<SEC-DOCUMENT>0001558370-17-004852.txt : 20170905
<SEC-HEADER>0001558370-17-004852.hdr.sgml : 20170904
<ACCEPTANCE-DATETIME>20170616162632
<PRIVATE-TO-PUBLIC>
ACCESSION NUMBER:		0001558370-17-004852
CONFORMED SUBMISSION TYPE:	CORRESP
PUBLIC DOCUMENT COUNT:		1
FILED AS OF DATE:		20170616

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			CAPITAL SOUTHWEST CORP
		CENTRAL INDEX KEY:			0000017313
		IRS NUMBER:				751072796
		STATE OF INCORPORATION:			TX
		FISCAL YEAR END:			0331

	FILING VALUES:
		FORM TYPE:		CORRESP

	BUSINESS ADDRESS:	
		STREET 1:		5400 LYNDON B. JOHNSON FREEWAY
		STREET 2:		SUITE 1300
		CITY:			DALLAS
		STATE:			TX
		ZIP:			75240
		BUSINESS PHONE:		2142385700

	MAIL ADDRESS:	
		STREET 1:		5400 LYNDON B. JOHNSON FREEWAY
		STREET 2:		SUITE 1300
		CITY:			DALLAS
		STATE:			TX
		ZIP:			75240
</SEC-HEADER>
<DOCUMENT>
<TYPE>CORRESP
<SEQUENCE>1
<FILENAME>filename1.htm
<TEXT>
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			cswc_CORRESP_DEF14A
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		<p style="margin:0pt;font-family:Times New Roman,Times,serif;font-size: 12pt;">
			<font style="display:inline;">June 16, 2017 </font>
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			<font style="display:inline;">&nbsp;</font>
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		<p style="margin:0pt;font-family:Times New Roman,Times,serif;font-size: 12pt;">
			<font style="display:inline;font-weight:bold;">BY EDGAR AND OVERNIGHT DELIVERY</font><font style="display:inline;">&nbsp;</font>
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			<font style="display:inline;">&nbsp;</font>
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			<font style="display:inline;">United States Securities and Exchange Commission<br />Division of Investment Management</font>
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		<p style="margin:0pt;font-family:Times New Roman,Times,serif;font-size: 12pt;">
			<font style="display:inline;">Attn: Jay Williamson<br />Washington, DC 20549-8626 </font>
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			<font style="display:inline;">&nbsp;</font>
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						<font style="display:inline;">RE: </font></p>
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					<p style="margin:0pt;font-family:Times New Roman,Times,serif;font-size: 12pt;">
						<font style="display:inline;">Capital Southwest Corporation</font></p>
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						<font style="display:inline;">&nbsp;</font></p>
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					<p style="margin:0pt;font-family:Times New Roman,Times,serif;font-size: 12pt;">
						<font style="display:inline;">Definitive Proxy Statement on Schedule 14A</font></p>
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						<font style="display:inline;">&nbsp;</font></p>
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					<p style="margin:0pt;font-family:Times New Roman,Times,serif;font-size: 12pt;">
						<font style="display:inline;">Filed June 16, 2017</font></p>
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						<font style="display:inline;">&nbsp;</font></p>
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					<p style="margin:0pt;font-family:Times New Roman,Times,serif;font-size: 12pt;">
						<font style="display:inline;">File No.&nbsp;814-00061</font></p>
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			<font style="display:inline;">&nbsp;</font>
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		<p style="margin:0pt;font-family:Times New Roman,Times,serif;font-size: 12pt;">
			<font style="display:inline;">Dear Mr. Williamson: </font>
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			<font style="display:inline;">&nbsp;</font>
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		<p style="margin:0pt 0pt 12pt;text-indent:0pt;font-family:Times New Roman,Times,serif;font-size: 12pt;">
			<font style="display:inline;">On May 23, 2017, the staff of the Division of Investment Management (the &#x201C;Staff&#x201D;) of the Securities and Exchange Commission requested additional information from Capital Southwest Corporation (the &#x201C;Company&#x201D;) with respect to its use of performance measures to determine the annual cash incentive compensation of its named executive officers.&nbsp;&nbsp;Following the Company&#x2019;s discussion with the Staff, the Company has included additional disclosures in its Definitive Proxy Statement on Schedule 14A (File No. 814-00061) (the &#x201C;Definitive Proxy Statement&#x201D;) reflecting those discussions.&nbsp;&nbsp;The revised disclosure is included in Exhibit A to this letter, which shows changes to the version delivered to the Staff on May&nbsp;22, 2017.</font>
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		<p style="margin:0pt;border-bottom:1pt none #D9D9D9 ;font-family:Times New Roman,Times,serif;font-size: 12pt;">
			<font style="display:inline;">If you have any questions, please do not hesitate to contact Michael S. Sarner at (972) 233-8242. </font>
