UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
SCHEDULE 14A
(RULE 14a-101)
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant ý
Filed by a Party other than the Registrant ¨
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¨ | Preliminary Proxy Statement |
| ¨ | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
| ý | Definitive Proxy Statement |
| ¨ | Definitive Additional Materials |
| ¨ | Soliciting Material Pursuant to Section 240.14a-12 |
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| Barings BDC, Inc. |
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Triangle Capital Corporation |
| (Name of Registrant as Specified in its Charter) |
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| (Name of Person(s) Filing Proxy Statement if Other Than the Registrant) |
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| | (1 | ) | | Title of each class of securities to which transaction applies:
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| | (2 | ) | | Aggregate number of securities to which transaction applies:
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| | (3 | ) | | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
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¨ | | Fee paid previously with preliminary materials. |
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3700 Glenwood Avenue, Suite 530
Raleigh,Charlotte, North Carolina 2761228202
(919) 719-4770(704) 805-7200
March 1, 201810, 2023
Dear Stockholder:
You are cordially invited to attend Triangle Capital Corporation’s 2018the 2023 Annual Meeting of Stockholders of Barings BDC, Inc., to be held virtually on Wednesday,Thursday, May 2, 20184, 2023 at 8:30 a.m. (Eastern Time), at the Woman's Club of Raleigh, 3300 Woman's Club Drive, Raleigh, North Carolina 27612.following website: www.virtualshareholdermeeting.com/BBDC2023.
The notice of Annual Meeting of Stockholders and proxy statement accompanying this letter provide an outline of the business to be conducted at the meeting. I will also report on the progress of the Company during the past year and answer stockholders’ questions.
It is important that your shares be represented at the Annual Meeting. If you are unable to attend the meeting in person,virtually, I urge you to vote your shares by completing, dating and signing the enclosed proxy card and promptly returning it in the envelope provided. If a broker or other nominee holds your shares in “street name,” your broker has enclosed a voting instruction form, which you should use to vote those shares. The voting instruction form indicates whether you have the option to vote those shares by telephone or by using the Internet. Your vote is important.
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| Eric Lloyd |
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E. Ashton Poole |
Chairman of the Board of Directors & Chief Executive Officer |
| & Executive Chairman |
BARINGS BDC, INC.
300 South Tryon Street, Suite 2500
TRIANGLE CAPITAL CORPORATION
3700 Glenwood Avenue, Suite 530
Raleigh,Charlotte, North Carolina 2761228202
(919) 719-4770(704) 805-7200
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held On Wednesday,Thursday, May 2, 20184, 2023
To the Stockholders of Triangle Capital Corporation:Barings BDC, Inc.:
The 20182023 Annual Meeting of Stockholders (the “Annual Meeting”) of Triangle Capital CorporationBarings BDC, Inc. (the “Company”) will be held at the Woman's Club of Raleigh, 3300 Woman's Club Drive, Raleigh, North Carolina 27612,virtually on Wednesday,Thursday, May 2, 20184, 2023 at 8:30 a.m. (Eastern Time) forat the following purposes:website: www.virtualshareholdermeeting.com/BBDC2023. The Annual Meeting will be held in a virtual meeting format only. You will not be able to attend the Annual Meeting in person.
You are being asked to consider and vote upon the following proposals:
1. To elect eightthree Class II directors to serve for one yeara three-year term and until their successors have been duly elected and qualifiedqualify (Proposal No. 1);
2. To ratifyapprove a proposal to authorize the appointmentCompany, pursuant to subsequent approval of Ernst & Young LLP asits Board of Directors, to issue and sell shares of its common stock (during the Company's independent registered public accounting firm for12 months following such authorization) at a price below the fiscal year ending December 31, 2018Company’s then-current net asset value per share in one or more offerings, subject to certain limitations set forth in the Proxy Statement accompanying this Notice (including, without limitation, that the number of shares issued and sold pursuant to such authority does not exceed 30% of the Company’s then-outstanding common stock immediately prior to each such offering) (Proposal No. 2); and
3. To approve, in an advisory (non-binding) vote, the compensation of our named executive officers (Proposal No. 3); and
4. To transact such other business as may properly come before the meeting.
YouWe have enclosed our annual report on Form 10-K for the rightyear ended December 31, 2022, proxy statement and a proxy card.
Our Board of Directors has fixed the close of business on March 6, 2023, as the record date for the determination of stockholders entitled to receive notice of and to vote at the meeting if you were a stockholderAnnual Meeting and at any adjournment or postponement thereof. We intend to mail these materials on or about March 10, 2023, to all stockholders of record entitled to vote at the close of business on February 22, 2018. Annual Meeting.
Each Company stockholder is invited to attend the Annual Meeting virtually. You or your proxyholder will be able to attend the Annual Meeting online, vote and submit questions by visiting www.virtualshareholdermeeting.com/BBDC2023 and using a control number assigned by Broadridge Financial Solutions, Inc. (“Broadridge”). Please see "How To Participate in the Annual Meeting" in the accompanying proxy statement for more information.
Whether or not you expect to be present in person at the virtual Annual Meeting, please sign the enclosed proxy card and return it promptly in the self-addressed envelope provided. Instructions are shown on the proxy card. If a broker or other nominee holds your shares in “street name,” that is they are registered in the name of your broker, has enclosed a voting instruction form, whichbank, trustee or other nominee, you should usehave received a notice containing voting instructions from your nominee rather than from us. You should follow the voting instructions in the notice to ensure that your vote those shares.is counted. The voting instruction form indicates whether you have the option to vote those shares by telephone or by using the Internet.
Your vote is extremely important to the Company. In the event there are not sufficient votes for a quorum or to approve or ratify any of the foregoing proposals at the time of the Annual Meeting, the Annual Meeting may be adjourned in order to permit further solicitation of proxies by the Company.
OUR BOARD OF DIRECTORS INCLUDING EACH OF THE INDEPENDENT DIRECTORS, UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" EACH OF THE PROPOSALS.
If you have additional questions and you are a Barings BDC, Inc., stockholder you may contact the Company’s Investor Relations department at 1-888-401-1088, or by email at BDCinvestorrelations@barings.com. You may also contact Broadridge, the Company's proxy solicitor, toll-free at 1-877-777-4652 for directions on how to attend the Annual Meeting virtually and how to vote during the virtual meeting.
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| By order of the Board of Directors, |
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| Alexandra Pacini |
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Steven C. Lilly |
Chief Financial Officer and Secretary, Barings BDC, Inc. |
Raleigh,
Charlotte, North Carolina
March 1, 201810, 2023
This is an important meeting.Annual Meeting. To ensure proper representation at the meeting,Annual Meeting, please complete, sign, date and return the proxy card in the enclosed, self-addressed envelope.envelope, or vote your shares electronically via the Internet or by telephone. Please see the enclosed proxy statement and the enclosed proxy card for details about electronic voting. Even if you vote your shares prior to the meeting,this Annual Meeting, you still may attend the meeting and vote your shares electronically via the live webcast if you wish to change your vote.
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to Be Held on Thursday, May 4, 2023:
Our notice of the Annual Meeting, proxy statement, and annual report on Form 10-K for the year ended December 31, 2022 are available on the internet at https://materials.proxyvote.com/06759L.
The following information applicable to the Annual Meeting may be found in person.the notice of the Annual Meeting, proxy statement and accompanying proxy card:
▪The date, time and location of the meeting;
▪A list of the matters intended to be acted on and our Board of Directors' recommendations regarding those matters;
▪Any control/identification numbers that you need to access your proxy card; and
▪Information on how to obtain directions to attend the Annual Meeting electronically via the live webcast.
TABLE OF CONTENTS
300 South Tryon Street, Suite 2500
TRIANGLE CAPITAL CORPORATION
3700 Glenwood Avenue, Suite 530
Raleigh,Charlotte, North Carolina 2761228202
(919) 719-4770(704) 805-7200
PROXY STATEMENT
20182023 Annual Meeting of Stockholders
This proxy statement is furnished in connection with the solicitation of proxies by the Board of Directors of Triangle Capital CorporationBarings BDC, Inc. (the “Company,” “Triangle,“Barings BDC,” “we,” “us” or “our”) for use at our 20182023 Annual Meeting of Stockholders to be held virtually on Wednesday,Thursday, May 2, 20184, 2023 at 8:30 a.m. (Eastern Time) at the Woman's Club of Raleigh, 3300 Woman's Club Drive, Raleigh, North Carolina 27612,following website: www.virtualshareholdermeeting.com/BBDC2023, and at any adjournmentspostponement or adjournment thereof (the “Annual Meeting”). The Notice of Annual Meeting, this proxy statement, the accompanying proxy card and our Annual Report for the fiscal year ended December 31, 20172022, which includes audited financial statements for the year ended December 31, 2022, are first being sent to stockholdersreleased on or about March 1, 2018.10, 2023 to the Company's stockholders of record as of the close of business on March 6, 2023.
We encourage you to access the Annual Meeting prior to the start time. The live webcast will begin promptly at 8:30 a.m. (Eastern Time) on Thursday, May 4, 2023. We will have technicians ready to assist you with any technical difficulties you may have accessing the live webcast. Technical support will be available on the meeting website starting approximately 8:15 a.m. (Eastern Time) and will remain available until the Annual Meeting has finished. The virtual meeting platform is fully supported across browsers (e.g., Internet Explorer, Firefox, Chrome, and Safari) and devices (desktops, laptops, tablets, and cell phones) running the most updated version of applicable software and plugins. Participants should ensure that they have a strong WiFi connection if they intend to participate in the Annual Meeting. Participants should also give themselves plenty of time to log in and ensure that they can hear audio prior to the start of the Annual Meeting. Please see “How to Participate in the Annual Meeting” below for additional details.
We encourage you to vote your shares, either by voting in person atelectronically via the meetinglive webcast of the Annual Meeting or by granting a proxy (i.e., authorizing someone else to vote your shares). If you properly sign, date and datemail the accompanying proxy card or authorize your proxy by telephone or through the Internet, and we receivethe Company receives it in time for voting at the meeting,Annual Meeting, the persons named as proxies will vote theyour shares registered directly in your name in the manner that you specified. specify.If you give no instructions on the proxy card you execute, the shares covered by the proxy card will be voted FOR“FOR” the election of the nominees as directors FORand "FOR" the ratificationproposal to authorize the Company, with the subsequent approval of its Board of Directors, to issue and sell shares of its common stock (during the 12 months following such authorization) at a price below its then-current net asset value per share in one or more offerings, subject to certain limitations set forth herein (including, without limitation, that the number of shares issued and sold pursuant to such authority does not exceed 30% of the appointment of Ernst & Young LLP as the Company's independent registered public accounting firm, and FOR the approval of the compensation of our named executive officers.
YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE PROMPTLY VOTE YOUR SHARES EITHER BY MAIL, BY TELEPHONE, OR VIA THE INTERNET.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING TO BE HELD ON WEDNESDAY, MAY 2, 2018:
The Notice of Annual Meeting, this proxy statement and our annual report for the fiscal year ended December 31, 2017 are available at the following Internet address: http://ir.tcap.com/annual-proxy.
INFORMATION ABOUT THE MEETING
WhenCompany’s then-outstanding common stock immediately prior to each such offering). If any other business is the Annual Meeting?
The Annual Meeting will be held on Wednesday, May 2, 2018 at 8:30 a.m. (Eastern Time).
Where willbrought before the Annual Meeting, your votes will be held?cast at the discretion of the proxy holders, subject to applicable SEC rules.
TheAny stockholder “of record” (i.e., stockholders holding shares directly in their name) giving a valid proxy for the Annual Meeting will be heldmay revoke it before it is exercised by giving a later-dated properly executed proxy, by giving notice of revocation to the Company's Secretary in writing before the Annual Meeting or by voting electronically via the live webcast of the Annual Meeting. However, the mere presence of the stockholder at the Woman's ClubAnnual Meeting does not revoke the proxy. Any stockholder of Raleigh, 3300 Woman's Club Drive, Raleigh, North Carolina 27612.record attending the Annual Meeting virtually by live webcast may vote electronically whether or not he or she has previously authorized his or her shares to be voted by proxy.
What itemsIf your shares are registered in the name of a bank, brokerage firm or other nominee, you will receive instructions from your bank, broker, or other nominee that you must follow in order to instruct how your shares are to be voted at the Annual Meeting. If your shares are registered in the name of a bank, brokerage firm or other nominee, to revoke any voting instructions prior to the time the vote is taken at the Annual Meeting, you must contact such broker, bank or other institution or nominee to determine how to revoke your vote in accordance with its policies a sufficient time
in advance of the Annual Meeting. Unless revoked as stated above, the shares of common stock represented by valid proxies will be voted on all matters to be acted upon at the Annual Meeting?Meeting.
ThereIf you want to submit a question during the Annual Meeting, log into the live webcast at www.virtualshareholdermeeting.com/BBDC2023, type your question into the “Ask a Question” field, and click “Submit.”
Only questions submitted via the live webcast that are threepertinent to Annual Meeting matters scheduled for a vote:will be answered during the Annual Meeting, subject to time constraints. Questions or comments that are not related to the proposals under discussion, are about personal concerns not shared by stockholders generally, or use blatantly offensive language may be ruled out of order. Additionally, the Company may not be able to answer multiple questions submitted by the same stockholder. The Company intends to post and answer questions pertinent to the Annual Meeting matters that cannot be answered during the Annual Meeting due to time constraints online at the Company’s website at https://ir.barings.com/annual-shareholder-meeting-materials. The questions and answers will be available as soon as practicable after the Annual Meeting and will remain available until one week after posting.
PURPOSE OF ANNUAL MEETING
At the Annual Meeting, you will be asked to consider and vote on the following proposals:
1.To elect eightthree Class II directors to serve for one yeara three-year term and until their successors have been duly elected and qualifiedqualify (Proposal No. 1);
2.To ratifyapprove a proposal to authorize the appointmentCompany, pursuant to subsequent approval of Ernst & Young LLP asits Board of Directors, to issue and sell shares of its common stock (during the Company's independent registered public accounting firm for12 months following such authorization) at a price below the fiscal year ending December 31, 2018Company’s then-current net asset value per share in one or more offerings, subject to certain limitations set forth in the Proxy Statement accompanying this Notice (including, without limitation, that the number of shares issued and sold pursuant to such authority does not exceed 30% of the Company’s then-outstanding common stock immediately prior to each such offering) (Proposal No. 2); and
3.To approve, in an advisory (non-binding) vote,transact such other business as may properly come before the compensationmeeting, or any postponement or adjournment thereof.
The Board of our named executive officers (Proposal No. 3).
As of the date of this proxy statement, we areDirectors is not aware of any other matters that willmatter to be presented for considerationaction at the Annual Meeting.
What areMeeting other than the Boardmatters set forth herein. Should any other matter requiring a vote of Directors’ recommendations?
Our Board of Directors recommends that you vote:
“FOR”stockholders arise, it is the election of eachintention of the eight nomineespersons named hereinin the proxy to servevote in accordance with their discretion on the Board of Directors;
“FOR” the ratificationsuch matters. Stockholders have no dissenters' or appraisal rights in connection with any of the appointment of Ernst & Young LLP as the Company's independent registered public accounting firm for the fiscal year ending December 31, 2018;proposals described herein.
Adjournment and Additional Solicitation
“FOR” the approval, byIf there appear to be insufficient votes to obtain a non-binding advisory vote, of the compensation of our named executive officers;
Will Triangle’s directors be in attendancequorum at the Annual Meeting?
We encourage, but do not require, our directorsMeeting, the chairman of the meeting or the stockholders who are represented in person (electronically via the live webcast) or by proxy may vote to attend annual meetings of stockholders. However, we anticipate that all of our directors will attendadjourn the Annual Meeting.
Meeting to permit further solicitation of proxies. If adjournment is submitted to the stockholders for approval, the designated Company proxy holders will vote proxies held by each of them for such adjournment to permit the further solicitation of proxies. Approval of any proposal to adjourn the Annual Meeting submitted to the stockholders for approval requires the affirmative vote of a majority of the votes cast on the proposal.
INFORMATION ABOUT VOTING
Who is entitledA stockholder vote may be taken on any of the proposals in this Proxy Statement prior to any such adjournment if there are sufficient votes for approval of such proposal.
VOTING SECURITIES
You may vote at the Annual Meeting?
Only stockholdersMeeting only if you were a holder of record of the Company's common stock at the close of business on the record date, February 22, 2018, are entitled to receive notice of the Annual Meeting and to vote the shares for which they are stockholders of record on that date at the Annual Meeting,March 6, 2023 or any postponement or adjournment of the Annual Meeting. As of the close of business on February 22, 2018, we had 48,024,614 shares of common stock outstanding.
Stockholders of Record: Shares Registered in Your Name. If, on February 22, 2018, your shares were registered directly in your name with Triangle’s transfer agent, Computershare, Inc., thenif you arehold a stockholder of record. Asvalid proxy from a stockholder of record you may vote in person at the Annual Meeting or vote by proxy.
Beneficial Owners:Shares Registered in the Nameas of a Broker or Bank. If, on February 22, 2018, yoursuch record date. As of March 6, 2023, there were 107,916,166 shares were held in an account at a brokerage firm, bank, dealer or other similar organization, then you are the beneficial owner of shares held in “street name,” and these proxy materials are being forwarded to you by that organization. The organization holding your account is considered the stockholder of record for purposes of voting at the Annual Meeting. As a beneficial owner, you have the right to direct your broker or other agent on how to vote the shares in your account. You are also invited to attend the Annual Meeting. However, since you are not the stockholder of record, you may not vote your shares in person at the Annual Meeting unless you request and obtain a valid legal proxy from your broker or other agent.
How do I vote?
With respect to Proposal No. 1 (election of directors), you may either vote “FOR” one or more of the nominees to the Board of Directors, you may vote “AGAINST” one or more of the nominees or you may “ABSTAIN” from voting with respect to one or more of the nominees. With respect to each of Proposal Nos. 2 and 3, you may vote “FOR” or “AGAINST,” or “ABSTAIN” from voting altogether. The procedures for voting are set forth below.
Stockholders of Record: Shares Registered in Your Name. If you are a stockholder of record, you may vote in person at the Annual Meeting or vote by proxy using the enclosed proxy card. Whether or not you plan to attend the Annual Meeting, we urge you to fill out, sign and return the enclosed proxy card to ensure your vote is counted. You may still attend the Annual Meeting and vote in person if you have already signed and returned your proxy card.
To vote in person, come to the Annual Meeting, and we will give you a ballot when you arrive.
To vote using the enclosed proxy card, simply complete, sign and date the enclosed proxy card and return it promptly in the postage paid envelope provided. If you return your signed proxy card to us before the Annual Meeting, we will vote your shares as you direct unless, if after returning your signed proxy card, you attend the Annual Meeting and vote in person or otherwise revoke your proxy as set forth under the heading "Can I change my vote after submitting my proxy card?" below.
Beneficial Owners: Shares Registered in the Name of a Broker or Bank. If you are a beneficial owner of shares registered in the name of your broker, bank or other agent, you should have received voting instructions with these proxy materials. You should follow the instructions provided by your broker, bank or other agent regarding how to vote your shares. To vote in person at the Annual Meeting, you must obtain a valid legal proxy from your broker, bank or other agent. To do this, follow the instructions from your broker, bank or other agent included with these proxy materials or contact your broker, bank or other agent to request a legal proxy.
You may receive more than one proxy statement and voting instruction form if your shares are held through more than one account (e.g., through different brokers or nominees). Each proxy card or voting instruction form only covers those shares ofCompany's common stock held in the applicable account. If you hold shares in more than one account, you will have to provide voting instructions as to all of your accounts to vote all of your shares.
How many votes do I have?
For each proposal to be voted upon, you have one vote for eachoutstanding. Each share of common stock that you own as of the close of businessis entitled to one vote on February 22, 2018.
What if I returneach matter submitted to a proxy card but do not make specific choices?
If you return a signed and dated proxy card without marking any voting selections, your shares will be voted as follows: “FOR” the election of each of the eight nominees named herein to serve on the Board of Directors; “FOR” the ratification of the appointment of Ernst & Young LLP as the Company's independent registered public accounting firm for the fiscal year ending December 31, 2018, and “FOR” the approval, on an advisory basis, of the compensation of our named executive officers.
