compensation Committee has reviewed and discussed the Executive Compensation section with management. Based on its review and discussion with management, the Compensation Committee recommended to the Board that the Executive Compensation section be included in the Companys Annual Report on Form 10-K for the fiscal year ended December 31, 2013.
This report of the Compensation Committee shall not be deemed to be filed under the Exchange Act or incorporated by reference by any general statement incorporating the Form 10-K by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the Company specifically incorporates this information by reference.
|
Compensation Committee
|
|
Deborah H. McAneny, Chairwoman
|
|
Tracy L. Collins
|
|
Vincent Paul Finigan
|
|
Willy R. Strothotte
|
18
Options and Restricted Share Awards
In addition to the grants of restricted common shares to our directors described above under Director Compensation, on February 14, 2013, the Compensation Committee granted our Manager 292,009 restricted common shares
under our 2007 Share Incentive Plan that vest in one-third increments on March 1, 2014, 2015 and 2016.
Compensation Committee Interlocks and Insider Participation
The members of the Compensation Committee in 2013 were Tracy L. Collins, Vincent Paul Finigan, Deborah H. McAneny and Willy R. Strothotte. None of these persons is a current or former officer or employee of the Company or its affiliates. During 2013, none of our executive officers served as members of the compensation committee (or other board committee performing equivalent functions or, in the absence of any such committee, the board of directors) of any entity that had one or more executive officers who served on our Board or our Compensation Committee. As a result, there are no compensation committee interlocks and no insider participation in compensation decisions that are required to be reported under the rules and regulations of the Exchange Act.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SHAREHOLDER MATTERS
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table presents certain information known to us regarding the beneficial ownership of our common shares. In accordance with SEC rules, each listed persons beneficial ownership includes:
·
all shares the investor actually owns (of record or beneficially);
·
all shares over which the investor has or shares voting or dispositive control (such as in the capacity as a general partner of an investment fund); and
·
all shares the investor has the right to acquire within 60 days (such as upon exercise of common share options that are currently vested or which are scheduled to vest within 60 days).
Except as otherwise noted, information is given as of April 17, 2014. The information in this table is provided without giving effect to our proposed merger with KKR & Co. (the merger) as described in Item 1BusinessProposed Merger with KKR & Co. of our Form 10-K or any transactions contemplated in the merger agreement. The table presents information regarding:
·
each of our named executive officers;
·
each of our directors;
·
all of our directors and executive officers as a group; and
·
each holder of shares known to us to own beneficially more than five percent of our common shares.
Except as otherwise noted, the beneficial owners named in the following table have sole voting and investment power with respect to all of our common shares shown as beneficially owned by them, subject to community property laws, where applicable.
19
Name and Address of Beneficial Owner(1)
|
|
Number of KFN
Common Shares
Beneficially Owned
|
|
Percentage of KFN
Common Shares
Beneficially Owned(2)
|
|
FMR LLC(3)
|
|
30,723,622
|
|
15.0
|
%
|
Leon G. Cooperman(4)
|
|
19,564,131
|
|
9.6
|
%
|
Morgan Stanley(5)
|
|
16,203,116
|
|
7.9
|
%
|
Thornburg Investment Management, Inc.(6)
|
|
12,180,609
|
|
6.0
|
%
|
Paul M. Hazen(7)
|
|
707,756
|
|
*
|
|
Craig J. Farr
|
|
0
|
|
*
|
|
Michael R. McFerran(8)
|
|
142,136
|
|
*
|
|
Nicole J. Macarchuk(9)
|
|
47,208
|
|
*
|
|
Tracy L. Collins(10)
|
|
68,043
|
|
*
|
|
Robert L. Edwards(11)
|
|
19,869
|
|
*
|
|
Vincent Paul Finigan(12)
|
|
12,607
|
|
*
|
|
R. Glenn Hubbard(13)
|
|
55,341
|
|
*
|
|
Ross J. Kari(14)
|
|
57,766
|
|
*
|
|
Ely L. Licht(15)
|
|
85,943
|
|
*
|
|
Deborah H. McAneny(16)
|
|
33,616
|
|
*
|
|
Scott C. Nuttall(17)
|
|
381,019
|
|
*
|
|
Scott A. Ryles(18)
|
|
32,688
|
|
*
|
|
Willy R. Strothotte(19)
|
|
0
|
|
*
|
|
All officers and directors as a group (14 persons)
|
|
1,643,992
|
|
*
|
|
*
Holdings represent less than 1% of all shares outstanding.
(1)
The address for all officers and directors of KFN is c/o KKR Financial Advisors LLC, 555 California Street, 50th Floor, San Francisco, California 94104.
(2)
Based on 204,824,159 KFN common shares outstanding as of April 17, 2014.