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			<font style="display:inline;">&nbsp;</font>
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						<font style="display:inline;font-size:1pt;">&nbsp;</font></p>
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						<font style="display:inline;font-size:1pt;">&nbsp;</font></p>
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						<font style="display:inline;">&nbsp;</font></p>
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					<p style="margin:0pt;font-family:Times New Roman,Times,serif;font-size: 12pt;">
						<font style="display:inline;">Sincerely, </font></p>
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						<font style="display:inline;">&nbsp;</font></p>
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					<p style="margin:0pt;font-family:Times New Roman,Times,serif;font-size: 12pt;">
						<font style="display:inline;">/s/ Michael S. Sarner</font></p>
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						<font style="display:inline;">&nbsp;</font></p>
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						<font style="display:inline;">&nbsp;</font></p>
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					<p style="margin:0pt;font-family:Times New Roman,Times,serif;font-size: 12pt;">
						<font style="display:inline;">Michael S. Sarner</font></p>
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						<font style="display:inline;">&nbsp;</font></p>
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					<p style="margin:0pt;font-family:Times New Roman,Times,serif;font-size: 12pt;">
						<font style="display:inline;">Chief Financial Officer</font></p>
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		<p style="margin:0pt;font-family:Times New Roman,Times,serif;font-size: 12pt;">
			<font style="display:inline;">&nbsp;</font>
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		<p style="margin:0pt;font-family:Times New Roman,Times,serif;font-size: 12pt;">
			<font style="display:inline;">&nbsp;</font>
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						<font style="display:inline;font-size:1pt;">&nbsp;</font></p>
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					<p style="margin:0pt;text-align:justify;text-justify:inter-ideograph;font-family:Times New Roman,Times,serif;font-size: 12pt;">
						<font style="display:inline;">cc:</font></p>
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					<p style="margin:0pt;text-align:justify;text-justify:inter-ideograph;font-family:Times New Roman,Times,serif;font-size: 12pt;">
						<font style="display:inline;">David Kern</font></p>
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						<font style="display:inline;">&nbsp;</font></p>
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					<p style="margin:0pt;text-align:justify;text-justify:inter-ideograph;font-family:Times New Roman,Times,serif;font-size: 12pt;">
						<font style="display:inline;">Jones Day</font></p>
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						<font style="display:inline;">&nbsp;</font></p>
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					<p style="margin:0pt;text-align:justify;text-justify:inter-ideograph;font-family:Times New Roman,Times,serif;font-size: 12pt;">
						<font style="display:inline;">2727 North Harwood Street</font></p>
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						<font style="display:inline;">&nbsp;</font></p>
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					<p style="margin:0pt;text-align:justify;text-justify:inter-ideograph;font-family:Times New Roman,Times,serif;font-size: 12pt;">
						<font style="display:inline;">Dallas, Texas&nbsp;&nbsp;75201-1515</font></p>
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		<p style="margin:0pt;font-family:Times New Roman,Times,serif;font-size: 12pt;">
			<font style="display:inline;">&nbsp;</font>
		</p>
		<p style="margin:0pt;text-align:justify;text-justify:inter-ideograph;border-bottom:1pt none #D9D9D9 ;font-family:Times New Roman,Times,serif;font-size: 12pt;">
			<font style="display:inline;">&nbsp;</font>
		</p>
		<p style="margin:0pt;text-align:justify;text-justify:inter-ideograph;border-top:1pt none #D9D9D9 ;font-family:Times New Roman,Times,serif;font-size: 12pt;">
			<font style="display:inline;">&nbsp;</font>
		</p>
		<p style="margin:0pt 0pt 12pt;font-weight:bold;font-family:Times New Roman,Times,serif;font-size: 12pt;">
			&nbsp;
		</p>
		<p style="margin:0pt;font-family:Times New Roman,Times,serif;font-size: 12pt;">
			<font style="display:inline;"></font></p></div><div style="margin-left:10.2941176470588%;margin-right:10.2941176470588%;">
		<p><font size="1"> </font></p></div><div style="margin-left:10.2941176470588%;margin-right:10.2941176470588%;"><hr align="center" style='background-color:#000000; border-width:0; color:#000000; height:2pt; lineheight:0; width:100%;'></hr><p style="page-break-after:always">&nbsp;</p></div><div style="margin-left:10.2941176470588%;margin-right:10.2941176470588%;"><div style="width:100%">