If any other matter is properly presented at the meeting, your proxy (one of the individuals named on your proxy card) will vote your shares as recommended by the Board of Directors or, if no recommendation is given, will vote your shares using his or her discretion.
Can I change my vote after submitting my proxy card?
Yes. You can change your vote or otherwise revoke your proxy at any time before the final vote at the Annual Meeting. If you areStockholders do not have the record holderright to cumulate votes in the election of your shares, you can revoke your proxy in any one of three ways:directors.
You can submit another properly completed proxy card bearing a later date which is received by the close of business on May 1, 2018 (the day before the Annual Meeting);
You can send a written notice which is received by the close of business on May 1, 2018 that you are revoking your proxy to Triangle Capital Corporation, 3700 Glenwood Avenue, Suite 530, Raleigh, North Carolina 27612, Attention: Steven C. Lilly, Corporate Secretary; orQUORUM REQUIRED
You can attend the Annual Meeting and vote in person. However, your attendanceA quorum must be present at the Annual Meeting for any business to be conducted. The presence at the Annual Meeting, electronically via live webcast or by proxy, of the holders of shares of common stock of the Company entitled to cast a majority of the votes entitled to be cast as of the record date of March 6, 2023 will constitute a quorum for the purposes of the Annual Meeting. If there are not by itself, revoke your proxy.
If your shares are held by your brokerage firm, bank, dealersufficient votes for a quorum or other similar organization as a nomineeto approve or agent, you should followratify any of the instructions provided by your broker, bank, custodian, nominee or other record holderforegoing proposals at the time of the Annual Meeting, the chairman of the meeting may adjourn the Annual Meeting in order to revoke your voting instructions.
How are votes counted?
Votes will be countedpermit further solicitation of proxies by the inspector of election appointed for the Annual Meeting, who will separately count “FOR,” “AGAINST” and “ABSTAIN” votes and broker non-votes with respect to Proposal Nos. 1, 2 and 3.
Under applicable rules of the New York Stock Exchange, or NYSE, a broker non-vote occurs when a nominee, such as a brokerage firm, bank, dealer or other similar organization, holding shares for a beneficial owner, does not vote on a particular proposal because the proposal is considered "non-routine" and the nominee does not have discretionary voting power with respect to that proposal and has not received instructions with respect to that proposal from the beneficial owner. In the event that a broker, bank, custodian, nominee or other record holder of our common stock indicates on a proxy that it does not have discretionary authority to vote certain shares on a particular proposal, then those shares will be treated as broker non-votes with respect to that proposal. Accordingly, if you own shares through a nominee, please be sure to instruct your nominee how to vote to ensure that your vote is counted on each of the proposals.
If your shares are held by your broker as your nominee (that is, in “street name”), you will need to obtain a proxy form from the institution that holds your shares and follow the instructions included on that form regarding how to instruct your broker to vote your shares. Under NYSE rules, Proposal Nos. 1 (election of directors) and 3 (advisory vote on executive compensation) are considered non-routine proposals and Proposal No. 2 (ratification of appointment of accounting firm) is considered a routine proposal. In the event that a broker, bank, or other agent indicates on a proxy that it does not have discretionary authority to vote shares on a non-routine proposal, or chooses not to exercise such authority, then those shares will be treated as broker non-votes.
Company.
Abstentions and broker non-votes, if any, will be treated as shares present for the purpose of determining the presence of a quorum for the transactionAnnual Meeting. A “broker non-vote” with respect to a matter occurs when a broker, bank or other institution or nominee holding shares on behalf of businessa beneficial owner returns a proxy but has not provided voting instructions because it has not received voting instructions from the beneficial owner on a particular proposal and does not have, or chooses not to exercise, discretionary authority to vote the shares on such proposals. If a stockholder does not vote electronically via the live webcast or does not submit voting instructions to its broker, bank or other nominee, the broker, bank or other nominee will only be permitted to vote the stockholder’s shares on “routine” proposals. There are no “routine” proposals at the Annual Meeting. Therefore, the Company does not expect to receive any broker non-votes at the Annual Meeting.
How many votesVOTES REQUIRED
Proposal No. 1
You may vote “For” or “Against” or abstain from voting on Proposal No. 1 (to elect three Class II directors to serve for a term of three years, and until their successors are needed to approve each proposal?
duly elected and qualify). For nominees for director listed in Proposal No. 1 to be elected, each director nominee requires a majority of the votes cast for his or her election, which means that each director nominee must receive more votes cast "FOR"“FOR” than "AGAINST"“AGAINST” that director nominee. For purposes of the vote on this proposal, abstentions and broker non-votes will not be counted as votes cast and will have no effect on the result of the vote, although they will be considered present for the purpose of determining the presence of a quorum.
To be approved, Proposal No. 2 must receive “FOR” votes from a majority of all votes cast at the Annual Meeting, whether in person or by proxy. For purposes of the vote on this proposal, abstentions and broker non-votes, if any, will not be counted as votes cast and will have no effect on the result of the vote, although they will be considered present for the purpose of determining the presence of a quorum.
If an incumbent director nominee does not receive the required number of votes for re-election, then under Maryland law, he or she will continue to serve as a director of the Company until his or her successor is duly elected and qualifies, subject to the Company's corporate governance guidelines discussed further below.Proposal No. 2
You may vote “For” or “Against” or abstain from voting on Proposal No. 2 (to authorize the Company, with the subsequent approval of its Board of Directors, to issue and sell shares of its common stock (during the 12 months following such authorization) at a price below its then-current net asset value per share in one or more offerings, subject to certain limitations set forth herein (including, without limitation, that the number of shares issued and sold pursuant to such authority does not exceed 30% of the Company’s then-outstanding common stock immediately prior to each such offering)). To be approved, Proposal No. 32 must receive “FOR”“FOR” votes from each of the following: (1) a majority of all votes castthe outstanding shares of the Company’s common stock; and (2) a majority of the outstanding shares of the Company’s common stock that are not held by affiliated persons of the Company. For purposes of Proposal No. 2, the Investment Company Act of 1940, as amended (the “1940 Act”), defines a “majority of the outstanding shares” as the vote of the lesser of: (1) 67% or more of the voting securities of the Company present at the Annual Meeting, whether in personif the holders of more than 50% of the outstanding voting securities of the Company are present virtually or represented by proxy.proxy; or (2) more than 50% of the outstanding voting securities of the Company. For purposes of the vote on this proposal,Proposal No. 2, abstentions and broker non-votes, if any, will not be counted ashave the effect of votes cast against the proposal.
HOW TO PARTICIPATE IN THE ANNUAL MEETING
The Annual Meeting will be conducted virtually, on Thursday, May 4, 2023 at 8:30 a.m. (Eastern Time) via live webcast.
Stockholders of record can participate in the Annual Meeting virtually by logging in to www.virtualshareholdermeeting.com/BBDC2023 and following the instructions provided. We recommend that you log in at least ten minutes before the Annual Meeting to ensure you are logged in when the meeting starts. Only registered stockholders as of March 6, 2023, the record date for the Annual Meeting, may submit questions and vote at the Annual Meeting. You may still virtually participate in the Annual Meeting if you vote by proxy in advance of the Annual Meeting.
Upon written request from a stockholder of record as of the record date, the Company's legal counsel, Dechert LLP, will havestream the webcast live at its offices located at 1900 K Street NW, Washington, DC 20006. Please note that no effectmembers of the Company's management or the Board will be in attendance at this location. If you wish to attend the Annual Meeting via webcast at the Washington, DC offices of Dechert LLP, please submit a written request to Barings BDC, Inc., Attention: Corporate Secretary, 300 South Tryon Street, Suite 2500, Charlotte, NC 28202, to be received no later than April 27, 2023. Your written request must include your name as stockholder of record and the number of shares of the Company’s common stock you hold.
Please note that if you hold your shares through a bank, broker or other nominee (i.e., in street name), you may be able to authorize your proxy by telephone or the Internet, as well as by mail. You should follow the instructions you receive from your bank, broker or other nominee to vote these shares. Also, if you hold your shares in street name, you must obtain a proxy executed in your favor from your bank, broker or nominee to be able to participate in and vote via the Annual Meeting webcast.
The Company and Dechert LLP are sensitive to the health and travel concerns of the Company's stockholders and recommendations from public health officials. As a result, the location, means, or other details of attending the webcast of the Annual Meeting at Dechert LLP's Washington, DC offices may change. In the event of such a change, and if a stockholder of record has requested to attend the meeting via webcast at Dechert LLP's Washington, DC offices, the Company will issue a press release announcing the change and file the announcement on the resultSEC's EDGAR system, along with other steps, but may not deliver additional soliciting materials to stockholders or otherwise amend the proxy materials. The Company plans to announce these changes, if any, at https://ir.barings.com/, and encourages you to check the “Investor Relations” and “Latest News” sections of this website prior to the vote, although theyAnnual Meeting if you plan to attend the webcast at the Washington, DC offices of Dechert LLP.
INFORMATION REGARDING THIS SOLICITATION
The Company will bear the cost of solicitation of proxies in the form accompanying this statement. Proxies will be considered presentsolicited by mail or by requesting brokers and other custodians, nominees and fiduciaries to forward proxy soliciting material to the beneficial owners of shares of common stock held of record by such brokers, custodians, nominees and fiduciaries, each of whom the Company will reimburse for its expenses in so doing. In addition to the use of mail, directors, officers and regular employees of Barings LLC, the Company’s external investment adviser (“Barings” or the “Adviser”), without special compensation therefor, may solicit proxies personally or by telephone, electronic mail, facsimile or other electronic means from stockholders. The address of Barings LLC is 300 South Tryon Street, Suite 2500, Charlotte, NC 28202.
The Company has engaged the services of Broadridge Financial Solutions, Inc. ("Broadridge") for the purpose of determiningassisting in the presencesolicitation of proxies at an anticipated cost of approximately $54,000 plus reimbursement of certain expenses and fees for additional services requested. We may also reimburse brokerage firms, banks and other agents for the cost of forwarding proxy materials to beneficial owners and obtaining your voting instructions. Please note that Broadridge may solicit stockholder proxies by telephone on behalf of the Company. They will not attempt to influence how you vote your shares, but only ask that you take the time to authorize your proxy. You may also be asked if you would like to authorize your proxy over the telephone and to have your voting instructions transmitted to the Company’s proxy tabulation firm.
Stockholders may authorize proxies and provide their voting instructions through the Internet, by telephone, or by mail by following the instructions on the proxy card. These options require stockholders to input the Control Number, which is provided on the proxy card. If you authorize a proxy using the Internet, after visiting www.proxyvote.com and inputting your Control Number, you will be prompted to provide your voting instructions.
Stockholders will have an opportunity to review their voting instructions and make any necessary changes before submitting their voting instructions and terminating their Internet link. Stockholders who authorize a proxy via the Internet, in addition to confirming their voting instructions prior to submission, will, upon request, receive an e-mail confirming their instructions.
If a stockholder wishes to participate in the Annual Meeting but does not wish to authorize his, her or its proxy by telephone or Internet, the stockholder may authorize a proxy by mail by completing and executing the accompanying proxy card and returning it in the postage-paid envelope or attend the Annual Meeting via live webcast.
YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING VIRTUALLY, PLEASE PROMPTLY VOTE YOUR SHARES EITHER BY MAIL, BY TELEPHONE, OR VIA THE INTERNET.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Board of Directors is currently comprised of ten Directors divided into three (3) classes, with terms expiring in 2023, 2024 and 2025. The term of office of Class II Directors ends on the date of the Annual Meeting (or on the date their respective successors are elected and qualify, if later). After providing exceptional service to our Board since August 2021, Dr. Bernard Harris, Jr. will not stand for re-election to the Board at the end of his current term, and therefore, will not stand for re-election at the Annual Meeting. In connection with Dr. Harris's departure, the Board passed a resolution reducing the number of directors that constitutes the full board to nine directors from ten directors, effective as of the close of business on May 4, 2023.
The remaining three Class II Directors of the Company—Steve Byers, Valerie Lancaster-Beal, and John Switzer—have been nominated by the Board of Directors (upon the recommendation of the Nominating and Corporate Governance Committee) for election for a three-year term expiring in 2026. No person being nominated as a Class II Director is being proposed for election pursuant to any agreement or understanding between such person, on the one hand, and the Company or any other person or entity, on the other hand. Each Class II Director has agreed to serve as a director if elected and has consented to be named as a nominee.
Pursuant to the Company's Seventh Amended and Restated Bylaws (the “Bylaws”), a nominee for director is elected to the Board of Directors if the number of votes cast for such nominee’s election exceed the number of votes cast against such nominee’s election. Pursuant to the Company's corporate governance guidelines, incumbent directors must agree to tender their resignation if they fail to receive the required number of votes for re-election, and in such event the Board of Directors will act within 90 days following certification of the stockholder vote to determine whether to accept the director’s resignation. These procedures are described in more detail in the Company's corporate governance guidelines, which are available under “Governance Documents” on the Investor Relations section of the Company's website at https://ir.barings.com/governancedocs. The Board of Directors may consider any factors it deems relevant in deciding whether to accept a director’s resignation. If a director’s resignation offer is not accepted by the Board of Directors, the Company expects that such director would continue to serve until his or her successor is duly elected and qualifies, or until the director’s earlier death, resignation, or removal. Any such director will be eligible for nomination for election as a director at future Annual Meetings.
The Board of Directors recommends that you vote “FOR” the election of the nominees named in this proxy statement.
In the absence of instructions to the contrary, it is the intention of the persons named as proxies to vote such proxy for the election of all the nominees named below. If any of the nominees should decline or be unable to serve as a director, it is intended that the proxy will be voted for the election of such person or persons who are nominated as replacements. The Board of Directors has no reason to believe that any of the persons named below will be unable or unwilling to serve.
Information about the Nominees for Director and Other Directors
The following chart summarizes the professional experience and additional considerations that contributed to the Nominating and Corporate Governance Committee’s and the Board of Directors’ conclusion that each nominee for Director and other Director should serve on the Board of Directors. The term “Fund Complex” included in the director biographies included in this proxy statement includes the Company, Barings Capital Investment Corporation (“BCIC”) (a non-listed business development company), Barings Private Credit Corporation (“BPCC”) (a perpetually offered non-listed business development company), Barings Global Short Duration High Yield Fund (a closed-end fund), Barings Corporate Investors (a closed-end fund), Barings Participation Investors (a closed-end fund), and Barings Private Equity Opportunities and Commitments Fund (“PEOC”) (a non-diversified, closed-end management investment company). The director information in the following chart is organized by class and, within each class, by “Interested Directors” and “Non-Interested Directors.” “Interested Directors” are “interested persons,” as defined in Section 2(a)(19) of the 1940 Act, of the Company.
NOMINEES FOR CLASS II DIRECTORS
| | | | | | | | | | | | | | | | | |
Name, Address and Age(1) | Position(s) Held with Company | Term and Length of Time Served | Principal Occupations
During Past 5 Years | Number of Portfolios Overseen in Fund Complex (2) | Other Directorships of Public or Registered Investment Companies Held by Director or Nominee for Director During Past 5 Years |
| Non-Interested Directors | | | | | |
Steve Byers(69) | Director | Class II Director; Term expires 2023; Director since February 2022 | Independent Consultant (since 2014). | 1 | Director (since 2011), Chairman (since 2016) Deutsche Bank DBX ETF Trust; Trustee (since 2016), The Arbitrage Funds Trust; Director (2012-2022), Chairman (2012-2022), Sierra Income Corporation. |
| Valerie Lancaster-Beal (68) | Director | Class II Director; Term expires 2023; Director since February 2022 | President and Chief Executive Officer (since 2014), VLB Associates, LLC (management consulting firm providing financial and operational advisory services); Chief Financial Officer (2015-2021), Odyssey Media (marketing and communications company). | 1 | Director (2012-2022), Sierra Income Corporation; Director (since 2012), KIPP NYC; Trustee (2000-2014), City University of New York; Board Member (2006 - 2010), Georgetown University Board of Regents. |
| John A. Switzer (66) | Director | Class II Director; Term expires 2023; Director since August 2018 | Director, Carolina Tractor and Equipment Company (since 2017); Managing Partner (1978-2016), KPMG LLP (registered public accounting firm). | 2 | Director (since March 2021), BCIC; Director and Audit Committee member (since 2019), HomeTrust Bancshares, Inc. |
(1) The business address of each nominee for director is 300 South Tryon Street, Suite 2500, Charlotte, NC 28202. The age of each individual is as of the date of the Annual Meeting.
(2) Including the Company.
CLASS III DIRECTORS: TERM EXPIRING 2024
| | | | | | | | | | | | | | | | | |
Name, Address and Age(1) | Position(s) Held with Company | Term and Length of Time Served | Principal Occupations During Past 5 Years | Number of Portfolios Overseen in Fund Complex (2) | Other Directorships of Public or Registered Investment Companies Held by Director or Nominee for Director During Past 5 Years |
| Interested Director | | | | | |
David Mihalick(3) (50) | Director | Class III Director; Term expires 2024; Director since November 2020 | Head of Private Assets (since 2021), Head of U.S. Public Fixed Income and Member of Global Investment Grade Allocation Committee (2019-2021), Head of U.S. High Yield and Member of Global High Yield Allocation Committee (2017-2021), U.S. High Yield Research Analyst and Portfolio Manager (2008-2017), Barings LLC (global asset manager). | 5 | Director (since March 2021), BCIC; Trustee (since 2020), Barings Global Short Duration High Yield Fund (closed-end investment company advised by Barings); Trustee (since 2022), Barings Corporate Investors (a closed-end fund advised by Barings); Trustee (since 2022), Barings Participation Investors (a closed-end fund advised by Barings); Trustee (2020-2021), Barings Funds Trust (open-end investment company advised by Barings until 2021. |
| | | | | | | | | | | | | | | | | |
| Non-Interested Directors | | | | | |
Thomas W. Okel (60)
| Director | Class III Director; Term expires 2024; Director since August 2018 | Executive Director (2011 - 2019), Catawba Lands Conservancy; Global Head of Syndicated Capital Markets (1989-2010), Bank of America Merrill Lynch. | 5 | Trustee (since 2022), PEOC; Director (since 2021), BPCC; Director (since 2020), BCIC; Trustee (since 2012), Barings Global Short Duration High Yield Fund (closed-end investment company advised by Barings); Trustee (since 2015), Horizon Funds (mutual fund complex); Trustee (2013-2021), Barings Funds Trust (open-end investment company advised by Barings until 2021). |
Jill Olmstead (59)
| Director | Class III Director; Term expires 2024; Director since August 2018 | Chief Human Resources Officer, (since 2018), LendingTree, Inc.; Founding Partner (2010-2018), Spivey & Olmstead, LLC (talent and leadership consulting firm). | 5 | Trustee (since 2022), PEOC; Director (since 2021), BPCC; Trustee (since Aug. 2021), Barings Global Short Duration High Yield Fund (closed-end investment company advised by Barings); Director (since 2020), BCIC. |
(1) The business address of each director is 300 South Tryon Street, Suite 2500, Charlotte, NC 28202. The age of each individual is as of the date of the Annual Meeting.
(2) Including the Company.
(3) Interested Director due to affiliations with Barings LLC.