(3)
This beneficial ownership information is based upon the Schedule 13G/A filed with the SEC on February 14, 2014 by FMR LLC and Edward C. Johnson 3d, chairman of FMR LLC. Fidelity Management & Research Company (Fidelity), a wholly-owned subsidiary of FMR LLC, may be deemed to be the beneficial owner of 29,769,406 common shares as a result of acting as investment advisor to various investment companies. Pyramis Global Advisors Trust Company (PGATC), an indirect wholly-owned subsidiary of FMR LLC, may be deemed to be the beneficial owner of 954,216 common shares as a result of its serving as investment manager of institutional accounts owning such shares. Mr. Johnson and FMR LLC, through their control of Fidelity and PGATC, each has (a) sole voting power on 954,216 common shares, (b) shared voting power on no common shares, (c) sole dispositive power on 30,723,622 common shares and (d) shared dispositive power on no common shares. The address for FMR LLC and Mr. Johnson is 245 Summer Street, Boston, Massachusetts 02210. The address of PGATC is 900 Salem Street, Smithfield, Rhode Island, 02917.
(4)
This beneficial ownership information is based upon the Schedule 13G/A filed with the SEC on February 5, 2014 by Leon G. Cooperman. Mr. Cooperman is the Managing Member of Omega Associates, L.L.C. (Associates). Associates is the general partner of Omega Capital Partners, L.P. (Capital LP), Omega Capital Investors, L.P. (Investors LP), Omega Equity Investors, L.P. (Equity LP), and Omega Charitable Partnership L.P. (Charitable LP). Mr. Cooperman is the President and majority stockholder of Omega Advisors, Inc. (Advisors), which serves as the investment manager to Omega Overseas Partners, Ltd. (Overseas). Advisors also serves as a discretionary investment advisor to a limited number of institutional clients (the Managed Accounts). Mr. Cooperman has investment authority over the Michael S. Cooperman WRA Trust (the WRA Trust), and is a trustee of the Leon and Toby Cooperman Family Foundation (the Foundation) and of The Cooperman Family Fund for a Jewish Future (Family Fund). On the basis of these relationships, Mr. Cooperman may be deemed to have (a) sole voting power on 13,299,600 common shares, (b) shared voting power on 6,264,531 common shares, (c) sole dispositive power on 13,299,600 common shares and (d) shared dispositive power on 6,264,531 common shares. This consists of 2,949,030 common shares owned by Capital LP; 1,074,630 common shares owned by Investors LP; 1,271,195 common shares owned by Equity LP; 3,398,687 common shares owned by Overseas; 100,000 common shares owned by Charitable LP, 6,264,531 common shares owned by the Managed Accounts; 2,700,000 common shares owned by the Foundation; 1,000,000 common shares owned by Mr. Cooperman; 55,000 common shares owned by Family Fund, 51,058 common shares owned by Mr. Coopermans son, Michael S. Cooperman; and 700,000 common shares owned by the WRA Trust. The address for Leon G. Cooperman is 11431 W. Palmetto Park Road, Boca Raton, Florida 33428.
(5)
This beneficial ownership information is based upon the Schedule 13G filed with the SEC on January 28, 2014 by Morgan Stanley. Morgan Stanley has (a) sole voting power on 15,775,540 shares, (b) shared voting power on 359,825 shares, (c) sole dispositive power on 16,203,116 shares and shared dispositive power on no shares. The address for Morgan Stanley is 1585 Broadway, New York, New York 10036.
(6)
This beneficial ownership information is based upon the Schedule 13G/A filed with the SEC on January 21, 2014 by Thornburg Investment Management Inc. Thornburg Investment Management, Inc. has (a) sole voting power on 12,180,609 shares, (b) shared voting power on no shares, (c) sole dispositive power on 12,180,609 shares and
20
(d) shared dispositive power on no shares. The address for Thornburg Investment Management, Inc. is 2300 North Ridgetop Road, Santa Fe, New Mexico 87506.
(7)
Includes an aggregate of 61,567 common shares directly held by trusts for which Mr. Hazen is an investment advisor and therefore may be deemed to have beneficial ownership, but has disclaimed any beneficial ownership. Includes 5,057 unvested restricted common shares and excludes 26,691 phantom shares, which may only be distributed to Mr. Hazen on the first day of the year following his removal or separation from our Board or, if earlier, upon a change in control of the Company. The merger will not constitute a change in control of the Company for this purpose.
(8)
Includes 41,972 unvested restricted common shares.
(9)
Includes 26,264 unvested restricted common shares.
(10)
Includes 14,538 unvested restricted common shares.
(11)
Includes 15,429 unvested restricted common shares.
(12)
Includes 6,548 unvested restricted common shares and excludes 90,764 phantom shares, which may only be distributed to Mr. Finigan on the first day of the year following his removal or separation from our Board or, if earlier, upon a change in control of the Company. The merger will not constitute a change in control of the Company for this purpose.
(13)
Excludes 247,122 phantom shares, which may only be distributed to Mr. Hubbard on the first day of the year following his removal or separation from our Board or, if earlier, upon a change in control of the Company. The merger will not constitute a change in control of the Company for this purpose.
(14)
Includes 14,538 unvested restricted common shares.
(15)
Includes 14,538 unvested restricted common shares.
(16)
Excludes 71,270 phantom shares, which may only be distributed to Ms. McAneny on the first day of the year following her removal or separation from our Board or, if earlier, upon a change in control of the Company. The merger will not constitute a change in control of the Company for this purpose.
(17)
Includes 5,455 shares owned by an investment vehicle for which Mr. Nuttalls spouse exercises investment control.