		<p style="margin:0pt;font-family:Times New Roman,Times,serif;font-size: 12pt;">

			&nbsp;

		</p>

</div></div><div style="margin-left:10.2941176470588%;margin-right:10.2941176470588%;"><p style="margin:0pt;font-family:Times New Roman,Times,serif;font-size: 12pt;"><font style="display:inline;"></font>
		</p>
		<p style="margin:0pt;text-align:center;border-bottom:1pt none #D9D9D9 ;font-family:Times New Roman,Times,serif;font-size: 12pt;">
			<font style="display:inline;font-weight:bold;">Exhibit A</font>
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			<font style="display:inline;">&nbsp;</font>
		</p>
		<p style="margin:0pt 0pt 12pt;font-family:Times New Roman,Times,serif;font-size: 12pt;">
			<font style="display:inline;font-weight:bold;font-style:italic;background-color: #FFFFFF;">Annual Cash Incentive Opportunities</font>
		</p>
		<p style="margin:0pt 0pt 12pt;border-bottom:1pt none #D9D9D9 ;text-indent:36pt;font-family:Times New Roman,Times,serif;font-size: 12pt;">
			<font style="display:inline;background-color: #FFFFFF;">Annual cash incentive opportunities are intended to reward individual performance as well as operating results during the&nbsp;year and therefore can be highly variable from&nbsp;year to&nbsp;year. The Committee established the target annual cash incentive opportunities for the NEOs at the start of the&nbsp;year, taking into account the potential contribution by that executive to overall company performance and </font><font style="display:inline;">each executive&#x2019;s industry experience</font><font style="display:inline;background-color: #FFFFFF;">, relative to the market. For fiscal 2018, the Committee set the annual cash incentive opportunity at 150% of annual base salary for Mr.&nbsp;Diehl and 125% of annual base salary for Mr.&nbsp;Sarner, consistent with fiscal 2017. No threshold or maximum payout levels were set. The Committee may, in its sole discretion, award cash incentives that are higher or lower than the target annual cash incentive opportunities set for fiscal 2017.</font>
		</p>
		<p style="margin:0pt 0pt 12pt;border-top:1pt none #D9D9D9 ;text-indent:36pt;font-family:Times New Roman,Times,serif;font-size: 12pt;">
			<font style="display:inline;background-color: #FFFFFF;">At the start of each fiscal&nbsp;year, the Committee also establishes <a name="_cp_text_1_3"></a></font><font style="display:inline;">Company and individual</font><font style="display:inline;background-color: #FFFFFF;">&nbsp;performance <a name="_cp_text_1_5"></a></font><font style="display:inline;">measures. The Committee strives to ensure that the performance measures utilized each year to evaluate NEO performance effectively align the performance of each individual NEO with the performance of the Company.&nbsp; </font><font style="display:inline;background-color: #FFFFFF;">The fiscal 2017 performance <a name="_cp_text_1_8"></a></font><font style="display:inline;">measures</font><font style="display:inline;background-color: #FFFFFF;">&nbsp;used for determining the annual cash incentive for NEOs included, among other things, the following:</font>
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		<div style="width:100%"><table style="width:100%;" cellpadding="0" cellspacing="0"><tr><td style="width:36pt;"><p style="width:36pt;font-size:0pt;"></p></td><td valign="top" align="left" style="width: 18.00pt; display: inline;">
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				<font style="margin:0pt;font-family:Symbol;border-bottom:1pt none #D9D9D9;font-size:12pt;;"> &#xB7;</font>