CLASS I DIRECTORS: TERM EXPIRING 2025 | | | | | | | | | | | | | | | | | |
Name, Address and Age(1) | Position(s) Held with Company | Term and Length of Time Served | Principal Occupations During Past 5 Years | Number of Portfolios Overseen in Fund Complex (2) | Other Directorships of Public or Registered Investment Companies Held by Director or Nominee for Director During Past 5 Years |
| Interested Director | | | | | |
Eric Lloyd(3) (54) | Chief Executive Officer and Executive Chairman of the Board of Directors | Class I Director; Term Expires 2025; Director since August 2018 | President (since 2021), Global Head of Private Assets (2020-2021), Deputy Head of Global Markets & Head of Private Fixed Income (2019-2020), Head of Global Private Finance (2013-2019), Barings LLC (global asset manager). | 3 | Director (since 2020), Chairman (since 2021), BCIC; Director (Chairman) (since 2021), BPCC. |
| Non-Interested Directors | | | | | |
| Mark F. Mulhern (63) | Director | Class I Director; Term Expires 2025; Director since October 2016 (Triangle Capital) | Executive Vice President and Chief Financial Officer (2014 - 2022), Highwood Properties, Inc. (publicly traded real estate investment trust). | 5 | Trustee (since 2022), PEOC; Director (since 2021), BPCC; Trustee (since 2021), Barings Global Short Duration High Yield Fund (closed-end investment company advised by Barings); Director (since 2020), Intercontinental Exchange (NYSE: ICE); Director (since 2020), ICE Mortgage Technology; Director (since 2020), BCIC; Director (since 2015), McKim and Creed (engineering service firm); Director and Audit Committee member (2012-2014), Highwood Properties (real estate investment trust); Director (2015-2017), Azure MLP (midstream oil and gas). |
| | | | | | | | | | | | | | | | | |
Robert Knapp(57) | Director | Class I Director; Term Expires 2025; Director since December 2020 | Chief Investment Officer (since 2007), Ironsides Partners LLC (investment management firm). | 1 | Director (since 2007), Africa Opportunity Fund Ltd.; Director (since 2010), Pacific Alliance Asia Opportunity Fund and Pacific Alliance Group Asset Management Ltd.; Director (since 2010), Sea Education Association; Director (since 2015), Mass Eye & Ear; Director (since 2016), Children's School of Science; Director (since 2017), Lamington Road DAC (successor to Emergent Capital Inc.); Director (since 2018), Okeanis Eco Tankers Corp.; Director (2003-2020), MVC Capital; Director (2017-2018), MPC Container Ships; Director (2012-2019), Castle Private Equity. |
(1) The business address of each director is 300 South Tryon Street, Suite 2500, Charlotte, NC 28202. The age of each individual is as of the date of the Annual Meeting.
(2) Including the Company.
(3) Interested Director due to affiliations with Barings LLC.
Qualifications of Director Nominees and Other Directors.
The following provides an overview of the considerations that led the Nominating and Corporate Governance Committee and the Board of Directors to recommend and approve the election or appointment of the individuals serving as a Director or nominee for Director. Each of the Directors has demonstrated superior credentials and recognition in his or her respective field and the relevant expertise and experience upon which to be able to offer advice and guidance to the Company’s management. In recommending the election or appointment of the Board members or nominees, the Nominating and Corporate Governance Committee generally considers certain factors including the current composition of the Board of Directors, overall business expertise, gender, cultural and racial diversity, whether the composition of the Board of Directors contains a majority of independent directors as determined under the NYSE listing standards and the 1940 Act, the candidate’s character and integrity, whether the candidate possesses an inquiring mind, vision and the ability to work well with others, conflicts of interest interfering with the proper performance of the responsibilities of a quorum. Even though your votedirector, a candidate’s overall business experience, what type of diversity he or she brings to the Board of Directors, whether the candidate has sufficient time to devote to the affairs of the Company, including consistent attendance at Board of Directors and committee meetings and advance review of materials and whether each candidate can be trusted to act in the best interests of the Company and its stockholders.
Nominees for Class II Directors; Term expiring at the 2023 Annual Stockholder Meeting
•Mr. Byers — Mr. Byers is a senior executive with over 30 years of leadership experience in finance, operations and control, investment management and capital markets with leading national firms in asset management, banking and brokerage. Mr. Byers serves as the Independent Chairman of the Board of Directors of Deutsche Bank DBX ETF Trust and as a member of the audit and nominating committees. Since 2016, Mr. Byers has also served as a board member of the Mutual Fund Directors Forum, an independent, non-profit organization serving independent directors of U.S. funds registered with the Securities and Exchange Commission under the 1940 Act. Mr. Byers served as an Independent Director and Chairman of Sierra Income Corporation, a non-traded business development company (BDC) sponsored by Medley LLC (NYSE:MCC), from 2012 to 2022. Sierra Income merged with Barings BDC, Inc. in February, 2022, in connection with which Mr. Byers was appointed to the Board of Directors of Barings BDC, Inc. From 2002 to 2012, Mr. Byers also served as Trustee for the College of William and Mary Graduate School of Business. Since 2014, Mr. Byers has been engaged periodically as an independent consultant to provide expert reports and opinions in financial and investment related matters. From 2000 to 2006, Mr. Byers served as an investment executive with Dreyfus Corporation and served as Vice Chairman, Executive Vice President, Chief Investment Officer, member of the Board of Directors and Executive Committee, and fund officer of 90 investment companies, responsible for investment performance of approximately $200 billion in assets under management. Prior to joining Dreyfus Corporation, Mr. Byers served in executive positions at PaineWebber Group from 1986 to 1997, and served in such capacities as chairman of the Investment Policy and Risk Oversight Committee, Capital Markets Director of Risk and Credit Management, and was NASD registered as General Principal, Financial and Operations Principal and Branch Principal. Prior to PaineWebber, Mr. Byers was an executive at Citibank/Citicorp from 1979 to 1986. Mr. Byers received his M.B.A. in Finance from Roth Graduate School of Business, Long Island University and his B.A. in Economics from Long Island University. In December 2014, Mr. Byers was recognized by the National Association of Corporate Directors as a Board Leadership Fellow.
•Ms. Lancaster-Beal — Ms. Lancaster-Beal is a financial professional with extensive management and board level experience in corporate governance, credit and financial analysis. Ms. Lancaster-Beal is the President and Chief Executive Officer of VLB Associates, a management consulting firm she founded in January 2014 that provides financial and operational advisory services to middle-market businesses, investment firms and thereforenon-profit organizations. In this capacity, she previously served as the Chief Financial Officer of Odyssey Media from 2015 to 2021, and as the Chief Administrative and Finance Director of Data Capital Management from 2015 to 2017. Prior to this, she served as Managing Director at M.R. Beal & Company, which she co-founded in April 1988, until 2014. Ms. Lancaster-Beal was a Senior Vice President of Drexel Burnham Lambert from 1984 to 1988 and as Vice President of Citicorp
Investment Bank from 1978 to 1984. Ms. Lancaster-Beal served as an Independent Director and Chair of the Nominating and Governance committee and the Audit committee of Sierra Income Corporation, a non-traded business development company (BDC) sponsored by Medley LLC (NYSE:MCC), from 2021 to 2022. Sierra Income merged with Barings BDC, Inc. in February, 2022, in connection with which Ms. Lancaster-Beal was appointed to the Board of Directors of Barings BDC, Inc. Ms. Lancaster-Beal currently serves on the Board of Directors of KIPP NYC, a network of free, public charter schools. She also previously served as a Trustee on the Board of the City University of New York from 2000 to 2014, where she chaired the Faculty, Staff and Administration Committee and served on the Finance Committee. Additionally, Ms. Lancaster-Beal served on the Board of Regents of Georgetown University from 2006 to 2010. Ms. Lancaster-Beal holds a B.A. in Economics from Georgetown University and an M.B.A. from the Wharton School of Business of the University of Pennsylvania.
•Mr. Switzer — Mr. Switzer brings over 35 years of public accounting firm experience to the Board. Mr. Switzer has served as a member of the Board of Directors of Barings Capital Investment Corporation (a business development company advised by Barings) since March 2021, and since May 2017, has served as a member of the Board of Directors of Carolina Tractor and Equipment Company (CTE), a large, privately held Southeastern supplier of construction, forestry, paving, and material handling equipment. Since September 2019, Mr. Switzer has also served as a member of the Board of Directors of HomeTrust Bancshares, Inc., a publicly traded regional banking organization, where he also serves on the Audit Committee. Previously, Mr. Switzer served as managing partner of KPMG's Charlotte office (starting in 2009) until retirement in 2016, where he was also the market leader for KPMG’s Carolinas, Florida, and San Juan offices. Prior to these positions, he served as managing partner of KPMG’s Cleveland (1999 to 2007) and Kentucky (Louisville and Lexington) (1988 to 1998) offices. Mr. Switzer currently serves on the boards of The Foundation for the Mint Museum and the National Association of Corporate Directors, Carolinas Chapter. Mr. Switzer is a Certified Public Accountant and holds a B.S. in Accounting from the University of Kentucky.
Directors Continuing in Office
Class III Directors; Term expiring at the 2024 Annual Stockholder Meeting
•Mr. Mihalick — Mr. Mihalick brings over 16 years of experience in the financial services industry. He is Barings LLC's Head of Private Assets, managing the firm's global private assets businesses, including global direct lending, private placement and infrastructure debt, private structured finance, funds and co-investments and private equity real assets. He is also a member of Barings LLC's Senior Leadership Team. Prior to his current role, Mr. Mihalick served as Head of U.S. Public Fixed Income and Head of U.S. High Yield, where he was responsible for the U.S. High Yield and Investment Grade Investment Groups. Prior to joining Barings LLC in 2008, he was a Vice President with Wachovia Securities Leveraged Finance Group. At Wachovia (now Wells Fargo) he was responsible for sell-side origination of leveraged loans and high yield bonds to support both corporate and private equity issuers. Prior to entering the financial services industry, he served as an officer in the United States Air Force and worked in the telecommunications industry for 7 years. Mr. Mihalick serves as a trustee or director of Barings Capital Investment Corporation, a business development company advised by Barings, Barings Global Short Duration High Yield Fund, a closed-end investment company advised by Barings, Barings Corporate Investors and Barings Participation Investors, both closed-end funds advised by Barings. Mr. Mihalick holds a B.S. from the United States Air Force Academy, an M.S. from the University of Washington and an M.B.A. from Wake Forest University.
•Mr. Okel — Mr. Okel brings over 20 years of experience in the underwriting, structuring, distribution and trading of debt used for corporate acquisitions, leveraged buyouts, recapitalizations and refinancings. He previously served as Executive Director of Catawba Lands Conservancy, a non-profit land trust. Prior to joining Catawba Lands Conservancy, he served as Global Head of Syndicated Capital Markets at Bank of America Merrill Lynch, where he managed capital markets, sales, trading and research for the United States, Europe, Asia and Latin America from 1989 to 2010. He currently serves as trustee or director of several public companies and non-profit organizations, including Barings Private Credit Corporation and Barings Capital Investment Corporation (both business development companies advised by Barings);
Barings Global Short Duration High Yield Fund, a closed-end investment company advised by Barings; Barings Private Equity Opportunities and Commitments Fund, a non-diversified, closed-end management investment company advised by Barings; and is Chairman of the Board of Directors of Horizon Funds, a mutual fund complex. Mr. Okel holds a Bachelor of Arts in Economics from Davidson College and a Masters of Management, Finance, Accounting and Marketing from Kellogg School of Management, Northwestern University.
•Ms. Olmstead — Ms. Olmstead brings over 21 years of senior leadership experience in Human Resources in the financial services industry to her role as the Chair of the Company’s Compensation Committee. She is currently the Chief Human Resources Officer at LendingTree, Inc. and was a Founding Partner of Spivey & Olmstead, LLC, a Talent and Leadership Consulting firm with expertise in the fields of executive development and talent management founded in June 2010. She also currently serves on the boards of Barings Private Credit Corporation and Barings Capital Investment Corporation (both business development companies advised by Barings); Barings Global Short Duration High Yield Fund, a closed-end investment company advised by Barings; and Barings Private Equity Opportunities and Commitments Fund, a non-diversified, closed-end management investment company advised by Barings. The Board benefits from her experience with C-suite executives in helping lead companies' efforts on talent strategies, including succession planning, building strong performance cultures, and diversity and inclusion work. She has a strategic and pragmatic approach to talent management with an eye toward bottom line results. In her capacity as Managing Director (2006 to 2009) and Executive Vice President (2000 to 2006) at Wachovia Corporation (now Wells Fargo) she was both the Head of Human Resources for the Corporate and Investment Bank and the Head of Human Resources for the International Businesses. Prior to this, she formed and led the Leadership Practices Group at Wachovia to create and implement a company-wide talent management process that identified, developed, tracked and promoted high potential leaders throughout their careers. Ms. Olmstead received a Bachelor of Science at Clemson University and a Masters in Organization Behavior and Development at Fielding University, Santa Barbara, CA.
Class I Directors; Term expiring at the 2025 Annual Stockholder Meeting
•Mr. Lloyd — Mr. Lloyd brings over 30 years of experience in investment management, investment banking, leveraged finance and risk management to the Board. Mr. Lloyd is President of Barings LLC where he leads and manages cross-asset investment teams, corporate strategy, business development, product management, investment business management, research analytics and quant, permanent capital, special situations, marketing and communication. Mr. Lloyd also works closely with all the investment teams at Barings LLC. Prior to his current role, Mr. Lloyd served as Head of Private Assets. Mr. Lloyd has worked in the industry since 1990 and his experience has encompassed leadership positions in investment management, investment banking, leveraged finance and risk management. Prior to joining Barings in 2013, Mr. Lloyd served as Head of Market and Institutional Risk for Wells Fargo, was on Wells Fargo’s Management Committee and was a member of the Board of Directors of Wells Fargo Securities. Before the acquisition of Wachovia, Mr. Lloyd worked in Wachovia’s Global Markets Investment Banking division and served on the division’s Operating Committee where he had various leadership positions, including Head of Wachovia’s Global Leveraged Finance Group. Mr. Lloyd serves as the Chairman of the Board of Directors to Barings Private Capital Corporation and Barings Capital Investment Corporation, both business development companies advised by Barings. Mr. Lloyd holds a B.S. in Finance from the University of Virginia's McIntire School of Commerce.
•Mr. Mulhern — Mr. Mulhern brings significant public company experience, both as a senior executive and as a board member. From September 2014 until his retirement on January 1, 2022, he served as Executive Vice President and Chief Financial Officer of Highwoods Properties, Inc., a Raleigh, North Carolina based publicly-traded real estate investment trust. Prior to joining Highwoods, Mr. Mulhern served as Executive Vice President and Chief Financial Officer of Exco Resources, Inc. Prior to Exco, he served as Senior Vice President and Chief Financial Officer of Progress Energy, Inc. from 2008 until its merger with Duke Energy Corporation in 2012. He joined Progress Energy in 1996 as Vice President and Controller and served in a number of leadership roles at Progress Energy, including Vice President of Strategic Planning, Senior Vice President of Finance and President of Progress Ventures. He also spent eight years at Price
Waterhouse, now known as PwC. Mr. Mulhern previously served on the Highwoods Board of Directors and Audit Committee from January 2012 through August 2014. He currently serves on the boards of Barings Private Credit Corporation and Barings Capital Investment Corporation, both business development companies advised by Barings); Barings Global Short Duration High Yield Fund, a closed-end investment company advised by Barings; and Barings Private Equity Opportunities and Commitments Fund, a non-diversified, closed-end management investment company advised by Barings. Additionally, Mr. Mulhern serves on the board of the Intercontinental Exchange, a Fortune 500 company and provider of marketplace infrastructure, data service and technology solutions to a broad range of customers. He also serves on the board of Ellie Mae, Inc., the operating company of ICE Mortgage Technology, both of which are subsidiaries of Intercontinental Exchange. Mr. Mulhern also currently serves on the board of McKim and Creed, a North Carolina based professional engineering services firm. Mr. Mulhern is a Certified Public Accountant and is a graduate of St. Bonaventure University.
•Mr. Knapp — Mr. Knapp brings over 25 years of experience in the financial services industry to the Board. He is the Founder and Chief Investment Officer of Ironsides Partners LLC, a Boston-based investment manager specializing in closed-end funds, holding companies, and asset value investing generally. Ironsides and related entities serve as the manager and general partner to various funds and managed accounts for institutional clients. Mr. Knapp is also a director of Okeanis Eco Tankers, the Pacific Alliance Asia Opportunity Fund and its related entities and Pacific Alliance Group Asset Management Ltd., based in Hong Kong, and Lamington Road DAC, the successor to Emergent Capital. He is a principal and director of Africa Opportunity Partners Limited, a Cayman Islands company that serves as the investment manager to Africa Opportunity Fund Limited. Additionally, Mr. Knapp serves as a member of the Board of Managers of Veracity Worldwide LLC. Mr. Knapp previously served as the Lead Independent Director of MVC Capital, Inc. until completion of its merger with the Company in December 2020 and was previously an independent, nonexecutive director of Castle Private Equity AG and MPC Container Ships. He also acted as Managing Director for over ten years at Millennium Partners in New York. In the non-profit sector, Mr. Knapp serves as a director of the Massachusetts Eye and Ear Infirmary, and is a Trustee of the Children’s School of Science and the Sea Education Association, both based in Woods Hold, Massachusetts.
COMPENSATION DISCUSSION
The Company’s executive officers are employees of Barings and do not bindingreceive any direct compensation from the Company. Barings serves as our external investment adviser and manages the Company’s investment portfolio under the terms of a second amended and restated investment advisory agreement (the "Advisory Agreement"), in connection with which the Company pays Barings a base management fee and an incentive fee, the details of which are disclosed in the Company’s annual report on us,Form 10-K for the fiscal year ended December 31, 2022, which is being mailed to stockholders along with this proxy statement.
The Company’s day-to-day investment operations are managed by Barings and services necessary for its business, including the origination and administration of its investment portfolio are provided by individuals who are employees of Barings, as investment adviser and administrator, pursuant to the terms of the Advisory Agreement and an administration agreement (the "Administration Agreement"). The Company reimburses Barings, in its capacity as administrator, for the costs and expenses incurred by it in performing its obligations and providing personnel and facilities under the Administration Agreement in an amount to be negotiated and mutually agreed to by the Company and Barings quarterly in arrears. In no event will the agreed-upon quarterly expense amount exceed the amount of expenses that would otherwise be reimbursable by the Company under the Administration Agreement for the applicable quarterly period, and Barings will not be entitled to the recoupment of any amounts in excess of the agreed-upon quarterly expense amount. The costs and expenses incurred by Barings on our behalf under the Administration Agreement include, but are not limited to:
▪the allocable portion of Barings' rent for the Company’s Chief Financial Officer and Chief Compliance Officer and their respective staffs, which is based upon the allocable portion of the usage thereof by such personnel in connection with their performance of administrative services under the Administration Agreement;
▪the allocable portion of the salaries, bonuses, benefits and expenses of the Company’s Chief Financial Officer and Chief Compliance Officer and their respective staffs, which is based upon the allocable portion of the time spent by such personnel in connection with performing administrative services for the Company under the Administration Agreement;
▪the actual cost of goods and services used for the Company and obtained by Barings from entities not affiliated with the Company, which is reasonably allocated to the Company on the basis of assets, revenues, time records or other methods conforming with generally accepted accounting principles;
▪all fees, costs and expenses associated with the engagement of a sub-administrator, if any; and
▪costs associated with (a) the monitoring and preparation of regulatory reporting, including registration statements and amendments thereto, prospectus supplements, and tax reporting, (b) the coordination and oversight of service provider activities and the direct cost of such contractual matters related thereto and (c) the preparation of all financial statements and the coordination and oversight of audits, regulatory inquiries, certifications and sub-certifications.
DIRECTOR COMPENSATION
The Company's directors are divided into two groups — Interested Directors and Independent Directors. Interested Directors are “interested persons” as defined in Section 2(a)(19) of the 1940 Act. During 2022,Interested Directors did not receive any compensation from the Company for their service as members of the Board of Directors. The compensation table below sets forth compensation that the Company's Independent Directors earned during the year ended December 31, 2022.
| | | | | | | | | | | | | | | | | | | | |
| Name | | Fees Earned
or Paid in
Cash | | All Other Compensation(1) | | Total |
| Mark Mulhern | | $ | 130,000 | | | $ | — | | | $ | 130,000 | |
| John A. Switzer | | $ | 120,000 | | | $ | — | | | $ | 120,000 | |
| Thomas W. Okel | | $ | 130,000 | | | $ | — | | | $ | 130,000 | |
| Jill Olmstead | | $ | 120,000 | | | $ | — | | | $ | 120,000 | |
| Robert Knapp | | $ | 120,000 | | | $ | — | | | $ | 120,000 | |
Steve Byers(2) | | $ | 90,000 | | | $ | — | | | $ | 90,000 | |
Valerie Lancaster-Beal(2) | | $ | 90,000 | | | $ | — | | | $ | 90,000 | |
(1) All other compensation includes reimbursement of out-of-pocket expenses
(2) Each of Mr. Byers and Ms. Lancaster-Beal became a director of the Company effective February 25, 2022, immediately after the closing of the Company's merger with Sierra Income Corporation.