(18)
Includes 14,538 unvested restricted common shares.
(19)
Excludes 205,379 phantom shares, which may only be distributed to Mr. Strothotte on the first day of the year following his removal or separation from our Board or, if earlier, upon a change in control of the Company. The merger will not constitute a change in control of the Company for this purpose.
EQUITY COMPENSATION PLAN INFORMATION
The following table summarizes the total number of securities outstanding in the incentive plan and the number of securities remaining for future issuance, as well as the weighted average exercise price of all outstanding securities as of December 31, 2013.
|
|
Number of
securities to be issued
upon exercise of
outstanding options,
warrants and rights
|
|
Weighted average
exercise price of
outstanding options,
warrants and rights
|
|
Number of securities remaining
available for future issuance
under equity compensation
plans (excluding securities
reflected in the first column)(1)
|
|
Equity compensation plan not approved by shareholders
|
|
1,932,279
|
|
$
|
20.00
|
|
1,364,415
|
|
|
|
|
|
|
|
|
|
|
(1)
As of December 31, 2013, a total of 8,839,625 common shares were authorized under the 2007 Share Incentive Plan to satisfy awards made pursuant to the 2007 Share Incentive Plan. As such, the total number of securities remaining available for future issuance is net of 5,485,431 restricted common shares already issued and 57,500 common share options already exercised. Common shares which are subject to awards that terminate, lapse or are cancelled may again be used to satisfy awards under the 2007 Share Incentive Plan. Each January 1, an additional 125,000 common shares become available solely to satisfy restricted share awards made pursuant to the 2007 Share Incentive Plan to non-employee directors.
For additional information about the 2007 Share Incentive Plan see Item 11Executive Compensation2007 Share Incentive Plan
of this Form 10-K/A.
21
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Relationships With The Manager
As of April 17, 2014, our Manager and its affiliated entities and the executive officers of KAM, our Managers parent, collectively beneficially owned approximately 2.6% of our common shares on a fully diluted basis without giving effect to the merger or any transactions contemplated in the merger agreement. In addition, as of April 17, 2014 our chairman, Paul M. Hazen, who is chairman of Accel-KKR, beneficially owned approximately 0.3% of our outstanding common shares on a fully diluted basis, and our director, Scott C. Nuttall, who is an executive at KKR, beneficially owned approximately 0.2% of our outstanding common shares on a fully diluted basis, each without giving effect to the merger or any transactions contemplated in the merger agreement. For purposes of computing the percentage of our common shares owned by any person or persons on a fully diluted basis, we assume the exercise of all common share options beneficially owned by such person or persons, as the case may be. Furthermore, our Manager is wholly owned by KAM, which is wholly owned by KKR. As a result, the Management Agreement was negotiated between related parties and its terms, including fees payable, may not be as favorable to us as if it had been negotiated with an unaffiliated third party.
We are a party to the Management Agreement with our Manager pursuant to which our Manager provides for the day-to-day management of our operations. We do not have any employees and therefore rely on the resources and personnel of our Manager to conduct our operations. For performing services under the Management Agreement, our Manager receives a base management fee and incentive compensation based on our performance. The Manager also receives reimbursement for certain expenses. For the year ended December 31, 2013, our Manager earned $25.0 million in net base management fees and $22.7 million in incentive fees. We are required to reimburse our Manager for certain expenses incurred on our behalf during any given year. For the year ended December 31, 2013, we reimbursed our Manager for allocable general and administrative expenses of $9.8 million. So long as the Management Agreement remains in effect, we are required to continue to make monthly payments of the base management fee and, if applicable, quarterly payments of incentive compensation to the Manager, and to reimburse the Manager for certain expenses. The base management fee is calculated as a percentage of our equity (as defined in the Management Agreement) and the incentive compensation is based upon our quarterly net income and, as a result, we cannot quantify the amount of those fees that will be payable in the future.
For additional information about the Management Agreement, including additional information on how the base management fee and incentive compensation are calculated, see Item 11Executive CompensationThe Management Agreement of this Form 10-K/A.
For the year ended December 31, 2013, we recognized share-based compensation expense related to restricted common shares granted to the Manager pursuant to the 2007 Share Incentive Plan of $3.5 million. On February 14, 2013, the Compensation Committee granted our Manager 292,009 restricted common shares under our 2007 Share Incentive Plan that vest in one-third increments on March 1, 2014, 2015 and 2016.
An affiliate of our Manager entered into separate management agreements with the respective investment vehicles for all of our Cash Flow CLOs pursuant to which it is entitled to receive fees for the services it performs as collateral manager for all of these CLOs, except for KKR Financial CLO 2011-1, Ltd (CLO 2011-1). The collateral manager has the option to waive the fees it earns for providing management services for the CLO.
Fees Waived
During the year ended December 31, 2013, the collateral manager waived aggregate CLO management fees totaling $19.7 million for all CLOs, except for KKR Financial CLO 2005-1, Ltd. (CLO 2005-1) and KKR Financial CLO 2012-1, Ltd. (CLO 2012-1), and for partial periods for KKR Financial CLO 2007-1, Ltd. (CLO 2007-1) and KKR Financial CLO 2007-A, Ltd. (CLO 2007-A).