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			<font style="display:inline;background-color: #FFFFFF;">Achievement of <a name="_cp_text_1_9"></a></font><font style="display:inline;color:#000000;">significant</font><font style="display:inline;background-color: #FFFFFF;">&nbsp;corporate</font><font style="display:inline;color:#000000;"> financial</font><font style="display:inline;background-color: #FFFFFF;"> objectives, particularly<a name="_cp_text_2_10"></a></font><font style="display:inline;text-decoration:line-through;background-color: #FFFFFF;">;<a name="_cp_text_1_11"></a></font><font style="display:inline;color:#000000;">: (1)&nbsp;investment income</font><font style="display:inline;background-color: #FFFFFF;">&nbsp;</font><font style="display:inline;color:#000000;">growth, (2)&nbsp;pre-tax net investment income growth, (3)&nbsp;dividend growth, (4)&nbsp;growth and diversification of the investment portfolio, (5)&nbsp;overall credit quality of the investment portfolio, (6)&nbsp;liquidity and capital flexibility, (7)&nbsp;preservation of net asset value and (8)&nbsp;total return on shareholders equity;</font></p></td></tr></table></div>
		<p style="margin:0pt 0pt 0pt 36pt;text-indent: -18pt;border-top:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;font-family:Times New Roman,Times,serif;font-size: 12pt;">
			<font style="display:inline;">&nbsp;</font>
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				<font style="margin:0pt;font-family:Symbol;border-top:1pt none #D9D9D9;border-bottom:1pt none #D9D9D9;font-size:12pt;;"> &#xB7;</font>
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			<font style="display:inline;background-color: #FFFFFF;">Individual performance and achievement of individual goals, as well as the contribution to corporate objectives;</font></p></td></tr></table></div>
		<p style="margin:0pt 0pt 0pt 36pt;text-indent: -18pt;border-top:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;font-family:Times New Roman,Times,serif;font-size: 12pt;">
			<font style="display:inline;">&nbsp;</font>
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				<font style="margin:0pt;font-family:Symbol;border-top:1pt none #D9D9D9;border-bottom:1pt none #D9D9D9;font-size:12pt;;"> &#xB7;</font>
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			<font style="display:inline;background-color: #FFFFFF;">Maintaining the highest ethical standards, internal controls and adherence to regulatory requirements; and</font></p></td></tr></table></div>
		<p style="margin:0pt 0pt 0pt 36pt;text-indent: -18pt;border-top:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;font-family:Times New Roman,Times,serif;font-size: 12pt;">
			<font style="display:inline;">&nbsp;</font>
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		<div style="width:100%"><table style="width:100%;" cellpadding="0" cellspacing="0"><tr><td style="width:36pt;"><p style="width:36pt;font-size:0pt;"></p></td><td valign="top" align="left" style="width: 18.00pt; display: inline;">
			<p style="border-top:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;font-family:Times New Roman,Times,serif;font-size: 12pt;margin:0pt;">
				<font style="margin:0pt;font-family:Symbol;border-top:1pt none #D9D9D9;border-bottom:1pt none #D9D9D9;font-size:12pt;;"> &#xB7;</font>
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		</td><td style="width:0pt;"><p style="width:0pt;width:0pt;font-size:0pt;"></p></td><td align="left" valign="top">
			<p style="border-top:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;font-family:Times New Roman,Times,serif;font-size: 12pt;margin:0pt;">
			<font style="display:inline;background-color: #FFFFFF;">Appropriate and planned development of personnel.</font></p></td></tr></table></div>
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			<font style="display:inline;">&nbsp;</font>
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			<a name="_cp_text_1_12"></a><font style="display:inline;background-color: #FFFFFF;"></font>
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		<p><font size="1"> </font></p></div><div style="margin-left:10.2941176470588%;margin-right:10.2941176470588%;"><hr align="center" style='background-color:#000000; border-width:0; color:#000000; height:2pt; lineheight:0; width:100%;'></hr><p style="page-break-after:always">&nbsp;</p></div><div style="margin-left:10.2941176470588%;margin-right:10.2941176470588%;"><div style="width:100%">