Director Fees
Each Independent Director of the Board of Directors is paid an annual board retainer of $120,000, payable by the Company in quarterly installments, and the Board’s lead independent director and the chair of the Board’s Audit Committee will each receive an additional $10,000 annual retainer in recognition of the increased responsibilities associated with each such position.
In addition, the Company reimburses Independent Directors for any out-of-pocket expenses related to their service as members of the Board of Directors. The Independent Directors of the Board of Directors do not receive any stock-based compensation for their service as members of the Board of Directors. The Company's Interested Directors do not receive any compensation from the Company for their service as members of the Board of Directors.
CORPORATE GOVERNANCE
Director Independence
The Board of Directors has a majority of directors who are independent under the listing standards of the New York Stock Exchange (“NYSE”). The NYSE Listed Company Rules provide that a director of a BDC shall be considered to be independent if he or she is not an "interested person" of the Company, as defined in Section 2(a)(19) of the 1940 Act. Section 2(a)(19) of the 1940 Act defines an "interested person" to include, among other things, any person who has, or within the last two years had, a material business or professional relationship with the Company.
The Board of Directors has determined that Mses. Olmstead and Lancaster-Beal and Messrs. Mulhern, Okel, Switzer, Knapp, and Byers are independent (or not “interested persons” of the Company). Based upon information requested from each such director concerning his or her background, employment and affiliations, the Board of Directors has affirmatively determined that none of the independent directors has a material business or professional relationship with the Company, other than in his or her capacity as a member of the Board of Directors or any committee thereof. None of the members of the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee are "interested persons," as defined in Section 2(a)(19) of the 1940 Act, of the Company.
Meetings of the Board of Directors and Committees
In 2022, the Board of Directors held five meetings of the Board of Directors, as well as four Audit Committee meetings, one Compensation Committee meeting, and one Nominating and Corporate Governance Committee meetings. During 2022, none of the members of the Board of Directors attended less than 75% of the aggregate number of meetings of the Board of Directors and of the respective committees on which they served.
Each of the Company's directors makes a diligent effort to attend all board and committee meetings, as well as each Annual Meeting of Stockholders. We encourage, but do not require, our directors to attend annual meetings of stockholders. All members of the then-constituted Board of Directors attended the Company's 2022 Annual Meeting of Stockholders.
Audit Committee
The Company has a separately designated standing Audit Committee, as defined in Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Audit Committee is responsible for oversight matters, financial statement and disclosure oversight matters, matters relating to the hiring, retention and oversight of the Company’s independent registered public accounting firm, reviewing the plans, scope and results of the audit engagement with the Company’s independent registered public accounting firm, approving professional services provided by the Company’s independent registered public accounting firm, reviewing the independence of the Company’s independent registered public accounting firm, reviewing the integrity of the audits of the financial statements and reviewing the adequacy of the Company’s internal accounting controls. The Audit Committee also assists our Board of Directors willin establishing and monitoring the application of the valuation policies used for determining the fair value of the Company’s investments that are not publicly traded or for which current market values are not readily available.
The Audit Committee Charter is publicly available under “Governance Documents” on the Investor Relations section of the Company’s website at https://ir.barings.com/governance-docs. The contents of the Company’s website are not intended to be incorporated by reference into this proxy statement or in any other report or document it files with the SEC, and any references to the Company’s website are intended to be inactive textual references only.
The members of the Company’s Audit Committee are Messrs. Mulhern, Okel, Switzer, Knapp and Byers and Mses. Olmstead and Lancaster-Beal. Mr. Mulhern serves as the chairman of the Audit Committee. The Board of Directors has determined that Mr. Mulhern is an “audit committee financial expert” as defined under Item 407(d)(5) of Regulation S-K of the Exchange Act and that all members of the Audit Committee are financially literate under NYSE listing standards. The Board of Directors also has determined that each of Messrs. Mulhern, Okel, Switzer,
Knapp, and Byers and Mses. Olmstead and Lancaster-Beal meet the current independence requirements of Rule 10A-3 of the Exchange Act and NYSE listing standards.
Compensation Committee
The Compensation Committee is responsible for determining, or recommending to the Board of Directors for approval, the compensation of the Company’s independent directors; determining, or recommending to the Board of Directors for determination, the compensation, if any, of the Company’s chief executive officer and all other executive officers of the Company; and assisting the Board of Directors with matters related to compensation generally.
In connection with reviewing, and recommending to the Board of Directors, the compensation of the independent directors, the Compensation Committee evaluates the independent directors’ performance in light of goals and objectives relevant to the independent directors and sets independent directors’ compensation based on such evaluation and such other factors as the Compensation Committee deems appropriate and in the best interests of the Company (including the cost to the Company of such compensation and a review of data of comparable business development companies).
Currently none of the voting resultsCompany’s executive officers is compensated by the Company and, take them intoas a result, the Compensation Committee does not produce and/or review a report on executive compensation practices. The Compensation Committee also has the authority to engage compensation consultants, legal counsel or other advisors (each, a “Consultant”) following consideration when making future decisions regardingof certain factors related to such Consultants’ independence and has the authority to form and delegate any of its responsibilities to a subcommittee of the Compensation Committee. The Compensation Committee Charter is available under “Governance Documents” on the Investor Relations section of our website at https://ir.barings.com/governance-docs.
The members of the Compensation Committee are Messrs. Mulhern, Okel, Switzer, Knapp and Byers, and Mses. Olmstead and Lancaster-Beal, each of whom is not an "interested person" for purposes of Section 2(a)(19) of the 1940 Act and is independent under the applicable NYSE corporate governance listing standards. Ms. Olmstead serves as the chair of the Compensation Committee. No members of the Compensation Committee during 2022 had any relationship with the Company requiring disclosure under Item 404 of Regulation S-K under the Exchange Act.
Compensation Committee Interlocks and Insider Participation
No interlocking relationship, as defined by the rules adopted by the SEC, existed during the year ended December 31, 2022 between any member of the Board of Directors or the Compensation Committee and an executive compensation.
officer of the Company.How many shares must be presentNominating and Corporate Governance Committee
The Nominating and Corporate Governance Committee is responsible for identifying, researching and recommending for nomination directors for election by the Company's stockholders, recommending for appointment nominees to constitutefill vacancies on the Board of Directors or a quorumcommittee of the Board of Directors, developing and recommending to the Board of Directors a set of corporate governance principles and overseeing the evaluation of the Board of Directors. The Nominating and Corporate Governance Committee’s policy is to consider nominees properly recommended by the Company's stockholders in accordance with the Company's charter, Bylaws and applicable law. For more information on how the Company's stockholders may recommend a nominee for a seat on the Board of Directors, see "Stockholder Nominations and Proposals for the 2024 Annual Meeting?Meeting" in this proxy statement. The Nominating and Corporate Governance Committee also has the authority to retain, at the Company’s expense, such consultants or advisors as the Committee may deem necessary or appropriate to carry out its duties. The Committee has sole authority to retain or terminate any search firm or individual used to identify any director candidate, including the sole authority to approve the search firm’s fees and retention terms.
A quorumThe Nominating and Corporate Governance Committee Charter is publicly available under “Governance Documents” on the Investor Relations section of the Company's website at https://ir.barings.com/governance-docs.
The members of the Nominating and Corporate Governance Committee are Messrs. Mulhern, Okel, Switzer, Knapp, and Byers and Mses. Olmstead and Lancaster-Beal, each of whom is not an "interested person" for purposes of Section 2(a)(19) of the 1940 Act and is independent under the NYSE corporate governance listing standards. Mr. Okel serves as the chairman of the Nominating and Corporate Governance Committee. Each nominee for election under Proposal No. 1 at the Annual Meeting was recommended by the members of the Nominating and Corporate Governance Committee to the Board of Directors, which approved such nominees.
Communication with the Board of Directors
Barings BDC, Inc. stockholders and other interested parties may communicate with any member of our Board (including the chairman), the chairman of any of our Board committees, or with our non-management directors as a group by sending communications to Barings BDC, Inc., 300 South Tryon St., Suite 2500, Charlotte, North Carolina 28202, or via e-mail to BDCinvestorrelations@barings.com, or by calling the Barings BDC, Inc.’s investor relations department at 1-888-401-1088. All such communications should indicate clearly the director or directors to whom the communication is necessarybeing sent so that each communication, other than unsolicited commercial solicitations, may be forwarded directly to hold a valid meeting. A quorum will be present ifthe appropriate director(s).
The Composition of the Board of Directors and Leadership Structure
The 1940 Act requires that at least a majority of the outstanding shares entitled to vote are represented by stockholders present atCompany’s directors not be “interested persons” (as defined in the Annual Meeting or by proxy. On February 22, 2018, the record date, there were 48,024,614 shares outstanding and entitled to vote. Thus, 24,012,308 shares must be represented by stockholders present at the Annual Meeting or by proxy to have a quorum.
Your shares will be counted towards the quorum only if you submit a valid proxy (or one is submitted on your behalf by your broker, bank or other nominee) or if you vote in person at the Annual Meeting. Abstentions and broker non-votes will be counted towards the quorum requirement.
If a quorum is not present at the Annual Meeting, or if a quorum is present but there are not enough votes to approve one or more1940 Act) of the proposals, the person named as chairmanCompany. Currently, seven of the Annual Meeting may adjournCompany’s ten directors have been determined to qualify as independent directors (and to not be “interested persons”). However, Mr. Lloyd, our Chief Executive Officer and the meeting to permit further solicitationPresident of proxies. A stockholder vote may be taken on one or moreBarings LLC, and therefore an interested person of the proposalsCompany, serves as Executive Chairman of the Board of Directors. The Board of Directors believes that it is in this proxy statement priorthe best interests of investors for Mr. Lloyd to any such adjournment if therelead the Board of Directors because of his role as Chief Executive Officer of the Company and President of Barings LLC and his broad experience with the day-to-day management of cross-asset class investment teams, corporate strategy, business development and product management. In addition, the Board of Directors has designated Mr. Okel as lead independent director to preside over all executive sessions of independent directors. The Board of Directors believes that its leadership structure is appropriate in light of the Company’s characteristics and circumstances because the structure allocates areas of responsibility among the individual directors and the committees in a manner that enhances effective oversight. The Board of Directors also believes that its meeting frequency and governance structure provides ample opportunity for direct communication and interaction between the Board of Directors and the Company’s management.
The Oversight Role of the Board of Directors
The Board of Directors’ role in management of the Company is one of oversight. Oversight of the Company’s investment activities extends to oversight of the risk management processes employed by Barings as part of its day-to-day management of the Company’s investment activities. The Board of Directors reviews risk management processes throughout the year, consulting with appropriate representatives of Barings as necessary and periodically requesting the production of risk management reports or presentations and receiving reports from vendors and service providers regarding cybersecurity threats and incidents. The goal of the Board of Directors’ risk oversight function is to ensure that the risks associated with the Company’s investment activities are sufficient votesaccurately identified, thoroughly investigated and responsibly addressed. The Audit Committee (which consists of all the independent directors) is responsible for approval on such proposal(s).
How can I find outapproving the Company’s independent accountants, reviewing with the Company’s independent accountants the plans and results of the votingaudit engagement, approving professional services provided by the Company’s independent accountants, reviewing the independence of the Company’s independent accountants and reviewing the adequacy of the Company’s internal accounting controls. The Audit Committee also monitors the application of the valuation policies used for determining the fair value of the Company’s investments that are not publicly traded or for which current market values are not readily available. Stockholders should note, however, that the Board of Directors’ oversight function cannot eliminate all risks or ensure that particular events do not adversely affect the value of investments.
In accordance with the 1940 Act, the Company’s directors have adopted and implemented written policies and procedures reasonably designed to prevent violation of the U.S. federal securities laws, and we review these
compliance policies and procedures annually for their adequacy and the effectiveness of their implementation. In addition, we have designated Gregory MacCordy as the Company’s Chief Compliance Officer. As such, Mr. MacCordy is responsible for administering the Company’s compliance program and meeting with the Board of Directors at least annually to assess its effectiveness.
Code of Business Conduct and Ethics and Corporate Governance Guidelines
The Company and Barings are subject to Barings LLC's Global Code of Ethics Policy, and the Annual Meeting?
Preliminary voting resultsCompany has adopted a set of corporate governance guidelines covering ethics and business conduct. These documents apply to the Company's directors and officers, among other Barings employees. Barings LLC's Global Code of Ethics Policy and the Company's corporate governance guidelines are available on the Investor Relations section of the Company's website at https://ir.barings.com/governance-docs. Any material amendments to or waivers of a required provision of the Barings LLC Global Code of Ethics Policy and/or the Company's corporate governance guidelines will be announced at the Annual Meeting and filedreported on our website and/or in a Current Report on Form
8-K within four business days of the Annual Meeting. Final results, if differentamendment or waiver.
Under Barings LLC's Global Code of Ethics Policy, officers, directors and certain employees of Barings must first obtain pre-clearance from Barings' compliance department before trading in the Company's securities. In addition, the Company's Insider Trading Policy includes restrictions that prohibit directors and officers of the Company from, among other things, engaging in short sales or hedging transactions with respect to the Company's securities, including through the use of financial instruments such as prepaid variable forward contracts, equity swaps, collars and exchange funds.
EXECUTIVE OFFICERS AND INVESTMENT COMMITTEE
The Company’s officers serve at the discretion of the Board of Directors. The biographical information of each of the Company’s executive officers (in alphabetical order) who is not a director, as well as the Company's Secretary and Chief Compliance Officer, who are not executive officers of the Company, is as follows:
Ian Fowler, 59, is the Company’s President and is Co-Head of Barings LLC’s Global Private Finance Group, as well as a member of the group’s North American, European and Asia-Pacific Private Finance Investment Committees. Mr. Fowler has also served as the President and Chief Executive Officer of BCIC since inception and as Co-Chief Executive Officer of BPCC since May 2021 until being appointed as sole Chief Executive Officer in December 2022. He is responsible for leading a team that originates, underwrites and manages global private finance investments. Mr. Fowler has worked in the industry since 1988 and his experience has encompassed middle market commercial finance, including originating, underwriting and managing senior secured loans, mezzanine and co-investment transactions. Prior to joining Barings LLC in 2012, he was a Senior Managing Director with Harbour Group and co-founded Freeport Financial LLC where he was a member of the Executive Credit Committee and responsible for all business development and capital market initiatives. While at Freeport, he helped build the company into one of the top five non-bank affiliated middle market sponsor finance companies in the United States. Before Freeport, Mr. Fowler was Managing Director and Global Group Leader for GE Capital’s Global Sponsor Finance Group. Prior to GE Capital, Mr. Fowler held various leveraged finance and investment positions with NationsBank and Mellon Bank. Mr. Fowler holds a B.A. (Honors) from the preliminaryUniversity of Western Ontario and is a member of the CFA Institute.
Jonathan Landsberg, 38, serves as the Company's Chief Financial Officer and is a Managing Director at Barings LLC. He also serves as the Chief Financial Officer and Treasurer of BPCC and the Chief Financial Officer of BCIC. Mr. Landsberg also has roles with several Barings-complex BDC-related joint ventures, including Principal of Jocassee Partners LLC, and a Board member of Banff Partners LP, Thompson Rivers LLC, and Waccamaw River LLC. Mr. Landsberg has worked in the industry since 2006. Prior to joining Barings LLC in 2018, Mr. Landsberg was a Fixed Income Research Analyst at Wells Fargo Securities, covering the bank and specialty finance sectors. Before Wells Fargo, he spent eight years at Merrill Lynch / Bank of America in roles across debt origination and syndicated lending. Mr. Landsberg holds a B.A. degree in Engineering Sciences and Economics from Dartmouth College and is a member of the CFA Institute.
Gregory MacCordy, 63, serves as the Company's Chief Compliance Officer and is a Director at ACA Group (“ACA”). Mr. MacCordy is an experienced compliance, risk and subject matter expert with over 30 years of regulatory and financial services experience. He serves as chief compliance officer or chief risk officer for SEC registered investment advisers and investment companies such as business development companies and interval funds. Prior to ACA, Mr. MacCordy worked at the U.S. Securities & Exchange Commission where he was an Industry Expert and Specialized Compliance Examiner in the Asset Management Unit (Enforcement Division) conducting enforcement investigations of investment companies, investment advisers, and mutual funds in the areas of business development companies, CLOs, private equity, hedge funds, real estate and fixed income trading. Mr. MacCordy also spent 18 years at The Teachers Insurance and Annuity Association of America-College Retired Equity Fund (TIAA) beginning as a securities analyst and ultimately becoming a Managing Director. During his time at TIAA, he was responsible for investment decisions, credit research, valuation and stress testing, regulatory filings, and the development of risk and compliance program policies and procedures. Mr. MacCordy holds a Bachelor of Science and Business Administration in Accounting from University of Missouri and a MBA in Finance from New York University Stern School of Business.
Elizabeth Murray, 45, serves as the Company’s Chief Operating Officer and Chief Accounting Officer and also serves as the Principal Accounting Officer of BCIC and BPCC. She also serves as the Treasurer for PEOC. Ms. Murray previously was the Director of External Reporting for the Company and previously served as the Vice President of Financial Reporting at Triangle Capital Corporation prior to the externalization of the investment management of the Company to Barings LLC. Prior to joining Triangle Capital Corporation in 2012, she worked in Financial Planning and Analysis for RBC Bank, the U.S. retail banking division for Royal Bank of Canada. Prior to RBC Bank, Ms. Murray spent seven years at Progress Energy, Inc. and held various positions in finance, accounting and tax, most recently in Strategy and Financial Planning. Ms. Murray began her career as a Tax Consultant with
PricewaterhouseCoopers. Ms. Murray is a graduate of North Carolina State University where she obtained a B.S. degree in Accounting and a Master of Accounting degree. She is also a North Carolina Certified Public Accountant.
Alexandra Pacini, 30, is the Company's Secretary and a Director at Barings LLC. Ms. Pacini also serves as the Secretary of BCIC, BPCC, Barings Global Short Duration High Yield Fund, PEOC, Barings Corporate Investors and Barings Participation Investors
Ashlee Steinnerd, 41, is the Company’s Chief Legal Officer and the Head of Regulatory at Barings LLC. Ms. Steinnerd also serves as Chief Legal Officer of BCIC, BPCC, Barings Global Short Duration High Yield Fund, Barings Corporate Investors, PEOC, and Barings Participation Investors. Ms. Steinnerd has been a member of the Barings LLC legal team since 2019, advising Barings LLC on a variety of regulatory issues. Prior to joining Barings LLC, Ms. Steinnerd was Senior Counsel in the Securities and Exchange Commission’s Office of the Investor Advocate. Ms. Steinnerd held several roles during her tenure at the Securities and Exchange Commission between 2011 and 2019. Ms. Steinnerd holds a B.S. in Applied International Finance and Applied International Economics from the American University of Paris, France and a J.D. from Rutgers School of Law.
Investment Committee
The Company is externally managed by Barings LLC, which is registered with the SEC under the Investment Advisers Act of 1940, as amended. Barings also provides the administrative services necessary for us to operate. Barings, a wholly-owned subsidiary of MassMutual Life Insurance Company (“MassMutual”), is a leading global asset management firm, whose primary investment capabilities include fixed income, private credit, real estate, equity, and alternative investments. Subject to the overall supervision of our Board, a majority of which is made up of directors that are not “interested persons,” as defined in Section 2(a)(19) of the 1940 Act, of the Company or Barings, Barings’ Global Private Finance Group (“Barings GPFG”) manages our day-to-day operations, and provides investment advisory and management services to us. Barings GPFG is part of Barings' $300 billion (as of December 31, 2022) Global Fixed Income Platform that invests in liquid, private and structured credit. Barings GPFG manages private funds and separately managed accounts, along with multiple public vehicles.