Fees Charged and Fee Credits
During the year ended December 31, 2013, our Manager agreed to credit us for a portion of the CLO management fees received by an affiliate of our Manager from CLO 2007-1, CLO 2007-A and CLO 2012-1 via an offset to the monthly base management fees payable to our Manager. As we own less than 100% of the subordinated notes of these three CLOs (with the remaining subordinated notes held by third parties), we received a Fee Credit equal only to our pro rata share of the aggregate CLO management fees paid by these CLOs. Specifically, the amount of the reimbursement for each of these CLOs was calculated by taking the product of (x) the total CLO management fees received by an affiliate of our Manager during the period for such CLO multiplied by (y) the percentage of the subordinated notes of such CLO held by us.
22
The remaining portion of the CLO management fees paid by each of these CLOs was not credited to us, but instead resulted in a dollar-for-dollar reduction in the interest expense paid by us to the third party holder of the CLOs subordinated notes. During the year ended December 31, 2013, we recorded aggregate collateral management fees expense totaling $17.3 million for CLO 2005-1, CLO 2007-1, CLO 2007-A and CLO 2012-1, of which we received Fee Credits totaling $10.0 million to offset the monthly base management fees payable to our Manager.
Relationships With KKR; Other Relationships and Related Transactions
Merger with
KKR & Co.
On December 16, 2013, we announced the signing of a definitive merger agreement pursuant to which KKR & Co. agreed to acquire all of our outstanding common shares through an exchange of equity through which our shareholders will receive 0.51 common units representing the limited partnership interests of KKR & Co. for each of our common shares. The Manager is an indirect subsidiary of KKR & Co.
The Board determined, upon the unanimous recommendation of a transaction committee of the Board composed solely of independent directors, that the merger and the merger agreement were fair to and in the best interests of the Company and its common shareholders, and approved the merger agreement and the merger. For additional information about the merger agreement see Item 1BusinessProposed Merger with KKR & Co. of our Form 10-K.
Co-Investments
In the ordinary course of business, we invest in entities that are affiliated with KKR. As of December 31, 2013, our investments in KKR affiliated companies consisted of an aggregate $2.1 billion par amount, which is primarily comprised of $1.9 billion par amount of corporate loans. In addition, as of December 31, 2013, we invested in certain joint ventures and partnerships alongside KKR and its affiliates with an aggregate cost amount of $400.3 million. Our Board has adopted a set of amended and restated investment guidelines and procedures, or the Investment Policies, to govern our relationship with KKR. The Investment Policies referred to below are those that were adopted by our Board on July 28, 2011. In addition to the policies described below, our Manager has adopted policies and guidelines related to affiliate transactions and relationships that are designed to address conflicts that may arise from such situations.
Pursuant to the Investment Policies, we are required to seek the approval of the majority of the independent members of our Board or the Affiliated Transactions Committee before making any investment in an entity affiliated with KKR. Notwithstanding the foregoing, the Affiliated Transactions Committee Charter provides that certain of our investments in securities of companies affiliated with KKR are deemed to be pre-approved by the Affiliated Transactions Committee, including:
·
any individual debt investment purchased by the Company, either directly or through a joint financing transaction vehicle, that would not result in the Company, KKR and any affiliates of KKR (including any funds or accounts managed and/or controlled by any such entity, but other than the private equity investment creating the affiliation) collectively owning an economic interest in more than 19.9%, or the Threshold, of the outstanding par amount of a single tranche or class of a loan or a security, each, a Security, of a company that is affiliated with funds advised by the private equity business of KKR, or a Portfolio Company;
·
any investment existing prior to April 29, 2010 in excess of the Threshold, provided that any additions to such investment will require approval of the Affiliated Transactions Committee;
·
the purchase by the Company of any additional loan or security (including any debt or equity security) of a company or any affiliate of such company, either directly or through a joint financing transaction vehicle, if the Company previously acquired any loan or security in such company pursuant to a transaction or series of transactions that (i) were approved by the Affiliated Transactions Committee and/or (ii) did not require the Affiliated Transactions Committees approval under its Charter, provided that such follow-on investment was approved by, or in the judgment of the Manager is consistent with the investment thesis approved by, the Managers investment committee as part of its approval of such original investment and such follow-on investment is purchased by the Company and other participating KKR affiliates on a pro rata basis, at the same pricing terms, and otherwise in accordance with the Managers Allocation Policy and Conflicts of Interest Policy; and
·
any series or class of transactions to be entered into by the Company by resolution of the majority of the members of the Affiliated Transactions Committee.