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			<font style="display:inline;">The Committee did not set target amounts for any performance measure or establish any minimum or maximum payout under the annual cash incentive awards. In April 2017, the Committee evaluated the overall outcome of these performance measures on a holistic basis in determining the annual cash incentive payout. In determining the cash incentive awards for fiscal 2017, the Committee considered the following: (1)&nbsp;investment income of $23.5 million compared to $9.2 million in the prior year, (2)&nbsp;pre-tax net investment income of $0.61 per share compared to ($0.76) per share in the prior year, (3)&nbsp;declared $0.79 per share in total cash dividends compared to $0.14 per share in the prior year, (4)&nbsp;net asset value of $17.80 per share compared to $17.34 per share in the prior year, (5)&nbsp;$287 million in total investments at fair value, with no investments on non-accrual, compared to $178 million in total investments at fair value in the prior year, (6)&nbsp;<a name="_cp_text_2_8"></a>entered into a new credit facility with $100 million in commitments (subject to a borrowing base)<a name="_cp_text_2_12"></a>, with the ability to expand the facility to $150 million with lender consent, and $75 million available at year end, and (7)&nbsp;total return on shareholders equity of 8.6% for fiscal year 2017.</font>
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			<font style="display:inline;background-color: #FFFFFF;">The</font><font style="display:inline;font-family:Times;background-color: #FFFFFF;"> Committee <a name="_cp_text_1_14"></a></font><font style="display:inline;">concluded that the</font><font style="display:inline;font-family:Times;background-color: #FFFFFF;">&nbsp;performance <a name="_cp_text_1_16"></a></font><font style="display:inline;">of the Company and each individual NEO was at a consistent high level in fiscal year 2017, resulting in excellent financial results. <a name="img_1986931134"></a>In evaluating these results, the Committee did not assign weights to these performance measures and used discretion in determining the </font><font style="display:inline;background-color: #FFFFFF;">annual cash incentive <a name="_cp_text_1_18"></a></font><font style="display:inline;">compensation awarded to each NEO</font><font style="display:inline;background-color: #FFFFFF;">. Based on <a name="_cp_text_1_20"></a></font><font style="display:inline;">the Board&#x2019;s evaluation of fiscal year 2017</font><font style="display:inline;background-color: #FFFFFF;">, &nbsp;<a name="_cp_text_1_21"></a></font><font style="display:inline;">and</font><font style="display:inline;background-color: #FFFFFF;">&nbsp;upon completion of the annual audit, Mr.&nbsp;Diehl was </font><font style="display:inline;">awarded</font><font style="display:inline;background-color: #FFFFFF;"> an annual cash incentive of $751,938 (representing 170% of his base salary) and Mr.&nbsp;Sarner was </font><font style="display:inline;">awarded</font><font style="display:inline;background-color: #FFFFFF;"> an annual cash incentive of $528,795 (representing 142% of his base salary). The Committee believes the annual cash incentives earned by the NEOs are appropriate in relation to Capital Southwest&#x2019;s financial performance for fiscal 2017 as well as each named executive officer&#x2019;s individual performance during that period.</font>
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