Included in Barings GPFG is Barings North American Private Finance Team (the “U.S. Investment Team”), which consists of 51 investment professionals (as of December 31, 2022) located in four offices in the U.S. The U.S. Investment Team provides a full set of solutions to the North American middle market, including revolvers, first and second lien senior secured loans, unitranche structures, mezzanine debt and equity co-investments. The U.S. Investment Team averages over 20 years of industry experience at the Managing Director and Director level.
The Barings North American Private Finance investment committee (the “Investment Committee”), which is responsible for our investment origination and portfolio monitoring activities for middle-market companies in North America, consists of six members: Salman Mukhtar, Managing Director; Terry Harris, Managing Director and Head of Global Private Finance Portfolio Management; Ian Fowler, Managing Director, Fund Portfolio Manager and Co-Head of Global Private Finance; Adam Wheeler, Managing Director, Co-Head of Global Private Finance; Mark Flessner, Managing Director and Fund Portfolio Manager; and Brian Baldwin, Managing Director. Collectively, the Investment Committee has over 160 years of industry experience, and each member averages approximately 27 years of industry experience. A majority of the votes cast at a meeting at which a majority of the members of the Investment Committee is present is required to approve all investments in new middle-market companies.
Terry Harris, Ian Fowler and Adam Wheeler also sit on the European and Asia Pacific Investment Committees, which is responsible for our investment origination and portfolio monitoring activities for middle-market companies in European and Asia-Pacific geographies, affording them a unique relative value perspective across all of Barings' investment geographies. Ian Fowler, Mark Flessner and Brian Baldwin have all worked together at prior firms including GE Capital, Freeport Financial and Harbour Group. Barings believes that the individual and shared experiences of these senior team members provides the Investment Committee with an appropriate balance of shared investment philosophy and difference of background and opinion.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information with respect to the beneficial ownership of the Company's common stock as of March 6, 2023, the record date, by the Company's directors and executive officers, both individually and as a group, and by each person known to the Company to beneficially own 5% or more of the outstanding shares of the Company’s common stock. With respect to persons known to the Company to beneficially own 5% or more of the outstanding shares of the Company’s common stock, the Company bases such knowledge on beneficial ownership filings made by the holders with the SEC and other information known to the Company. Other than as set forth in the table below, none of the Company's directors or executive officers are deemed to beneficially own shares of the Company's common stock. Beneficial ownership is determined in accordance with the rules of the SEC and includes voting results,or investment power with respect to the securities. There is no common stock subject to options or warrants that are currently exercisable or exercisable within 60 days of March 6, 2023. Percentage of beneficial ownership is based on 107,916,166 shares of common stock outstanding as of March 6, 2023. Unless otherwise indicated by footnote, the business address of each person listed below is 300 South Tryon Street, Suite 2500, Charlotte, North Carolina 28202.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Name of Beneficial Owner | | Number of Shares
Beneficially
Owned(1) | | | | Percentage
of Class(2) | | Dollar Range of Equity
Securities Beneficially
Owned(3) |
| Directors and Executive Officers: | | | | | | | | |
| Interested Directors | | | | | | | | |
| Eric Lloyd | | 33,437 | | | | | * | | over $100,000 |
| David Mihalick | | 20,000 | | | | | * | | over $100,000 |
Dr. Bernard Harris, Jr.(4) | | — | | | | | * | | None |
| Non-Interested Directors | | | | | | | | |
| Mark F. Mulhern | | 14,855 | | | | | * | | over $100,000 |
| Thomas W. Okel | | 10,037 | | | | | * | | $50,001 - $100,000 |
| Jill Olmstead | | 4,000 | | | | | * | | $10,001 - $50,000 |
| John A. Switzer | | 6,000 | | | | | * | | $50,001 - $100,000 |
| Robert Knapp | | 361,034 | | | | | * | | over $100,000 |
| Steve Byers | | 20,019 | | | | | * | | over $100,000 |
| Valerie Lancaster-Beal | | — | | | | | * | | None |
| Executive Officers Who Are Not Directors | | | | | | | | |
| Ian Fowler | | — | | | | | * | | None |
| Jonathan Landsberg | | 8,423 | | | | | * | | $50,001 - $100,000 |
| Elizabeth Murray | | 12,982 | | | | | * | | over $100,000 |
| Ashlee Steinnerd | | — | | | | | * | | None |
| All directors and executive officers as a group (14 persons) | | 490,787 | | | | | * | | over $100,000 |
| Five-Percent Stockholders: | | | | | | | | |
| Barings LLC | | 13,639,681 | | | | | 12.6 | % | | over $100,000 |
* Less than 1.0%
(1)Beneficial ownership in this column has been determined in accordance with Rule 13d-3 of the Exchange Act. Except as otherwise noted, each beneficial owner of more than five percent of the Company's common stock and each director and executive officer has sole voting and/or investment power over the shares reported.
(2)Based on a total of 107,916,166 shares issued and outstanding as of March 6, 2023.
(3)Beneficial ownership in this column has been determined in accordance with Rule 16a-1(a)(2) of the Exchange Act. The dollar range of equity securities beneficially owned is based on a stock price of $8.71 per share as of March 6, 2023. Dollar ranges are as follows: None, $1 — $10,000, $10,001 — $50,000, $50,001 — $100,000, or over $100,000.
(4)Dr. Harris will not stand for re-election to the Board at the end of his current term at the Annual Meeting.
DELINQUENT SECTION 16(A) REPORTS
Section 16(a) of the Exchange Act requires the Company’s officers and directors, and persons who own more than 10% of our common stock, to file reports of securities ownership and changes in such ownership with the SEC. Officers, directors, and greater than 10% stockholders also are required by SEC rules to furnish the Company with copies of all Section 16(a) forms they file.
Based solely on the Company’s review of Forms 3, 4 and 5 filed by such persons and information provided by the Company’s directors and officers, the Company believes that during the year ended December 31, 2022, all Section 16(a) filing requirements applicable to such persons were met in a timely manner, with the following inadvertent exception: Steve Byers, one of the Company's directors, failed to timely file a Form 4 with respect to one transaction in shares of our common stock during the reporting period.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Related Party Transactions Policy and Procedure
The Company has procedures in place for the review, approval and monitoring of transactions involving the Company and certain persons related to it. For example, the Company has a code of conduct that generally prohibits any employee, officer or director of the Company from engaging in any transaction where there is a conflict between such individual's personal interest and the interests of the Company. Waivers to the code of conduct can generally only be obtained from the Chief Compliance Officer, a majority of the Board of Directors or the chairperson of the Audit Committee and are publicly disclosed as required by applicable law and regulations. In addition, the members of the Audit Committee oversee, on an ongoing basis, and conduct a prior review of all transactions between the Company and related persons (as defined in Item 404 of Regulation S-K) that are required to be disclosed in the Company's proxy statement.
As a BDC, the Company is also subject to certain regulatory requirements that restrict the Company's ability to engage in certain related-party transactions. The Company has separate policies and procedures that have been adopted to ensure that it does not enter into any such prohibited transactions without seeking necessary approvals, including prohibited transactions under the 1940 Act.
BDCs generally are prohibited under the 1940 Act from knowingly participating in certain transactions with their affiliates without the prior approval of their independent directors and, in some cases, of the U.S. Securities and Exchange Commission (the “SEC”). Those transactions include purchases and sales, and so-called “joint” transactions, in which a BDC and one or more of its affiliates engage in certain types of profit-making activities. Any person that owns, directly or indirectly, 5.0% or more of a BDC’s outstanding voting securities will be publishedconsidered an affiliate of the BDC for purposes of the 1940 Act, and a BDC generally is prohibited from engaging in purchases or sales of assets or joint transactions with such affiliates, absent the prior approval of the BDC’s independent directors. Additionally, without the approval of the SEC, a BDC is prohibited from engaging in purchases or sales of assets or joint transactions with the BDC’s officers and directors, and investment adviser, including funds managed by the investment adviser and its affiliates.
BDCs may, however, invest alongside certain related parties or their respective other clients in certain circumstances where doing so is consistent with current law and SEC staff interpretations. For example, a BDC may invest alongside such accounts consistent with guidance promulgated by the SEC staff permitting the BDC and such other accounts to purchase interests in a single class of privately placed securities so long as certain conditions are met, including that the BDC’s investment adviser, acting on the BDC’s behalf and on behalf of other clients, negotiates no term other than price. Co-investment with such other accounts is not permitted or appropriate under this guidance when there is an opportunity to invest in different securities of the same issuer or where the different investments could be expected to result in a conflict between the BDC’s interests and those of other accounts.
The 1940 Act generally prohibits BDCs from making certain negotiated co-investments with certain affiliates absent an order from the SEC permitting the BDC to do so. Pursuant to Barings’ existing SEC co-investment exemptive relief under the 1940 Act (the "Exemptive Relief"), the Company is generally permitted to co-invest with funds affiliated with Barings if a "required majority" (as defined in Section 57(o) of the 1940 Act) of the Company's independent directors make certain conclusions in connection with a co-investment transaction, including that (1) the terms of the transaction, including the consideration to be paid, are reasonable and fair to the Company and its stockholders and do not involve overreaching in respect of the Company or its stockholders on the part of any person concerned and (2) the transaction is consistent with the interests of the Company's stockholders and is consistent with the Company's investment objective and strategies. Co-investments made under the Exemptive Relief are subject to compliance with the conditions and other requirements contained in the Exemptive Relief, which could limit the Company’s ability to participate in a co-investment transaction.
The Company’s executive officers and the members of Barings’ Investment Committee, as well as the other principals of Barings, manage other funds affiliated with Barings, including BCIC and BPCC and other closed-end investment companies. In addition, Barings' investment team has responsibilities for managing U.S. and global middle-market debt investments for certain other investment funds and accounts. Accordingly, they have obligations
to investors in those entities, the fulfillment of which may not be in the best interests of, or may be adverse to the interests of, the Company or its stockholders. In addition, certain of the other funds and accounts managed by Barings may provide for higher management or incentive fees, greater expense reimbursements or overhead allocations, or permit Barings and its affiliates to receive higher origination and other transaction fees, all of which may contribute to this conflict of interest and create an incentive for Barings to favor such other funds or accounts. Although the professional staff of Barings will devote as much time to the Company’s management as appropriate to enable Barings to perform its duties in accordance with the Advisory Agreement, the investment professionals of Barings may have conflicts in allocating their time and services among the Company, on the one hand, and the other investment vehicles managed by Barings or one or more of its affiliates on the other hand.
Barings may face conflicts in allocating investment opportunities between the Company and affiliated investment vehicles that have overlapping investment objectives with ours, including BCIC and BPCC. In addition, the Company may not be made aware of and/or be given the opportunity to participate in certain investments made by investment funds which are managed by advisers affiliated with Barings and do not participate in the co-investment program described in the Exemptive Relief. In situations where co-investment with other affiliated funds or accounts is not permitted or appropriate, Barings will need to decide which account will proceed with the investment in accordance with its allocation policies and procedures. Although Barings will endeavor to allocate investment opportunities in a fair and equitable manner in accordance with its allocation policies and procedures, it is possible that, in the future, the Company may not be given the opportunity to participate in investments made by investment funds managed by Barings or an investment manager affiliated with Barings if such investment is prohibited by the Exemptive Relief or the 1940 Act. These restrictions, and similar restrictions that limit the Company's ability to transact business with its officers or directors or their affiliates, including funds managed by Barings, may limit the scope of investment opportunities that would otherwise be available to the Company.
Advisory Agreement
The Company is party to the Advisory Agreement with Barings, in which certain directors and officers of the Company and members of the Investment Committee may have indirect ownership and pecuniary interests. For the year ended December 31, 2022, the base management fee determined in accordance with the terms of the Advisory Agreement was approximately $29.5 million. For the year ended December 31, 2022, the income-based fee determined in accordance with the terms of the Advisory Agreement was approximately $6.6 million.
Administration Agreement
Pursuant to the terms of the Administration Agreement between Barings and the Company, Barings provides the Company with certain administrative and other services necessary to conduct the Company's day-to-day operations. The Company reimburses Barings, in its capacity as administrator, for the costs and expenses incurred and billed to the Company by Barings in performing its obligations and providing personnel and facilities under the Administration Agreement, or such lesser amount as may be agreed to by the Company and Barings from time to time. If the Company and Barings agree to a reimbursement amount for any period which is less than the full amount otherwise permitted under the Administration Agreement, then Barings will not be entitled to recoup any difference thereof in any subsequent period or otherwise. See "Compensation Discussion" above for more information. For the fiscal year ended December 31, 2022, the Company incurred and was invoiced by Barings for expenses of approximately $3.4 million under the terms of the Administration Agreement.
Barings Credit Support Agreements
In connection with the Company’s merger with MVC Capital, Inc., the Company entered into a Credit Support Agreement (the “MVC Capital Credit Support Agreement”) with Barings, pursuant to which Barings has agreed to provide credit support to the Company in the amount of up to $23.0 million relating to the net cumulative realized and unrealized losses on the acquired MVC Capital, Inc. investment portfolio over a 10-year period. The MVC Capital Credit Support Agreement is intended to give stockholders of the combined company following the merger of the Company and MVC Capital, Inc. downside protection from net cumulative realized and unrealized losses on the acquired MVC Capital, Inc. portfolio and insulate the combined company’s stockholders from potential value volatility and losses in MVC Capital, Inc.’s portfolio following the closing of the merger. There is no fee or other
payment by the Company to Barings or any of its affiliates in connection with the MVC Capital Credit Support Agreement. Any cash payment from Barings to the Company under the MVC Capital Credit Support Agreement will be excluded from the incentive fee calculations under the Advisory Agreement.
In connection with the Company’s merger with Sierra Income Corporation, the Company entered into a Credit Support Agreement (the “SIC Credit Support Agreement”) with Barings, pursuant to which Barings has agreed to provide credit support to the Company in the amount of up to $100.0 million relating to the net cumulative realized and unrealized losses on the acquired Sierra Income Corporation investment portfolio over a 10-year period. The SIC Credit Support Agreement is intended to give stockholders of the combined company following the merger of the Company and Sierra Income Corporation downside protection from net cumulative realized and unrealized losses on the acquired Sierra Income Corporation portfolio and insulate the combined company’s stockholders from potential value volatility and losses in Sierra Income Corporation’s portfolio following the closing of the merger. There is no fee or other payment by the Company to Barings or any of its affiliates in connection with the SIC Credit Support Agreement. Any cash payment from Barings to the Company under the SIC Credit Support Agreement will be excluded from the incentive fee calculations under the Advisory Agreement.
August 2020 Note Purchase Agreement
On August 3, 2020, the Company entered into a Note Purchase Agreement (the “August 2020 NPA”) with Massachusetts Mutual Life Insurance Company, which wholly-owns Barings, governing the issuance of (1) $50.0 million in aggregate principal amount of Series A senior unsecured notes due August 2025 (the “Series A Notes due 2025”) with a fixed interest rate of 4.66% per year, and (2) up to $50.0 million in aggregate principal amount of additional senior unsecured notes due August 2025 with a fixed interest rate per year to be determined (the “Additional Notes” and, collectively with the Series A Notes due 2025, the “August 2025 Notes”), in each case, to qualified institutional investors in a private placement. The Company issued an aggregate principal amount of $25.0 million of the Series A Notes due 2025 on September 24, 2020 and an aggregate principal amount of $25.0 million of the Series A Notes due 2025 on September 29, 2020, both of which will mature on August 4, 2025 unless redeemed, purchased or prepaid prior to such date in accordance with their terms. Interest on the August 2025 Notes is due semiannually in March and September of each year, beginning in March 2021. The August 2025 Notes are guaranteed by certain of the Company’s subsidiaries and are the Company’s general unsecured obligations that rank pari passu with all outstanding and future unsecured unsubordinated indebtedness issued by the Company. Upon the occurrence of an event of default, the holders of at least 66-2/3% in principal amount of the August 2025 Notes at the time outstanding may declare all August 2025 Notes then outstanding to be immediately due and payable.
On November 4, 2020, the Company amended Currentthe August 2020 NPA to reduce the aggregate principal amount of unissued Additional Notes from $50.0 million to $25.0 million. The Company's permitted issuance period for the Additional Notes under the August 2020 NPA expired on February 3, 2022, prior to which date the Company had issued no Additional Notes.
November 2020 Note Purchase Agreement
On November 4, 2020, the Company entered into a Note Purchase Agreement (the “November 2020 NPA”) governing the issuance of (1) $62.5 million in aggregate principal amount of Series B senior unsecured notes due November 2025 (the “Series B Notes”) with a fixed interest rate of 4.25% per year and (2) $112.5 million in aggregate principal amount of Series C senior unsecured notes due November 2027 (the “Series C Notes” and, collectively with the Series B Notes, the “November Notes”) with a fixed interest rate of 4.75% per year, in each case, to qualified institutional investors in a private placement. Each stated interest rate is subject to a step up of (x) 0.75% per year, to the extent the applicable November Notes do not satisfy certain investment grade conditions and/or (y) 1.50% per year, to the extent the ratio of the Company’s secured debt to total assets exceeds specified thresholds, measured as of each fiscal quarter end. The November Notes were delivered and paid for on November 5, 2020.
The Series B Notes will mature on November 4, 2025, and the Series C Notes will mature on November 4, 2027 unless redeemed, purchased or prepaid prior to such date by the Company in accordance with their terms. Interest on the November Notes is due semiannually in May and November, beginning in May 2021. The November Notes are
guaranteed by certain of the Company’s subsidiaries, and are the Company's general unsecured obligations that rank pari passu with all outstanding and future unsecured unsubordinated indebtedness issued by the Company.
Barings’ parent company, Massachusetts Mutual Life Insurance Company, holds $25.0 million in aggregate principal amount of the Series B Notes.
February 2021 Note Purchase Agreement
On February 25, 2021, the Company entered into a Note Purchase Agreement (the “February 2021 NPA”) governing the issuance of (1) $80.0 million in aggregate principal amount of Series D senior unsecured notes due February 26, 2026 (the “Series D Notes”) with a fixed interest rate of 3.41% per year and (2) $70.0 million in aggregate principal amount of Series E senior unsecured notes due February 26, 2028 (the “Series E Notes” and, collectively with the Series D Notes, the “February Notes”) with a fixed interest rate of 4.06% per year, in each case, to qualified institutional investors in a private placement. Each stated interest rate is subject to a step up of (x) 0.75% per year, to the extent the applicable February Notes do not satisfy certain investment grade rating conditions and/or (y) 1.50% per year, to the extent the ratio of the Company’s secured debt to total assets exceeds specified thresholds, measured as of each fiscal quarter end. The February Notes were delivered and paid for on February 26, 2021.
The Series D Notes will mature on February 26, 2026, and the Series E Notes will mature on February 26, 2028 unless redeemed, purchased or prepaid prior to such date by the Company in accordance with the terms of the February 2021 NPA. Interest on the February Notes is due semiannually in February and August of each year, beginning in August 2021. The February Notes are guaranteed by certain of the Company’s subsidiaries, and are the Company's general unsecured obligations that rank pari passu with all outstanding and future unsecured unsubordinated indebtedness issued by the Company.
Barings’ parent company, Massachusetts Mutual Life Insurance Company, holds $25.0 million in aggregate principal amount of the Series D Notes.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee and Board of Directors, including a majority of the independent directors, have selected KPMG LLP as the Company's independent registered public accounting firm for the fiscal year ending December 31, 2023. KPMG LLP also will serve as the independent auditors for all of the Company’s wholly-owned subsidiaries and its joint ventures, Jocassee Partners LLC, Thompson Rivers LLC, Waccamaw River LLC, and Sierra Senior Loan Strategy JV I LLC.
We expect representatives of KPMG LLP will be present at the Annual Meeting and will have an opportunity to make a statement if they desire to do so and to respond to appropriate questions.
Independent Registered Public Accounting Firm's Fees
Fees Paid to Independent Registered Public Accounting Firm
The following table provides information regarding the fees billed by KPMG LLP for work performed for the fiscal years ended December 31, 2022 and 2021, or attributable to the audit of the Company's 2022 or 2021 financial statements, including out-of-pocket expenses:
| | | | | | | | | | | | | | | | | |
| | Fiscal Year Ended
December 31, 2022 | | Fiscal Year Ended
December 31, 2021 | |
| Audit Fees | | $ | 1,292,758 | | | $ | 891,400 | | |
| Audit Related Fees | | 1,210,652 | | (3) | 42,024 | | (1) |
| Tax Fees | | 138,950 | | | 94,013 | | (2) |
| Other Fees | | — | | | — | | |
| TOTAL FEES | | $ | 2,642,360 | | | $ | 1,027,437 | | |
(1)Includes fees of $7,950 related to accounting and auditing matters associated with the Sierra Income Corporation merger.