23
Notwithstanding the pre-approval policies described above, the Affiliated Transactions Committee Charter provides that the following investments and transactions require majority approval of the Affiliated Transactions Committee and will not be deemed to be pre-approved:
·
any investment in a debt Security of a Portfolio Company that (i) has a price below 80 and such price is at least 10 points below the average price for a Security on the index which is most applicable to such Security, (ii) is rated Caa3 or lower by Moodys Investors Service, or Moodys, or CCC- or lower by Standard & Poors Ratings Service, or S&P, or (iii) is rated Caa2 by Moodys or CCC by S&P and such Security is also on negative watch;
·
any joint financing transaction in which any affiliate of the Manager is investing contemporaneously with the Company or is an existing investor in the applicable vehicle (other than any such investments existing prior to April 29, 2010, provided that any additions to such investments will require approval of the Affiliated Transactions Committee);
·
any amendment sought from the Company with respect to a debt Security of a Portfolio Company that adversely affects, alters or changes the economics, powers, preferences or special rights of such Security, excluding any amendment that the Manager reasonably believes would be in the best interests of the Company and to which one of the following conditions applies: (i) unusual or exigent circumstances then exist which in the reasonable opinion of the Manager make it impracticable to obtain the prior approval of the Affiliated Transactions Committee (provided that the Manager must timely inform the Affiliated Transactions Committee of any amendment entered into in reliance on this exception); (ii) the granting of, or failure to grant, such amendment would not be material to the Companys investment in the applicable Security; or (iii) the Manager reasonably believes that the Companys granting of, or failure to grant, such amendment would not affect whether or not such amendment is approved by the requisite number of holders of the applicable Security;
·
any transaction between the Company and any other fund or account managed by the Manager or KKR, excluding (i) certain transactions between structured finance vehicles managed by the Manager where the Company and the counterparty client have an equal amount of economic ownership of each financing vehicle, (ii) financing vehicles and the Company when such trade is undertaken in pro rata proportion to the economic ownership of such financing vehicle by the Client and certain and (iii) certain transactions between the Company and structured finance vehicles managed by the Manager for which the overcollateralization ratio in the most junior overcollateralization test contained in the indenture governing such vehicle is greater than 100%;
·
any investment if any of the following criteria are met: (i) the investment is a type of investment that our Managers investment committee has a current policy of disfavoring as a general matter; (ii) in our Managers judgment, the structure or pricing of the investment is worse than relevant market comparables; (iii) the investment is not being offered generally to other potential investors on the same or less favorable terms; (iv) in our Managers judgment, the transaction would not be fully subscribed in the absence of our investment; or (v) in connection with the investment our Manager or an affiliate of our Manager would receive any direct or indirect economic benefit, other than in the capacity of investment manager or general partner of a fund or account, in connection with transaction fees (including but not limited to arrangement, syndication or underwriting fees), or any similar compensation; and
·
any investment where, after giving effect to the investment, the aggregate amount of our investments consisting of investments in entities affiliated with KKR or that would otherwise constitute affiliated transactions would exceed a percentage established from time to time by a majority of our independent directors or by the Affiliated Transactions Committee (such percentage to initially equal 50% of all of our investments excluding residential mortgage loans and mortgage-backed securities).
Related Parties Transaction Policies
We have implemented several measures to ensure that potential transactions do not conflict with our best interests and any such transaction is reviewed by the Board. Our approach includes (1) review of opportunities submitted voluntarily under our Code of Ethics and evaluated by our Audit Committee and (2) identification of related party transactions by management and review of such transactions by the Affiliated Transactions Committee. These standards are described in writing in the Code of Ethics and the Affiliated Transactions Committee Charter, each of which is available on our website at http://ir.kkr.com/kfn_ir/kfn_governance.cfm under the captions Code of Business Conduct and Ethics and Affiliated Transactions Committee Charter, respectively.
24
We have implemented a Code of Ethics that sets forth various policies and procedures designed to promote ethical behavior by the directors, officers and employees of the Company and the Manager, if applicable. Our Code of Ethics defines conflicts of interest and requires all directors and executive officers of the Company to disclose any material transaction or relationship that reasonably could be expected to give rise to such a conflict to the Chairman of the Audit Committee. No action may be taken with respect to such transaction or relationship unless and until such action has been approved by the Audit Committee.
The Board has also delegated its responsibility for evaluating transactions in which a Related Party has, or will have, a direct or indirect material interest. For the purposes of our Code of Ethics, a Related Party is defined as KKR, any entity that is controlled by or under the common control of KKR including, without limitation, the Manager, any executive officer, director or director nominee of, or any beneficial owner of 5% or more of any equity interest of, the Company, KKR or any of its affiliates, including the Manager, or member of the immediate family of any of the foregoing related persons or any entity in which any of the foregoing persons has, or will have, a direct or indirect material interest. Our management is responsible for determining when a Related Party transaction may occur and requesting approval by the Affiliated Transactions Committee.
Our Board has the authority, in its sole discretion, to grant exemptions from the ownership limitations contained in our Operating Agreement upon determining that granting such exemption will not adversely affect the ability of KKR Financial Holdings II, LLC, our wholly owned subsidiary, to maintain its qualification as a real estate investment trust for United States federal income tax purposes, and subject to such representations, covenants and undertakings as it may deem appropriate.
DIRECTOR INDEPENDENCE
See Item 10Corporate GovernanceDirector Independence of this Form 10-K/A.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
AUDIT COMMITTEE MATTERS
Audit Committee Report
The Audit Committee of the Board of Company reviews the Companys financial reporting process, its system of internal controls, its audit process and its process for monitoring compliance with laws and regulations. Each of the five Audit Committee members satisfies the definition of independent director as established in the NYSE listing standards and applicable SEC regulations. The Audit Committee has reviewed the audited consolidated financial statements of the Company and discussed such statements with management. The Audit Committee has discussed with Deloitte & Touche LLP (Deloitte), the Companys independent registered public accounting firm during the year 2013, the matters required to be discussed by Public Company Accounting Oversight Board Auditing Standard No. 16 Communications with Audit Committees. The Audit Committee received from Deloitte the written disclosures and the letter required by applicable requirements of the Public Company Accounting Oversight Board regarding Deloittes communications with the Audit Committee regarding independence and discussed with Deloitte its independence. Based on its review of the written disclosures and the letter regarding Deloittes independence and its discussions with Deloitte, the Audit Committee has determined that Deloittes provision to the Company of various non-audit services for the year 2013 is compatible with maintaining its independence. Based on the review and discussions noted above, the Audit Committee recommended to the Board that the Companys audited consolidated financial statements be included in the Companys Annual Report on Form 10-K for the year ended December 31, 2013, and be filed with the SEC. The Audit Committee also appointed Deloitte to serve as the Companys independent registered public accounting firm for the year 2014.
25
This report of the Audit Committee shall not be deemed to be filed under the Exchange Act or incorporated by reference by any general statement incorporating the Form 10-K by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the Company specifically incorporates this information by reference.
|
Audit Committee
|
|
Ross J. Kari, Chairman
|
|
Tracy L. Collins
|
|
Robert L. Edwards
|
|
R. Glenn Hubbard
|
|
Scott A. Ryles
|
Principal Accounting Fees and Services
The aggregate fees and expenses billed by Deloitte for professional services rendered for the years ended December 31, 2013 and 2012 are set forth below.
|
|
2013
|
|
2012
|
|
Audit Fees
|
|
$
|
2,090,591
|
|
$
|
1,734,000
|
|
Audit-Related Fees
|
|
$
|
339,700
|
|
$
|
324,500
|
|
Tax Fees
|
|
$
|
568,432
|
|
$
|
715,101
|
|
All Other Fees
|
|
|
|
|
|
Total Fees
|
|
$
|
2,998,723
|
|
$
|
2,773,601
|
|
Audit Fees
were for the audits of our annual consolidated financial statements included in our Annual Report, reviews of the consolidated financial statements included in our Quarterly Reports on Form 10-Q, other assistance required to complete the year-end audits and other services rendered for comfort letters, consents and other assistance with our equity and bond offerings.
Audit-Related Fees
include professional services performed in connection with our natural resources segment, as well as review of covenant compliance calculations and XBRL-related services.
Tax Fees
were for services rendered related to tax compliance and reporting.
All Other Fees
would include services not otherwise described abovenone were incurred in 2013 or 2012.
Pre-Approval Policy for Services of Independent Registered Public Accounting Firm
The Audit Committee must pre-approve all audit services and permissible non-audit services provided by our independent public accounting firms to ensure that the work does not compromise its independence in performing audit services. The term of any general pre-approval is twelve months from the date of pre-approval, unless the Audit Committee considers a different period and states otherwise. The Audit Committee may revise the list of general pre-approved services from time to time. Unless a service to be provided by the independent public accounting firm falls within a pre-approved type of service, specific pre-approval by the Audit Committee will be required. Any proposed services falling within a pre-approved type of service but exceeding pre-approved fee levels for that type of service will also require specific pre-approval by the Audit Committee. The Audit Committee delegates pre-approval authority to its chair and may delegate pre-approval authority to one or more of its other members. The chair and any other member or members to whom such authority is delegated will report any pre-approval decisions to the Audit Committee at its next scheduled meeting. All services provided by Deloitte in 2013 were pre-approved by the Audit Committee.
26
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
DOCUMENTS FILED AS PART OF THIS REPORT:
1. and 2. Financial Statements and Schedules
All financial statement schedules are omitted because of the absence of conditions under which they are required or because the required information is included in our consolidated financial statements or notes thereto, included in Part II, Item 8, of our Annual Report on Form 10-K.
3. Exhibit Index
|
|
|
|
Incorporated by Reference
|
Exhibit
Number
|
|
Exhibit Description
|
|
Form
|
|
File No.
|
|
Exhibit
|
|
Filing
Date
|
|
Filed
Herewith
|
2.1
|
|
Agreement and Plan of Merger, dated as of February 9, 2007, among the Registrant, KKR Financial Holdings Corp. and KKR Financial Merger Corp.