(2)Includes fees of $14,013 related to tax fees associated with the MVC Capital, Inc. merger.
(3)Includes fees of $1,200,000 related to audit fees of Sierra Income Corporation as of December 31, 2021.
During the fiscal years ended December 31, 2022 and 2021, KPMG LLP billed aggregate non-audit fees of $182,337 (comprised of $43,387 related to Barings LLC and $138,950 related to Barings BDC, Inc.) and $135,966 (comprised of $41,953 related to Barings LLC and $94,013 related to Barings BDC, Inc.), respectively, for services rendered to the Company and for services rendered to Barings LLC.
Audit Fees. Audit fees include fees for services that normally would be provided by the accountant in connection with statutory and regulatory filings or engagements and that generally only the independent accountant can provide. In addition to fees for the audit of the Company's annual financial statements, the audit of the effectiveness of the Company's internal control over financial reporting and the review of the Company's quarterly financial statements in accordance with generally accepted auditing standards, this category contains fees for comfort letters, statutory audits, consents, and assistance with and review of documents filed with the SEC.
Audit Related Fees. Audit related fees are assurance related services that traditionally are performed by the independent accountant, such as attest services that are not required by statute or regulation.
Tax Fees.Tax fees include corporate and subsidiary compliance and consulting.
All Other Fees. Fees for other services would include fees for products and services other than the services reported above, including any non-audit fees.
Pre-Approval Policies and Procedures
The Audit Committee has established, and the Board of Directors has approved, a pre-approval policy that describes the permitted audit, audit-related, tax and other services to be provided by the Company’s independent registered accounting firm. The policy requires that the Audit Committee pre-approve the audit and non-audit services
performed by the independent registered accounting firm in order to assure that the provision of such service does not impair the firm’s independence.
Any requests for audit, audit-related, tax and other services that have not received general pre-approval must be submitted to the Audit Committee for specific pre-approval, irrespective of the amount, and cannot commence until such approval has been granted. Normally, pre-approval is provided at regularly scheduled meetings of the Audit Committee. However, the Audit Committee may delegate pre-approval authority to one or more of its members. The member or members to whom such authority is delegated shall report any pre-approval decisions to the Audit Committee at a subsequent meeting. The Audit Committee does not delegate its responsibilities to pre-approve services performed by the independent registered accounting firm to management. During 2022 and 2021, 100% of the Company’s audit fees, audit-related fees, tax fees and fees for other services provided by the Company's independent registered public accounting firm were pre-approved by the Audit Committee.
AUDIT COMMITTEE REPORT
The Audit Committee assists the Board of Directors in its oversight of the Company’s financial reporting process and implementation and maintenance of effective controls to prevent, deter and detect fraud by management. In addition, the Audit Committee is directly responsible for the appointment, compensation and oversight of the Company’s independent registered public accounting firm. Each of the members of the Audit Committee qualifies as an “independent” director in accordance with NYSE listing standards, SEC rules and the Company’s corporate governance guidelines.
In overseeing the preparation of the Company’s financial statements, the Audit Committee met with both management and KPMG LLP, the Company’s independent registered public accounting firm for the fiscal year ended December 31, 2022, to review and discuss the audited financial statements prior to their issuance and to discuss significant accounting issues. Management advised the Audit Committee that all financial statements were prepared in accordance with generally accepted accounting principles, and the Audit Committee discussed the financial statements with both management and KPMG LLP.
The Audit Committee also is responsible for assisting the Board of Directors in the oversight of the qualification, independence and performance of the Company’s independent auditor. In connection with the audit of the Company’s financial statements for the fiscal year ended December 31, 2022, the Audit Committee regularly met in separate, executive sessions with certain members of senior management and KPMG LLP. The Audit Committee has discussed with KPMG LLP the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board, or PCAOB, and the SEC. The Audit Committee has received from KPMG LLP the written disclosures and the letter required by applicable requirements of the PCAOB regarding KPMG LLP’s communications with the Audit Committee concerning independence and has discussed with KPMG LLP its independence. In addition, the Audit Committee has considered whether the provision of non-audit services, and the fees charged for such services, by KPMG LLP are compatible with KPMG LLP maintaining its independence from the Company.
Based upon the review and discussions referred to above, the Audit Committee recommended to the Company’s Board of Directors that the Company’s audited consolidated financial statements be included in the Company’s Annual Report on Form 8-K10-K for the fiscal year ended December 31, 2022. In addition, the Audit Committee has selected, and recommended to the Board of Directors that it approve the appointment of KPMG LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2023.
| | |
| THE AUDIT COMMITTEE1 |
| Mark F. Mulhern, Chair |
| Thomas W. Okel |
| Robert Knapp |
| Jill Olmstead |
| John A. Switzer |
| Steve Byers |
| Valerie Lancaster-Beal |
The foregoing report shall not be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except to the extent that the Company specifically incorporates this Audit Committee report by reference, and shall not otherwise be deemed filed under such Securities Act and/or Exchange Act.
1Reflects the membership of the Audit Committee as of the date of the Audit Committee's recommendations and approval referenced in this Audit Committee report.
PROPOSAL NO. 2
APPROVAL TO SELL SHARES OF COMMON STOCK BELOW NET ASSET VALUE (BOOK VALUE)
The Company is a closed-end investment company that has elected to be treated as a BDC under the 1940 Act. The 1940 Act generally prohibits the Company, as a BDC, from issuing and selling shares of its common stock at a price below the then-current net asset value (i.e., book value) per share of such stock, with certain exceptions. One such exception would permit the Company to issue and sell shares of its common stock at a price below net asset value per share at the time of sale if the Company’s stockholders have approved a sale below net asset value per share within the one-year period immediately prior to any such sale, provided that the Board of Directors also makes certain determinations prior to any such sale.
Pursuant to this provision, the Company is seeking the approval of its stockholders so that it may, in one or more public or private offerings of its common stock, issue and sell shares of its common stock at a price below its then-current net asset value per share in one or more offerings, subject to certain conditions discussed below. It should be noted that the maximum number of shares that the Company could issue and sell at a per share price below net asset value per share pursuant to this authority would be limited to 30% of its then-outstanding common stock. If approved, the authorization would be effective for a period expiring on the first anniversary of the date of the stockholders’ approval of this proposal and would permit the Company to engage in such transactions at various times within that period, subject to further approval from the Board of Directors.
Generally, equity securities sold in public securities offerings are priced based on public market prices quoted on exchanges such as NYSE, rather than net asset value, or book value, per share. Since the Company’s IPO, the Company’s common stock has traded both above and below its net asset value per share. At each of the Company’s Annual Meetings of Stockholders from 2008 to 2017, and at its 2020, 2021, and 2022 Annual Meetings of Stockholders, the Company requested and received approval from its stockholders to sell its stock at a price per share below net asset value under certain circumstances. As in such prior years, the Company is seeking the approval of a majority of its stockholders of record to offer and sell shares of its common stock at prices that, net of underwriting discount or commissions, may be less than net asset value per share in one or more offerings. This stockholder approval would permit the Company to issue and sell shares of its common stock in accordance with pricing standards that market conditions generally require, and would also assure stockholders that the number of shares issued and sold pursuant to such authority does not exceed 30% of the Company’s then-outstanding common stock immediately prior to each such offering. If stockholders approve this proposal, the Company should have greater flexibility in taking advantage of changing market and financial conditions in connection with an equity offering. Of the Company’s ten underwritten follow-on equity offerings completed since its IPO, only two were priced below the then-current net asset value per share (both during 2009).
Reasons to Offer Common Stock Below Net Asset Value
Market Conditions Have Created, and May in the Future Create, Attractive Investment and Acquisition Opportunities
From time to time, capital markets may experience periods of disruption and instability. For example, between 2008 and 2009, the global capital markets were unstable as evidenced by periodic disruptions in liquidity in the debt capital markets, significant write-offs in the financial services sector, the re-pricing of credit risk in the broadly syndicated credit market and the failure of major financial institutions. Despite actions of the U.S. federal government and foreign governments, these events contributed to worsening general economic conditions that materially and adversely impacted the broader financial and credit markets and reduced the availability of debt and equity capital for the market as a whole and financial services firms in particular. As a result of the disruption and volatility in the credit markets during this time, the Company saw some measure of reduction in capital available to certain specialty finance companies and other capital providers, causing a reduction in competition. These conditions also generally coincided with lower stock prices for BDCs, with BDCs trading below net asset value. The Company believes that favorable investment opportunities to invest at attractive risk-adjusted returns, including opportunities to make acquisitions of other companies or investment portfolios at attractive values, may be created during these periods of disruption and volatility.
While market conditions have largely recovered from the events of 2008 and 2009, there have been continuing periods of volatility, some lasting longer than others, including recently as a result of the ongoing effects of the global COVID-19 pandemic starting in 2020. Since the Company’s IPO in 2007, the Company’s common stock has traded both at a premium and at a discount in relation to its net asset value, which is the equivalent of “book value,” rather than market or publicly traded value. As of the record date of March 6, 2023, the Company's common stock traded at a discount to net asset value per share. The possibility that shares of the Company’s common stock will continue to trade at a discount from net asset value or trade at premiums that are unsustainable over the long-term are separate and distinct from the risk that the Company’s net asset value will decrease. It is not possible to predict whether any shares of the Company’s common stock issued in the future will trade at, above, or below net asset value.
Since the 2008 recession, lingering economic conditions in the U.S. credit markets from periods of contraction or recession have contributed to significant stock price volatility for capital providers such as the Company and have made access to capital more challenging for many smaller businesses. However, these changes in the credit market conditions also have beneficial effects for capital providers like the Company because small business are selling for lower prices, are generally willing to pay higher interest rates and are generally willing to accept contractual terms that are more favorable to the Company in their investment agreements. Accordingly, for firms that continue to have access to capital, the Company believes that a challenging economic environment could provide investment opportunities on more favorable terms than have been available in recent periods. In addition, in light of the fact that any debt capital that may be available may be at a higher cost and on less favorable terms and conditions than in past periods, the Company’s ability to take advantage of these opportunities may be largely dependent upon its access to equity capital.
Stockholder approval of the proposal to sell shares of the Company's common stock at a price below its then-current net asset value per share, subject to the conditions set forth in this proposal, would provide the Company with the flexibility to invest in such attractive investment opportunities, which typically need to be made expeditiously.
Trading History
The following table, reflecting the public trading history of our common stock since January 1, 2020, lists the high and low closing sales prices for our common stock, and such closing sales prices as percentages of the net asset values per share for the relevant periods. On March 6, 2023, the record date, the last reported closing sale price of our common stock on the NYSE was $8.71. Net asset value per share in the table below is determined as of the last day in the relevant quarter and therefore may not reflect the net asset value per share on the date of the high and low closing sales prices. The net asset values shown are based on outstanding shares at the end of each period.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Net Asset
Value | | Closing Sales Price | | Premium (Discount) of High Closing Sales Price
to Net Asset Value | | Premium (Discount) of Low Closing Sales Price
to Net Asset Value |
| High | | Low | |
| Year ended December 31, 2020 | | | | | | | | | | |
| First Quarter | | $ | 9.23 | | | $ | 10.54 | | | $ | 5.34 | | | 14.2 | % | | (42.1) | % |
| Second Quarter | | $ | 10.23 | | | $ | 8.41 | | | $ | 6.22 | | | (17.8) | % | | (39.2) | % |
| Third Quarter | | $ | 10.97 | | | $ | 8.44 | | | $ | 7.36 | | | (23.1) | % | | (32.9) | % |
| Fourth Quarter | | $ | 10.99 | | | $ | 9.28 | | | $ | 7.51 | | | (15.6) | % | | (31.7) | % |
| Year ended December 31, 2021 | | | | | | | | | | |
| First Quarter | | $ | 11.14 | | | $ | 10.20 | | | $ | 8.83 | | | (8.4) | % | | (20.7) | % |
| Second Quarter | | $ | 11.39 | | | $ | 10.77 | | | $ | 10.16 | | | (5.4) | % | | (10.8) | % |
| Third Quarter | | $ | 11.40 | | | $ | 11.07 | | | $ | 10.36 | | | (2.9) | % | | (9.1) | % |
| Fourth Quarter | | $ | 11.36 | | | $ | 11.47 | | | $ | 10.62 | | | 1.0 | % | | (6.5) | % |
| Year ended December 31, 2022 | | | | | | | | | | |
| First Quarter | | $ | 11.86 | | | $ | 11.20 | | | $ | 10.07 | | | (5.6) | % | | (15.1) | % |
| Second Quarter | | $ | 11.41 | | | $ | 10.90 | | | $ | 9.24 | | | (4.5) | % | | (19.0) | % |
| Third Quarter | | $ | 11.28 | | | $ | 10.41 | | | $ | 8.32 | | | (7.7) | % | | (26.2) | % |
| Fourth Quarter | | $ | 11.05 | | | $ | 9.26 | | | $ | 8.06 | | | (16.2) | % | | (27.1) | % |
| Year ending December 31, 2023 | | | | | | | | | | |
| First Quarter (through March 6, 2023) | | * | | $ | 8.95 | | | $ | 8.22 | | | * | | * |
* Net asset value has not yet been calculated for this period.
Greater Investment Opportunities Due to Larger Capital Resources
The additional capital raised through an offering of the Company’s common stock may help the Company generate additional deal flow. With more capital to make investments, the Company could be a more meaningful capital provider and such additional capital would allow it to compete more effectively for high quality investment opportunities. Such investment opportunities may be funded with proceeds of an offering of shares of the Company’s common stock.
Status as a BDC and RIC and Maintaining a Favorable Debt-to-Equity Ratio
As a BDC and a regulated investment company, or RIC, for tax purposes, the Company is dependent on its ability to raise capital through the issuance of its common stock. RICs generally must distribute substantially all of their earnings to stockholders as dividends in order to achieve pass-through tax treatment, which prevents the Company from retaining any meaningful amount of earnings to support operations, which may include making new investments (including investments in existing portfolio companies). Further, under the 1940 Act, the Company must meet a debt-to equity ratio of less than approximately 2:1 in order to incur debt or issue senior securities. Therefore, to continue to build the Company’s investment portfolio, the Company endeavors to maintain consistent access to capital through the public and private debt markets and the public equity markets enabling it to take advantage of investment opportunities as they arise.
Exceeding the approximate 2:1 debt-to-equity ratio could have severe negative consequences for a BDC, including the inability to pay dividends, breach of applicable debt covenants and failure to qualify for tax treatment as a RIC. Although the Company does not currently expect that it will exceed this debt-to-equity ratio, the markets it operates in and the general economy may be volatile and uncertain. Even though the underlying performance of a particular portfolio company may not indicate an impairment or its inability to repay all principal and interest in full, volatility in the capital markets may negatively impact the valuations of investments and create unrealized losses on certain investments. Any such write-downs in value, as well as unrealized losses based on the underlying performance of the Company’s portfolio companies, if any, will negatively impact stockholders’ equity and the resulting debt-to-equity ratio. Issuing additional equity would allow the Company to realign its debt-to-equity ratio and take steps to avoid these negative consequences. In addition to meeting legal requirements applicable to BDCs, having a more favorable debt-to-equity ratio would also generally strengthen the Company’s balance sheet and give it more flexibility to fully execute its business strategy.
Summary
The Board of Directors believes it is desirable to have the flexibility to issue shares of the Company’s common stock at a price below the Company’s then-current net asset value per share in certain instances when it is in the best interests of the Company and its stockholders. This would, among other things, provide access to capital markets to pursue attractive investment and acquisition opportunities during periods of volatility, improve capital resources to enable the Company to compete more effectively for high quality investment opportunities and add financial flexibility to comply with regulatory requirements and any applicable debt facility covenants, including the 2:1 debt-to-equity ratio limit under the 1940 Act. It could also minimize the likelihood that the Company would be required to sell assets that the Company would not otherwise sell, which sales could occur at times and at prices that are disadvantageous to the Company.
The final terms of any sale of the Company’s common stock at a price below the then-current net asset value per share will be determined by the Board of Directors in connection with such issuance, and the shares of common stock will not include preemptive rights. Any transaction in which the Company issues such shares of common stock, including the nature and amount of consideration that would be received by the Company at the time of issuance and the use of any proceeds therefrom, will be reviewed and approved by the Board of Directors at the time of issuance. If this proposal is approved, no further authorization from the stockholders will be solicited prior to any such issuance in accordance with the terms of this proposal. If approved, the authorization would be effective for a period expiring on the first anniversary of the date of the stockholders’ approval of this proposal and would permit the Company to engage in such transactions at various times within that period, subject to further approval from the Board of Directors.
Conditions to Sales Below Net Asset Value
Stockholder approval is a condition that must be satisfied prior to any sales of the Company’s common stock at a price below the then-current net asset value per share, and the Company is seeking such approval in this proposal. If this proposal is approved by the Company’s stockholders, the Company would not issue and sell its common stock at a price below its per share net asset value unless the number of shares issued and sold pursuant to such authority does not exceed 30% of the Company’s then-outstanding common stock immediately prior to each such offering. To the extent the Company issues and sells shares of its common stock, regardless of the price at which such shares are sold, the Company’s market capitalization and the amount of its publicly tradable common stock will increase, thus affording all common stockholders potentially greater liquidity in the market for the Company’s shares.
In addition, if this proposal is approved, the Company will issue and sell shares of its common stock at a price below net asset value per share only if the following conditions are met:
▪a majority of the Company’s directors who have no financial interest in the issuance and sale and a majority of such directors who are not interested persons of the Company have determined that any such sale would be in the best interests of the Company and its stockholders; and
▪a majority of the Company’s directors who have no financial interest in the issuance and sale, and a majority of such directors who are not interested persons of the Company, in consultation with the underwriter or underwriters of the offering if it is to be underwritten, and as of a time immediately prior to the first solicitation by or on behalf of the Company of firm commitments to purchase such securities or immediately prior to the issuance of such securities, have determined in good faith that the price at which such securities are to be issued and sold is not less than a price which closely approximates the market value of those securities, less any distributing commission or discount.
In determining whether or not to sell additional shares of the Company’s common stock at a price below the net asset value per share, the Board of Directors will be obligated to act in the best interests of the Company and its stockholders.
Key Stockholder Considerations
Before voting on this proposal or giving proxies with regard to this matter, stockholders should consider the dilutive effect on the net asset value per outstanding share of common stock of the issuance of shares of the Company’s common stock at less than net asset value per share. Any sale of common stock at a price below net asset value would result in an immediate dilution to existing common stockholders. Since under this proposal shares of the Company’s common stock could be issued at a price that is substantially below the net asset value per share, the dilution could be substantial. This dilution would include reduction in the net asset value per share as a result of the issuance of shares at a price below the net asset value per share and a proportionately greater decrease in a stockholder’s interest in the earnings and assets of the Company and voting interest in the Company than the increase in the assets of the Company resulting from such issuance. If this Proposal No. 2 is approved, the Board of Directors of the Company may, consistent with its fiduciary duties, approve the sale of the Company’s common stock at any discount to its then-current net asset value per share; however, the Board of Directors will consider the potential dilutive effect of the issuance of shares of common stock at a price below the net asset value per share when considering whether to authorize any such issuance and will act in the best interests of the Company and its stockholders in doing so. It should be noted that the maximum number of shares that the Company could issue and sell at a per share price below net asset value per share pursuant to this authority would be limited to 30% of the Company’s then-outstanding common stock immediately prior to each such offering.
The 1940 Act establishes a connection between common share sale price and net asset value because, when shares of common stock are sold at a sale price below net asset value per share, the resulting increase in the number of outstanding shares is not accompanied by a proportionate increase in the net assets of the issuer. Further, if current stockholders of the Company do not purchase any shares to maintain their percentage interest, regardless of whether such offering is above or below the then-current net asset value, their voting power will be diluted. For an illustration of the potential dilutive effect of an offering of our common stock at a price below net asset value, please see the table below under the heading “Examples of Dilutive Effect of the Issuance of Shares Below Net Asset Value.”