|
|
S-4
|
|
333-140586
|
|
2
|
|
02/09/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2.2
|
|
Agreement and Plan of Merger, dated as of December 16, 2013, by and among KKR & Co. L.P., KKR Fund Holdings L.P., Copal Merger Sub LLC and the Company
|
|
8-K
|
|
001-33437
|
|
10.18
|
|
12/16/13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3.1
|
|
Amended and Restated Operating Agreement of the Registrant, dated May 3, 2007, as amended May 7, 2009
|
|
10-Q
|
|
001-33437
|
|
3.1
|
|
08/06/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3.2
|
|
Amendment No.1 to the Amended and Restated Operating Agreement of the Registrant, dated February 28, 2010
|
|
10-K
|
|
001-33437
|
|
3.2
|
|
03/01/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3.3
|
|
Amendment No. 2 to the Amended and Restated Operating Agreement of the Company, effective as of January 10, 2013
|
|
8-K
|
|
001-33437
|
|
3.1
|
|
01/11/13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3.4
|
|
Share Designation of the 7.375% Series A LLC Preferred Shares, dated as of January 17, 2013
|
|
8-K
|
|
001-33437
|
|
3.1
|
|
01/17/13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4.1
|
|
Form of Certificate for Common Shares
|
|
S-4
|
|
333-140586
|
|
A
|
|
02/09/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4.2
|
|
Indenture, dated as of January 15, 2010, between the Registrant and Wells Fargo Bank, National Association
|
|
8-K
|
|
001-33437
|
|
4.1
|
|
01/15/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4.3
|
|
Supplemental Indenture, dated as of January 15, 2010, between the Registrant and Wells Fargo Bank, National Association
|
|
8-K
|
|
001-33437
|
|
4.2
|
|
01/15/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4.4
|
|
Form of 7.50% Convertible Senior Note due January 15, 2017
|
|
8-K
|
|
001-33437
|
|
4.2
|
|
01/15/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4.5
|
|
Indenture, dated as of November 15, 2011, between the Registrant and Wilmington Trust, National Association
|
|
8-K
|
|
001-33437
|
|
4.1
|
|
11/15/11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4.6
|
|
Supplemental Indenture, dated as of November 15, 2011, between the Registrant and Wilmington Trust, National Association and Citibank, N.A.
|
|
8-K
|
|
001-33437
|
|
4.2
|
|
11/15/11
|
|
|
27
|
|
|
|
Incorporated by Reference
|
Exhibit
Number
|
|
Exhibit Description
|
|
Form
|
|
File No.
|
|
Exhibit
|
|
Filing
Date
|
|
Filed
Herewith
|
4.7
|
|
Form of 8.375% Senior Note due November 15, 2041
|
|
8-K
|
|
001-33437
|
|
4.3
|
|
11/15/11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4.8
|
|
Supplemental Indenture, dated as of March 20, 2012, between the Company, Wilmington Trust, National Association, as Trustee, and Citibank N.A., as Authenticating Agent, Paying Agent and Security Registrar
|
|
8-K
|
|
001-33437
|
|
4.2
|
|
03/20/12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4.9
|
|
Form of 7.500% Senior Note due March 20, 2042
|
|
8-K
|
|
001-33437
|
|
4.2
|
|
03/20/12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4.10
|
|
Form of 7.375% Series A LLC Preferred Share Global Certificate
|
|
8-K
|
|
001-33437
|
|
4.1
|
|
01/17/13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.1
|
|
Amended and Restated Management Agreement, dated as of May 4, 2007, among the Registrant, KKR Financial Advisors LLC and KKR Financial Corp.
|
|
8-K
|
|
001-33437
|
|
10.1
|
|
05/04/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.2
|
|
First Amendment Agreement to Amended and Restated Management Agreement, dated as of June 15, 2007, among the Registrant, KKR Financial Advisors LLC and KKR Financial Corp.
|
|
8-K
|
|
001-33437
|
|
10.1
|
|
06/15/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.3
|
|
2007 Share Incentive Plan
|
|
8-K
|
|
001-33437
|
|
10.2
|
|
05/04/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.4
|
|
Non-Employee Directors Deferred Compensation and Share Award Plan
|
|
8-K
|
|
001-33437
|
|
10.3
|
|
05/04/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.5
|
|
Form of Nonqualified Share Option Agreement
|
|
8-K
|
|
001-33437
|
|
10.4
|
|
05/04/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.6
|
|
Form of Restricted Share Award Agreement
|
|
8-K
|
|
001-33437
|
|
10.5
|
|
05/04/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.7
|
|
Form of Restricted Share Award Agreement for Non-Employee Directors
|
|
8-K
|
|
001-33437
|
|
10.6
|
|
05/04/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.8
|
|
Amended and Restated License Agreement, dated as of May 4, 2007, among the Registrant, Kohlberg Kravis Roberts & Co. L.P. and KKR Financial Corp.
|
|
8-K
|
|
001-33437
|
|
10.8
|
|
05/04/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.9*
|
|
Indenture, dated as of March 30, 2005, by and among KKR Financial CLO 2005-1, Ltd., KKR Financial CLO 2005-1 Corp. and JPMorgan Chase Bank, National Association(1)
|
|
S-11/A
|
|
333-124103
|
|
10.6
|
|
06/09/05
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.10**
|
|
Letter Agreement, dated as of August 12, 2004, between KKR Financial Corp. and KKR Financial Advisors LLC
|
|
S-11/A
|
|
333-124103
|
|
10.8
|
|
06/21/05
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.11**
|
|
Collateral Management Agreement, dated as of March 30, 2005, between KKR Financial CLO 2005-1, Ltd. and KKR Financial Advisors II, LLC
|
|
S-11/A
|
|
333-124103
|
|
10.11
|
|
06/21/05
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.12**
|
|
Fee Waiver Letter, dated April 15, 2005, between KKR Financial CLO 2005-1, Ltd., KKR Financial Advisors II, LLC and JPMorgan Chase Bank, N.A.
|
|
S-11/A
|
|
333-124103
|
|
10.12
|
|
06/21/05
|
|
|
28
|
|
|
|
Incorporated by Reference
|
Exhibit
Number
|
|
Exhibit Description
|
|
Form
|
|
File No.
|
|
Exhibit
|
|
Filing
Date
|
|
Filed
Herewith
|
10.13
|
|
Letter Agreement, dated February 27, 2009, between the Company and KKR Financial Advisors LLC
|
|
10-K
|
|
001-33437
|
|
10.21
|
|
03/02/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.14
|
|
Credit Agreement, dated as of November 5, 2010, by and among the Borrower, JP Morgan Chase Bank, N.A., Bank of America, N.A., and Bank of Montreal
|
|
10-Q
|
|
001-33437
|
|
10.18
|
|
05/02/11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.15
|
|
First Omnibus Amendment, dated as of May 13, 2011, to Credit Agreement, dated as of November 5, 2010, by and among the Borrower, JP Morgan Chase Bank, N.A., Bank of America, N.A., and Bank of Montreal
|
|
10-Q
|
|
001-33437
|
|
10.19
|
|
08/04/11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.16
|
|
Credit Agreement, dated as of November 30, 2012, among KKR Financial Holdings LLC, each lender from time to time party thereto, Citibank, N.A., as Swingline Lender and Issuing Bank, and Citibank, N.A., as Administrative Agent
|
|
8-K
|
|
001-33437
|
|
10.1
|
|
12/05/12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.17
|
|
Second Amendment Agreement to the Amended and Restated Management Agreement, dated as of February 27, 2013, between the Registrant and KKR Financial Advisors LLC
|
|
10-K
|
|
001-33437
|
|
10.17
|
|
02/28/13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12.1
|
|
Computation of Ratio of Earnings to Fixed Charges and Ratio of Earnings to Fixed Charges and Preferred Share Distributions
|
|
10-K
|
|
001-33437
|
|
12.1
|
|
02/27/14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21.1
|
|
List of Subsidiaries of the Registrant
|
|
10-K
|
|
001-33437
|
|
21.1
|
|
02/27/14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23.1
|
|
Consent of Deloitte & Touche LLP
|
|
10-K
|
|
001-33437
|
|
23.1
|
|
02/27/14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31.1
|
|
Certification pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as amended
|
|
10-K
|
|
001-33437
|
|
31.1
|
|
02/27/14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31.2
|
|
Certification pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as amended
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10-K
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001-33437
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31.2
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02/27/14
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31.3
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Certification pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as amended
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X
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31.4
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Certification pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as amended
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X
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32
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Certification pursuant to 18 U.S.C. Section 1350
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10-K
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001-33437
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32
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02/27/14
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101.INS
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XBRL Instance Document
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10-K
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001-33437
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101.INS
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02/27/14
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101.SCH
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XBRL Taxonomy Extension Schema Document
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10-K
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001-33437
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101.SCH
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02/27/14
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101.CAL
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XBRL Taxonomy Extension Calculation Linkbase Document
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10-K
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001-33437
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101.CAL
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02/27/14
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101.DEF
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XBRL Taxonomy Extension Definition Linkbase Document
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10-K
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001-33437
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101.DEF
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02/27/14
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29
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Incorporated by Reference
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Exhibit
Number
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Exhibit Description
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Form
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File No.
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Exhibit
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Filing
Date
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Filed
Herewith
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101.LAB
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XBRL Taxonomy Extension Label Linkbase Document
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10-K
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001-33437
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101.LAB
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02/27/14
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101.PRE
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XBRL Taxonomy Extension Presentation Linkbase Document
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10-K
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001-33437
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101.PRE
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02/27/14
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(1)
The registrant has, in the ordinary course of business, entered into other substantially identical indentures, except for the other parties thereto, the amounts of each class issued, the dates of execution and certain other pricing related terms.
*
Previously filed as an exhibit to Amendment No. 2 to KKR Financial Corp.s Registration Statement on Form S-11/A (Registration No. 333-124103), filed with the Securities and Exchange Commission on June 9, 2005.
**
Previously filed as an exhibit to Amendment No. 2 to KKR Financial Corp.s Registration Statement on Form S-11/A (Registration No. 333-124103), filed with the Securities and Exchange Commission on June 21, 2005.
30
SIGNATURES
Pursuant to the requirements of Section 13 of the Securities Exchange Act of 1934, the Registrant has duly caused this Amendment No. 1 to annual report on Form 10-K/A for the fiscal year ended December 31, 2013, to be signed on its behalf by the undersigned, and in the capacities indicated, thereunto duly authorized, on April 23, 2014.
|
KKR FINANCIAL HOLDINGS LLC
(Registrant)
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By:
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/s/ MICHAEL R. MCFERRAN
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Name:
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Michael R. McFerran
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Title:
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Chief Financial Officer
(Principal Financial and Accounting Officer)
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31
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