Finally, any sale of substantial amounts of the Company’s common stock or other securities in the open market may adversely affect the market price of the Company’s common stock and may adversely affect the Company’s ability to obtain future financing in the capital markets. In addition, future sales of the Company’s common stock to the public may create a potential market overhang, which is the existence of a large block of shares readily available for sale that could lead the market to discount the value of shares held by other investors. In the event the Company were to continue to sell its common stock at prices below net value for sustained periods of time, such offerings may result in sustained discounts in the marketplace.
Examples of Dilutive Effect of the Issuance of Shares Below Net Asset Value
The table on the following page illustrates the level of net asset value dilution that would be experienced by a nonparticipating stockholder in four daysdifferent hypothetical offerings of different sizes and levels of discount from net asset value per share, although it is not possible to predict the level of market price decline that may occur. Actual sales prices and discounts may differ from the presentation below.
The examples assume that Company XYZ has 1,000,000 shares of common stock outstanding, $15,000,000 in total assets and $5,000,000 in total liabilities. The current net asset value and net asset value per share are thus $10,000,000 and $10.00. The table illustrates the dilutive effect on nonparticipating Stockholder A of (1) an offering of 50,000 shares (5% of the outstanding shares) at $9.50 per share after offering expenses and commission (a 5% discount from net asset value), (2) an offering of 100,000 shares (10% of the finaloutstanding shares) at $9.00 per share after offering expenses and commissions (a 10% discount from net asset value), (3) an offering of 200,000 shares (20% of the outstanding shares) at $8.00 per share after offering expenses and commissions (a 20% discount from net asset value) and (4) an offering of 250,000 shares (25% of the outstanding shares) at $0.01 per share after offering expenses and commissions (a 100% discount from net asset value). Because we are not limited as to the amount of discount from net asset value at which we can offer shares, the fourth example on the following table (an offering at a price of $0.01 per share) is included, however, the Company will not offer shares at a 100% discount to net asset value. “NAV” in the table below stands for “net asset value.”
Dilutive Effect of the Issuance of Shares by Company XYZ Below Net Asset Value
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Example 1
5% Offering
at 5% Discount | | Example 2
10% Offering
at 10% Discount | | Example 3
20% Offering
at 20% Discount | | Example 4
25% Offering
at 100% Discount |
| | | Prior to Sale
Below NAV | | Following
Sale | | %
Change | | Following
Sale | | %
Change | | Following
Sale | | %
Change | | Following
Sale | | %
Change |
| Offering Price | | | | | | | | | | | | | | | | | | |
| Price per Share to Public | | — | | | $ | 10.00 | | | — | | | $ | 9.47 | | | — | | | $ | 8.42 | | | — | | | $ | 0.01 | | | — | |
| Net Proceeds per Share to Issuer | | — | | | $ | 9.50 | | | — | | | $ | 9.00 | | | — | | | $ | 8.00 | | | — | | | $ | 0.01 | | | — | |
| Decrease to NAV | | | | | | | | | | | | | | | | | | |
| Total Shares Outstanding | | 1,000,000 | | | 1,050,000 | | | 5.00 | % | | 1,100,000 | | | 10.00 | % | | 1,200,000 | | | 20.00 | % | | 1,250,000 | | | 25.00 | % |
| NAV per Share | | $ | 10.00 | | | $ | 9.98 | | | (0.24) | % | | $ | 9.91 | | | (0.91) | % | | $ | 9.67 | | | (3.33) | % | | $ | 8.00 | | | (19.98) | % |
| Dilution to Stockholder | | | | | | | | | | | | | | | | | | |
| Shares Held by Stockholder A | | 10,000 | | | 10,000 | | | — | | | 10,000 | | | — | | | 10,000 | | | — | | | 10,000 | | | — | |
| Percentage Held by Stockholder A | | 1.0 | % | | 0.95 | % | | (4.76) | % | | 0.91 | % | | (9.09) | % | | 0.83 | % | | (16.67) | % | | 0.80 | % | | (20.00) | % |
| Total Asset Values | | | | | | | | | | | | | | | | | | |
| Total NAV Held by Stockholder A | | $ | 100,000 | | | $ | 99,762 | | | (0.24) | % | | $ | 99,091 | | | (0.91) | % | | $ | 96,667 | | | (3.33) | % | | $ | 80,020 | | | (19.98) | % |
| Total Investment by Stockholder A (Assumed to Be $10.00 per Share) | | $ | 100,000 | | | $ | 100,000 | | | — | | | $ | 100,000 | | | — | | | $ | 100,000 | | | — | | | $ | 100,000 | | | — | |
| Total Dilution to Stockholder A (Total NAV Less Total Investment) | | — | | | $ | (238) | | | — | | | $ | (909) | | | — | | | $ | (3,333) | | | — | | | $ | (19,980) | | | — | |
| Per Share Amounts | | | | | | | | | | | | | | | | | | |
| NAV per Share Held by Stockholder A | | — | | | $ | 9.98 | | | — | | | $ | 9.91 | | | — | | | $ | 9.67 | | | — | | | $ | 8.00 | | | — | |
| Investment per Share Held by Stockholder A (Assumed to be $10.00 per Share on Shares Held Prior to Sale) | | $ | 10.00 | | | $ | 10.00 | | | — | | | $ | 10.00 | | | — | | | $ | 10.00 | | | — | | | $ | 10.00 | | | — | |
| Dilution per Share Held by Stockholder A (NAV per Share Less Investment per Share) | | — | | | $ | (0.02) | | | — | | | $ | (0.09) | | | — | | | $ | (0.33) | | | — | | | $ | (2.00) | | | — | |
| Percentage Dilution to Stockholder A (Dilution per Share Divided by Investment per Share) | | — | | | — | | | (0.24) | % | | — | | | (0.91) | % | | — | | | (3.33) | % | | — | | | (19.98) | % |
The Board of Directors recommends a vote “FOR” the proposal to authorize the Company, with the subsequent approval of its Board of Directors, to issue and sell shares of its common stock (during the 12 months following such authorization) at a price below its then-current net asset value per share in one or more offerings, subject to certain limitations set forth herein (including, without limitation, that the number of shares issued and sold pursuant to such authority does not exceed 30% of the Company’s then-outstanding common stock immediately prior to each such offering).
Required Vote.
Approval of this proposal requires the affirmative vote of each of the following: (1) a majority of the outstanding shares of the Company's common stock; and (2) a majority of the outstanding shares of the Company's common stock that are not held by affiliated persons of the Company. For purposes of this proposal, the 1940 Act defines a "majority of the outstanding shares” as the vote of the lesser of: (1) 67% or more of the voting resultssecurities of the Company present at the Annual Meeting if the holders of more than 50% of the outstanding voting securities of the Company are established.present virtually or represented by proxy; or (2) more than 50% of the outstanding voting securities of the Company. Abstentions and broker non-votes, if any, will have the effect of votes cast against this proposal.
ADDITIONAL INFORMATIONELECTION OF DIRECTORS
HowThe Board of Directors is currently comprised of ten Directors divided into three (3) classes, with terms expiring in 2023, 2024 and when2025. The term of office of Class II Directors ends on the date of the Annual Meeting (or on the date their respective successors are elected and qualify, if later). After providing exceptional service to our Board since August 2021, Dr. Bernard Harris, Jr. will not stand for re-election to the Board at the end of his current term, and therefore, will not stand for re-election at the Annual Meeting. In connection with Dr. Harris's departure, the Board passed a resolution reducing the number of directors that constitutes the full board to nine directors from ten directors, effective as of the close of business on May 4, 2023.
The remaining three Class II Directors of the Company—Steve Byers, Valerie Lancaster-Beal, and John Switzer—have been nominated by the Board of Directors (upon the recommendation of the Nominating and Corporate Governance Committee) for election for a three-year term expiring in 2026. No person being nominated as a Class II Director is being proposed for election pursuant to any agreement or understanding between such person, on the one hand, and the Company or any other person or entity, on the other hand. Each Class II Director has agreed to serve as a director if elected and has consented to be named as a nominee.
Pursuant to the Company's Seventh Amended and Restated Bylaws (the “Bylaws”), a nominee for director is elected to the Board of Directors if the number of votes cast for such nominee’s election exceed the number of votes cast against such nominee’s election. Pursuant to the Company's corporate governance guidelines, incumbent directors must agree to tender their resignation if they fail to receive the required number of votes for re-election, and in such event the Board of Directors will act within 90 days following certification of the stockholder vote to determine whether to accept the director’s resignation. These procedures are described in more detail in the Company's corporate governance guidelines, which are available under “Governance Documents” on the Investor Relations section of the Company's website at https://ir.barings.com/governancedocs. The Board of Directors may I submitconsider any factors it deems relevant in deciding whether to accept a stockholder proposaldirector’s resignation. If a director’s resignation offer is not accepted by the Board of Directors, the Company expects that such director would continue to serve until his or her successor is duly elected and qualifies, or until the director’s earlier death, resignation, or removal. Any such director will be eligible for Triangle’s 2019nomination for election as a director at future Annual Meeting?Meetings.
Our annual meetingThe Board of stockholders generallyDirectors recommends that you vote “FOR” the election of the nominees named in this proxy statement.
In the absence of instructions to the contrary, it is heldthe intention of the persons named as proxies to vote such proxy for the election of all the nominees named below. If any of the nominees should decline or be unable to serve as a director, it is intended that the proxy will be voted for the election of such person or persons who are nominated as replacements. The Board of Directors has no reason to believe that any of the persons named below will be unable or unwilling to serve.
Information about the Nominees for Director and Other Directors
The following chart summarizes the professional experience and additional considerations that contributed to the Nominating and Corporate Governance Committee’s and the Board of Directors’ conclusion that each nominee for Director and other Director should serve on the Board of Directors. The term “Fund Complex” included in Maythe director biographies included in this proxy statement includes the Company, Barings Capital Investment Corporation (“BCIC”) (a non-listed business development company), Barings Private Credit Corporation (“BPCC”) (a perpetually offered non-listed business development company), Barings Global Short Duration High Yield Fund (a closed-end fund), Barings Corporate Investors (a closed-end fund), Barings Participation Investors (a closed-end fund), and Barings Private Equity Opportunities and Commitments Fund (“PEOC”) (a non-diversified, closed-end management investment company). The director information in the following chart is organized by class and, within each class, by “Interested Directors” and “Non-Interested Directors.” “Interested Directors” are “interested persons,” as defined in Section 2(a)(19) of the 1940 Act, of the Company.
NOMINEES FOR CLASS II DIRECTORS
| | | | | | | | | | | | | | | | | |
Name, Address and Age(1) | Position(s) Held with Company | Term and Length of Time Served | Principal Occupations
During Past 5 Years | Number of Portfolios Overseen in Fund Complex (2) | Other Directorships of Public or Registered Investment Companies Held by Director or Nominee for Director During Past 5 Years |
| Non-Interested Directors | | | | | |
Steve Byers(69) | Director | Class II Director; Term expires 2023; Director since February 2022 | Independent Consultant (since 2014). | 1 | Director (since 2011), Chairman (since 2016) Deutsche Bank DBX ETF Trust; Trustee (since 2016), The Arbitrage Funds Trust; Director (2012-2022), Chairman (2012-2022), Sierra Income Corporation. |
| Valerie Lancaster-Beal (68) | Director | Class II Director; Term expires 2023; Director since February 2022 | President and Chief Executive Officer (since 2014), VLB Associates, LLC (management consulting firm providing financial and operational advisory services); Chief Financial Officer (2015-2021), Odyssey Media (marketing and communications company). | 1 | Director (2012-2022), Sierra Income Corporation; Director (since 2012), KIPP NYC; Trustee (2000-2014), City University of New York; Board Member (2006 - 2010), Georgetown University Board of Regents. |
| John A. Switzer (66) | Director | Class II Director; Term expires 2023; Director since August 2018 | Director, Carolina Tractor and Equipment Company (since 2017); Managing Partner (1978-2016), KPMG LLP (registered public accounting firm). | 2 | Director (since March 2021), BCIC; Director and Audit Committee member (since 2019), HomeTrust Bancshares, Inc. |
(1) The business address of each year. We will considernominee for inclusiondirector is 300 South Tryon Street, Suite 2500, Charlotte, NC 28202. The age of each individual is as of the date of the Annual Meeting.
(2) Including the Company.
CLASS III DIRECTORS: TERM EXPIRING 2024
| | | | | | | | | | | | | | | | | |
Name, Address and Age(1) | Position(s) Held with Company | Term and Length of Time Served | Principal Occupations During Past 5 Years | Number of Portfolios Overseen in Fund Complex (2) | Other Directorships of Public or Registered Investment Companies Held by Director or Nominee for Director During Past 5 Years |
| Interested Director | | | | | |
David Mihalick(3) (50) | Director | Class III Director; Term expires 2024; Director since November 2020 | Head of Private Assets (since 2021), Head of U.S. Public Fixed Income and Member of Global Investment Grade Allocation Committee (2019-2021), Head of U.S. High Yield and Member of Global High Yield Allocation Committee (2017-2021), U.S. High Yield Research Analyst and Portfolio Manager (2008-2017), Barings LLC (global asset manager). | 5 | Director (since March 2021), BCIC; Trustee (since 2020), Barings Global Short Duration High Yield Fund (closed-end investment company advised by Barings); Trustee (since 2022), Barings Corporate Investors (a closed-end fund advised by Barings); Trustee (since 2022), Barings Participation Investors (a closed-end fund advised by Barings); Trustee (2020-2021), Barings Funds Trust (open-end investment company advised by Barings until 2021. |
| | | | | | | | | | | | | | | | | |
| Non-Interested Directors | | | | | |
Thomas W. Okel (60)
| Director | Class III Director; Term expires 2024; Director since August 2018 | Executive Director (2011 - 2019), Catawba Lands Conservancy; Global Head of Syndicated Capital Markets (1989-2010), Bank of America Merrill Lynch. | 5 | Trustee (since 2022), PEOC; Director (since 2021), BPCC; Director (since 2020), BCIC; Trustee (since 2012), Barings Global Short Duration High Yield Fund (closed-end investment company advised by Barings); Trustee (since 2015), Horizon Funds (mutual fund complex); Trustee (2013-2021), Barings Funds Trust (open-end investment company advised by Barings until 2021). |
Jill Olmstead (59)
| Director | Class III Director; Term expires 2024; Director since August 2018 | Chief Human Resources Officer, (since 2018), LendingTree, Inc.; Founding Partner (2010-2018), Spivey & Olmstead, LLC (talent and leadership consulting firm). | 5 | Trustee (since 2022), PEOC; Director (since 2021), BPCC; Trustee (since Aug. 2021), Barings Global Short Duration High Yield Fund (closed-end investment company advised by Barings); Director (since 2020), BCIC. |
(1) The business address of each director is 300 South Tryon Street, Suite 2500, Charlotte, NC 28202. The age of each individual is as of the date of the Annual Meeting.
(2) Including the Company.
(3) Interested Director due to affiliations with Barings LLC.
CLASS I DIRECTORS: TERM EXPIRING 2025 | | | | | | | | | | | | | | | | | |
Name, Address and Age(1) | Position(s) Held with Company | Term and Length of Time Served | Principal Occupations During Past 5 Years | Number of Portfolios Overseen in Fund Complex (2) | Other Directorships of Public or Registered Investment Companies Held by Director or Nominee for Director During Past 5 Years |
| Interested Director | | | | | |
Eric Lloyd(3) (54) | Chief Executive Officer and Executive Chairman of the Board of Directors | Class I Director; Term Expires 2025; Director since August 2018 | President (since 2021), Global Head of Private Assets (2020-2021), Deputy Head of Global Markets & Head of Private Fixed Income (2019-2020), Head of Global Private Finance (2013-2019), Barings LLC (global asset manager). | 3 | Director (since 2020), Chairman (since 2021), BCIC; Director (Chairman) (since 2021), BPCC. |
| Non-Interested Directors | | | | | |
| Mark F. Mulhern (63) | Director | Class I Director; Term Expires 2025; Director since October 2016 (Triangle Capital) | Executive Vice President and Chief Financial Officer (2014 - 2022), Highwood Properties, Inc. (publicly traded real estate investment trust). | 5 | Trustee (since 2022), PEOC; Director (since 2021), BPCC; Trustee (since 2021), Barings Global Short Duration High Yield Fund (closed-end investment company advised by Barings); Director (since 2020), Intercontinental Exchange (NYSE: ICE); Director (since 2020), ICE Mortgage Technology; Director (since 2020), BCIC; Director (since 2015), McKim and Creed (engineering service firm); Director and Audit Committee member (2012-2014), Highwood Properties (real estate investment trust); Director (2015-2017), Azure MLP (midstream oil and gas). |
| | | | | | | | | | | | | | | | | |
Robert Knapp(57) | Director | Class I Director; Term Expires 2025; Director since December 2020 | Chief Investment Officer (since 2007), Ironsides Partners LLC (investment management firm). | 1 | Director (since 2007), Africa Opportunity Fund Ltd.; Director (since 2010), Pacific Alliance Asia Opportunity Fund and Pacific Alliance Group Asset Management Ltd.; Director (since 2010), Sea Education Association; Director (since 2015), Mass Eye & Ear; Director (since 2016), Children's School of Science; Director (since 2017), Lamington Road DAC (successor to Emergent Capital Inc.); Director (since 2018), Okeanis Eco Tankers Corp.; Director (2003-2020), MVC Capital; Director (2017-2018), MPC Container Ships; Director (2012-2019), Castle Private Equity. |
(1) The business address of each director is 300 South Tryon Street, Suite 2500, Charlotte, NC 28202. The age of each individual is as of the date of the Annual Meeting.
(2) Including the Company.
(3) Interested Director due to affiliations with Barings LLC.
Qualifications of Director Nominees and Other Directors.
The following provides an overview of the considerations that led the Nominating and Corporate Governance Committee and the Board of Directors to recommend and approve the election or appointment of the individuals serving as a Director or nominee for Director. Each of the Directors has demonstrated superior credentials and recognition in our proxyhis or her respective field and the relevant expertise and experience upon which to be able to offer advice and guidance to the Company’s management. In recommending the election or appointment of the Board members or nominees, the Nominating and Corporate Governance Committee generally considers certain factors including the current composition of the Board of Directors, overall business expertise, gender, cultural and racial diversity, whether the composition of the Board of Directors contains a majority of independent directors as determined under the NYSE listing standards and the 1940 Act, the candidate’s character and integrity, whether the candidate possesses an inquiring mind, vision and the ability to work well with others, conflicts of interest interfering with the proper performance of the responsibilities of a director, a candidate’s overall business experience, what type of diversity he or she brings to the Board of Directors, whether the candidate has sufficient time to devote to the affairs of the Company, including consistent attendance at Board of Directors and committee meetings and advance review of materials and whether each candidate can be trusted to act in the best interests of the Company and its stockholders.
Nominees for Class II Directors; Term expiring at the 2023 Annual Stockholder Meeting
•Mr. Byers — Mr. Byers is a senior executive with over 30 years of leadership experience in finance, operations and control, investment management and capital markets with leading national firms in asset management, banking and brokerage. Mr. Byers serves as the Independent Chairman of the Board of Directors of Deutsche Bank DBX ETF Trust and as a member of the audit and nominating committees. Since 2016, Mr. Byers has also served as a board member of the Mutual Fund Directors Forum, an independent, non-profit organization serving independent directors of U.S. funds registered with the Securities and Exchange Commission under the 1940 Act. Mr. Byers served as an Independent Director and Chairman of Sierra Income Corporation, a non-traded business development company (BDC) sponsored by Medley LLC (NYSE:MCC), from 2012 to 2022. Sierra Income merged with Barings BDC, Inc. in February, 2022, in connection with which Mr. Byers was appointed to the Board of Directors of Barings BDC, Inc. From 2002 to 2012, Mr. Byers also served as Trustee for the College of William and Mary Graduate School of Business. Since 2014, Mr. Byers has been engaged periodically as an independent consultant to provide expert reports and opinions in financial and investment related matters. From 2000 to 2006, Mr. Byers served as an investment executive with Dreyfus Corporation and served as Vice Chairman, Executive Vice President, Chief Investment Officer, member of the Board of Directors and Executive Committee, and fund officer of 90 investment companies, responsible for investment performance of approximately $200 billion in assets under management. Prior to joining Dreyfus Corporation, Mr. Byers served in executive positions at PaineWebber Group from 1986 to 1997, and served in such capacities as chairman of the Investment Policy and Risk Oversight Committee, Capital Markets Director of Risk and Credit Management, and was NASD registered as General Principal, Financial and Operations Principal and Branch Principal. Prior to PaineWebber, Mr. Byers was an executive at Citibank/Citicorp from 1979 to 1986. Mr. Byers received his M.B.A. in Finance from Roth Graduate School of Business, Long Island University and his B.A. in Economics from Long Island University. In December 2014, Mr. Byers was recognized by the National Association of Corporate Directors as a Board Leadership Fellow.
•Ms. Lancaster-Beal — Ms. Lancaster-Beal is a financial professional with extensive management and board level experience in corporate governance, credit and financial analysis. Ms. Lancaster-Beal is the President and Chief Executive Officer of VLB Associates, a management consulting firm she founded in January 2014 that provides financial and operational advisory services to middle-market businesses, investment firms and non-profit organizations. In this capacity, she previously served as the Chief Financial Officer of Odyssey Media from 2015 to 2021, and as the Chief Administrative and Finance Director of Data Capital Management from 2015 to 2017. Prior to this, she served as Managing Director at M.R. Beal & Company, which she co-founded in April 1988, until 2014. Ms. Lancaster-Beal was a Senior Vice President of Drexel Burnham Lambert from 1984 to 1988 and as Vice President of Citicorp
Investment Bank from 1978 to 1984. Ms. Lancaster-Beal served as an Independent Director and Chair of the Nominating and Governance committee and the Audit committee of Sierra Income Corporation, a non-traded business development company (BDC) sponsored by Medley LLC (NYSE:MCC), from 2021 to 2022. Sierra Income merged with Barings BDC, Inc. in February, 2022, in connection with which Ms. Lancaster-Beal was appointed to the Board of Directors of Barings BDC, Inc. Ms. Lancaster-Beal currently serves on the Board of Directors of KIPP NYC, a network of free, public charter schools. She also previously served as a Trustee on the Board of the City University of New York from 2000 to 2014, where she chaired the Faculty, Staff and Administration Committee and served on the Finance Committee. Additionally, Ms. Lancaster-Beal served on the Board of Regents of Georgetown University from 2006 to 2010. Ms. Lancaster-Beal holds a B.A. in Economics from Georgetown University and an M.B.A. from the Wharton School of Business of the University of Pennsylvania.
•Mr. Switzer — Mr. Switzer brings over 35 years of public accounting firm experience to the Board. Mr. Switzer has served as a member of the Board of Directors of Barings Capital Investment Corporation (a business development company advised by Barings) since March 2021, and since May 2017, has served as a member of the Board of Directors of Carolina Tractor and Equipment Company (CTE), a large, privately held Southeastern supplier of construction, forestry, paving, and material handling equipment. Since September 2019, Mr. Switzer has also served as a member of the Board of Directors of HomeTrust Bancshares, Inc., a publicly traded regional banking organization, where he also serves on the Audit Committee. Previously, Mr. Switzer served as managing partner of KPMG's Charlotte office (starting in 2009) until retirement in 2016, where he was also the market leader for KPMG’s Carolinas, Florida, and San Juan offices. Prior to these positions, he served as managing partner of KPMG’s Cleveland (1999 to 2007) and Kentucky (Louisville and Lexington) (1988 to 1998) offices. Mr. Switzer currently serves on the boards of The Foundation for the Mint Museum and the National Association of Corporate Directors, Carolinas Chapter. Mr. Switzer is a Certified Public Accountant and holds a B.S. in Accounting from the University of Kentucky.
Directors Continuing in Office
Class III Directors; Term expiring at the 2024 Annual Stockholder Meeting
•Mr. Mihalick — Mr. Mihalick brings over 16 years of experience in the financial services industry. He is Barings LLC's Head of Private Assets, managing the firm's global private assets businesses, including global direct lending, private placement and infrastructure debt, private structured finance, funds and co-investments and private equity real assets. He is also a member of Barings LLC's Senior Leadership Team. Prior to his current role, Mr. Mihalick served as Head of U.S. Public Fixed Income and Head of U.S. High Yield, where he was responsible for the U.S. High Yield and Investment Grade Investment Groups. Prior to joining Barings LLC in 2008, he was a Vice President with Wachovia Securities Leveraged Finance Group. At Wachovia (now Wells Fargo) he was responsible for sell-side origination of leveraged loans and high yield bonds to support both corporate and private equity issuers. Prior to entering the financial services industry, he served as an officer in the United States Air Force and worked in the telecommunications industry for 7 years. Mr. Mihalick serves as a trustee or director of Barings Capital Investment Corporation, a business development company advised by Barings, Barings Global Short Duration High Yield Fund, a closed-end investment company advised by Barings, Barings Corporate Investors and Barings Participation Investors, both closed-end funds advised by Barings. Mr. Mihalick holds a B.S. from the United States Air Force Academy, an M.S. from the University of Washington and an M.B.A. from Wake Forest University.
•Mr. Okel — Mr. Okel brings over 20 years of experience in the underwriting, structuring, distribution and trading of debt used for corporate acquisitions, leveraged buyouts, recapitalizations and refinancings. He previously served as Executive Director of Catawba Lands Conservancy, a non-profit land trust. Prior to joining Catawba Lands Conservancy, he served as Global Head of Syndicated Capital Markets at Bank of America Merrill Lynch, where he managed capital markets, sales, trading and research for the United States, Europe, Asia and Latin America from 1989 to 2010. He currently serves as trustee or director of several public companies and non-profit organizations, including Barings Private Credit Corporation and Barings Capital Investment Corporation (both business development companies advised by Barings);
Barings Global Short Duration High Yield Fund, a closed-end investment company advised by Barings; Barings Private Equity Opportunities and Commitments Fund, a non-diversified, closed-end management investment company advised by Barings; and is Chairman of the Board of Directors of Horizon Funds, a mutual fund complex. Mr. Okel holds a Bachelor of Arts in Economics from Davidson College and a Masters of Management, Finance, Accounting and Marketing from Kellogg School of Management, Northwestern University.
•Ms. Olmstead — Ms. Olmstead brings over 21 years of senior leadership experience in Human Resources in the financial services industry to her role as the Chair of the Company’s Compensation Committee. She is currently the Chief Human Resources Officer at LendingTree, Inc. and was a Founding Partner of Spivey & Olmstead, LLC, a Talent and Leadership Consulting firm with expertise in the fields of executive development and talent management founded in June 2010. She also currently serves on the boards of Barings Private Credit Corporation and Barings Capital Investment Corporation (both business development companies advised by Barings); Barings Global Short Duration High Yield Fund, a closed-end investment company advised by Barings; and Barings Private Equity Opportunities and Commitments Fund, a non-diversified, closed-end management investment company advised by Barings. The Board benefits from her experience with C-suite executives in helping lead companies' efforts on talent strategies, including succession planning, building strong performance cultures, and diversity and inclusion work. She has a strategic and pragmatic approach to talent management with an eye toward bottom line results. In her capacity as Managing Director (2006 to 2009) and Executive Vice President (2000 to 2006) at Wachovia Corporation (now Wells Fargo) she was both the Head of Human Resources for the Corporate and Investment Bank and the Head of Human Resources for the International Businesses. Prior to this, she formed and led the Leadership Practices Group at Wachovia to create and implement a company-wide talent management process that identified, developed, tracked and promoted high potential leaders throughout their careers. Ms. Olmstead received a Bachelor of Science at Clemson University and a Masters in Organization Behavior and Development at Fielding University, Santa Barbara, CA.
Class I Directors; Term expiring at the 2025 Annual Stockholder Meeting
•Mr. Lloyd — Mr. Lloyd brings over 30 years of experience in investment management, investment banking, leveraged finance and risk management to the Board. Mr. Lloyd is President of Barings LLC where he leads and manages cross-asset investment teams, corporate strategy, business development, product management, investment business management, research analytics and quant, permanent capital, special situations, marketing and communication. Mr. Lloyd also works closely with all the investment teams at Barings LLC. Prior to his current role, Mr. Lloyd served as Head of Private Assets. Mr. Lloyd has worked in the industry since 1990 and his experience has encompassed leadership positions in investment management, investment banking, leveraged finance and risk management. Prior to joining Barings in 2013, Mr. Lloyd served as Head of Market and Institutional Risk for Wells Fargo, was on Wells Fargo’s Management Committee and was a member of the Board of Directors of Wells Fargo Securities. Before the acquisition of Wachovia, Mr. Lloyd worked in Wachovia’s Global Markets Investment Banking division and served on the division’s Operating Committee where he had various leadership positions, including Head of Wachovia’s Global Leveraged Finance Group. Mr. Lloyd serves as the Chairman of the Board of Directors to Barings Private Capital Corporation and Barings Capital Investment Corporation, both business development companies advised by Barings. Mr. Lloyd holds a B.S. in Finance from the University of Virginia's McIntire School of Commerce.
•Mr. Mulhern — Mr. Mulhern brings significant public company experience, both as a senior executive and as a board member. From September 2014 until his retirement on January 1, 2022, he served as Executive Vice President and Chief Financial Officer of Highwoods Properties, Inc., a Raleigh, North Carolina based publicly-traded real estate investment trust. Prior to joining Highwoods, Mr. Mulhern served as Executive Vice President and Chief Financial Officer of Exco Resources, Inc. Prior to Exco, he served as Senior Vice President and Chief Financial Officer of Progress Energy, Inc. from 2008 until its merger with Duke Energy Corporation in 2012. He joined Progress Energy in 1996 as Vice President and Controller and served in a number of leadership roles at Progress Energy, including Vice President of Strategic Planning, Senior Vice President of Finance and President of Progress Ventures. He also spent eight years at Price
Waterhouse, now known as PwC. Mr. Mulhern previously served on the Highwoods Board of Directors and Audit Committee from January 2012 through August 2014. He currently serves on the boards of Barings Private Credit Corporation and Barings Capital Investment Corporation, both business development companies advised by Barings); Barings Global Short Duration High Yield Fund, a closed-end investment company advised by Barings; and Barings Private Equity Opportunities and Commitments Fund, a non-diversified, closed-end management investment company advised by Barings. Additionally, Mr. Mulhern serves on the board of the Intercontinental Exchange, a Fortune 500 company and provider of marketplace infrastructure, data service and technology solutions to a broad range of customers. He also serves on the board of Ellie Mae, Inc., the operating company of ICE Mortgage Technology, both of which are subsidiaries of Intercontinental Exchange. Mr. Mulhern also currently serves on the board of McKim and Creed, a North Carolina based professional engineering services firm. Mr. Mulhern is a Certified Public Accountant and is a graduate of St. Bonaventure University.
•Mr. Knapp — Mr. Knapp brings over 25 years of experience in the financial services industry to the Board. He is the Founder and Chief Investment Officer of Ironsides Partners LLC, a Boston-based investment manager specializing in closed-end funds, holding companies, and asset value investing generally. Ironsides and related entities serve as the manager and general partner to various funds and managed accounts for institutional clients. Mr. Knapp is also a director of Okeanis Eco Tankers, the Pacific Alliance Asia Opportunity Fund and its related entities and Pacific Alliance Group Asset Management Ltd., based in Hong Kong, and Lamington Road DAC, the successor to Emergent Capital. He is a principal and director of Africa Opportunity Partners Limited, a Cayman Islands company that serves as the investment manager to Africa Opportunity Fund Limited. Additionally, Mr. Knapp serves as a member of the Board of Managers of Veracity Worldwide LLC. Mr. Knapp previously served as the Lead Independent Director of MVC Capital, Inc. until completion of its merger with the Company in December 2020 and was previously an independent, nonexecutive director of Castle Private Equity AG and MPC Container Ships. He also acted as Managing Director for over ten years at Millennium Partners in New York. In the non-profit sector, Mr. Knapp serves as a director of the Massachusetts Eye and Ear Infirmary, and is a Trustee of the Children’s School of Science and the Sea Education Association, both based in Woods Hold, Massachusetts.
COMPENSATION DISCUSSION
The Company’s executive officers are employees of Barings and do not receive any direct compensation from the Company. Barings serves as our external investment adviser and manages the Company’s investment portfolio under the terms of a second amended and restated investment advisory agreement (the "Advisory Agreement"), in connection with which the Company pays Barings a base management fee and an incentive fee, the details of which are disclosed in the Company’s annual report on Form 10-K for the fiscal year ended December 31, 2022, which is being mailed to stockholders along with this proxy statement.
The Company’s day-to-day investment operations are managed by Barings and services necessary for its business, including the origination and administration of its investment portfolio are provided by individuals who are employees of Barings, as investment adviser and administrator, pursuant to the terms of the Advisory Agreement and an administration agreement (the "Administration Agreement"). The Company reimburses Barings, in its capacity as administrator, for the costs and expenses incurred by it in performing its obligations and providing personnel and facilities under the Administration Agreement in an amount to be negotiated and mutually agreed to by the Company and Barings quarterly in arrears. In no event will the agreed-upon quarterly expense amount exceed the amount of expenses that would otherwise be reimbursable by the Company under the Administration Agreement for the applicable quarterly period, and Barings will not be entitled to the recoupment of any amounts in excess of the agreed-upon quarterly expense amount. The costs and expenses incurred by Barings on our behalf under the Administration Agreement include, but are not limited to:
▪the allocable portion of Barings' rent for the Company’s Chief Financial Officer and Chief Compliance Officer and their respective staffs, which is based upon the allocable portion of the usage thereof by such personnel in connection with their performance of administrative services under the Administration Agreement;
▪the allocable portion of the salaries, bonuses, benefits and expenses of the Company’s Chief Financial Officer and Chief Compliance Officer and their respective staffs, which is based upon the allocable portion of the time spent by such personnel in connection with performing administrative services for the Company under the Administration Agreement;
▪the actual cost of goods and services used for the Company and obtained by Barings from entities not affiliated with the Company, which is reasonably allocated to the Company on the basis of assets, revenues, time records or other methods conforming with generally accepted accounting principles;
▪all fees, costs and expenses associated with the engagement of a sub-administrator, if any; and
▪costs associated with (a) the monitoring and preparation of regulatory reporting, including registration statements and amendments thereto, prospectus supplements, and tax reporting, (b) the coordination and oversight of service provider activities and the direct cost of such contractual matters related thereto and (c) the preparation of all financial statements and the coordination and oversight of audits, regulatory inquiries, certifications and sub-certifications.
DIRECTOR COMPENSATION
The Company's directors are divided into two groups — Interested Directors and Independent Directors. Interested Directors are “interested persons” as defined in Section 2(a)(19) of the 1940 Act. During 2022,Interested Directors did not receive any compensation from the Company for their service as members of the Board of Directors. The compensation table below sets forth compensation that the Company's Independent Directors earned during the year ended December 31, 2022.
| | | | | | | | | | | | | | | | | | | | |
| Name | | Fees Earned
or Paid in
Cash | | All Other Compensation(1) | | Total |
| Mark Mulhern | | $ | 130,000 | | | $ | — | | | $ | 130,000 | |
| John A. Switzer | | $ | 120,000 | | | $ | — | | | $ | 120,000 | |
| Thomas W. Okel | | $ | 130,000 | | | $ | — | | | $ | 130,000 | |
| Jill Olmstead | | $ | 120,000 | | | $ | — | | | $ | 120,000 | |
| Robert Knapp | | $ | 120,000 | | | $ | — | | | $ | 120,000 | |
Steve Byers(2) | | $ | 90,000 | | | $ | — | | | $ | 90,000 | |
Valerie Lancaster-Beal(2) | | $ | 90,000 | | | $ | — | | | $ | 90,000 | |
(1) All other compensation includes reimbursement of out-of-pocket expenses
(2) Each of Mr. Byers and Ms. Lancaster-Beal became a director of the Company effective February 25, 2022, immediately after the closing of the Company's merger with Sierra Income Corporation.
Director Fees
Each Independent Director of the Board of Directors is paid an annual board retainer of $120,000, payable by the Company in quarterly installments, and the Board’s lead independent director and the chair of the Board’s Audit Committee will each receive an additional $10,000 annual retainer in recognition of the increased responsibilities associated with each such position.
In addition, the Company reimburses Independent Directors for any out-of-pocket expenses related to their service as members of the Board of Directors. The Independent Directors of the Board of Directors do not receive any stock-based compensation for their service as members of the Board of Directors. The Company's Interested Directors do not receive any compensation from the Company for their service as members of the Board of Directors.
CORPORATE GOVERNANCE
Director Independence
The Board of Directors has a majority of directors who are independent under the listing standards of the New York Stock Exchange (“NYSE”). The NYSE Listed Company Rules provide that a director of a BDC shall be considered to be independent if he or she is not an "interested person" of the Company, as defined in Section 2(a)(19) of the 1940 Act. Section 2(a)(19) of the 1940 Act defines an "interested person" to include, among other things, any person who has, or within the last two years had, a material business or professional relationship with the Company.
The Board of Directors has determined that Mses. Olmstead and Lancaster-Beal and Messrs. Mulhern, Okel, Switzer, Knapp, and Byers are independent (or not “interested persons” of the Company). Based upon information requested from each such director concerning his or her background, employment and affiliations, the Board of Directors has affirmatively determined that none of the independent directors has a material business or professional relationship with the Company, other than in his or her capacity as a member of the Board of Directors or any committee thereof. None of the members of the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee are "interested persons," as defined in Section 2(a)(19) of the 1940 Act, of the Company.
Meetings of the Board of Directors and Committees
In 2022, the Board of Directors held five meetings of the Board of Directors, as well as four Audit Committee meetings, one Compensation Committee meeting, and one Nominating and Corporate Governance Committee meetings. During 2022, none of the members of the Board of Directors attended less than 75% of the aggregate number of meetings of the Board of Directors and of the respective committees on which they served.
Each of the Company's directors makes a diligent effort to attend all board and committee meetings, as well as each Annual Meeting of Stockholders, stockholder proposals that are received atStockholders. We encourage, but do not require, our executive offices,directors to attend annual meetings of stockholders. All members of the then-constituted Board of Directors attended the Company's 2022 Annual Meeting of Stockholders.
Audit Committee
The Company has a separately designated standing Audit Committee, as defined in writing, no later than 5:00 p.m. (Eastern Time) on November 1, 2018, and that comply with all applicable requirementsSection 3(a)(58)(A) of Rule 14a-8 promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Audit Committee is responsible for oversight matters, financial statement and disclosure oversight matters, matters relating to the hiring, retention and oversight of the Company’s independent registered public accounting firm, reviewing the plans, scope and results of the audit engagement with the Company’s independent registered public accounting firm, approving professional services provided by the Company’s independent registered public accounting firm, reviewing the independence of the Company’s independent registered public accounting firm, reviewing the integrity of the audits of the financial statements and reviewing the adequacy of the Company’s internal accounting controls. The Audit Committee also assists our Board of Directors in establishing and monitoring the application of the valuation policies used for determining the fair value of the Company’s investments that are not publicly traded or for which current market values are not readily available.
The Audit Committee Charter is publicly available under “Governance Documents” on the Investor Relations section of the Company’s website at https://ir.barings.com/governance-docs. The contents of the Company’s website are not intended to be incorporated by reference into this proxy statement or in any other report or document it files with the SEC, and any references to the Company’s website are intended to be inactive textual references only.
The members of the Company’s Audit Committee are Messrs. Mulhern, Okel, Switzer, Knapp and Byers and Mses. Olmstead and Lancaster-Beal. Mr. Mulhern serves as the chairman of the Audit Committee. The Board of Directors has determined that Mr. Mulhern is an “audit committee financial expert” as defined under Item 407(d)(5) of Regulation S-K of the Exchange Act.Act and that all members of the Audit Committee are financially literate under NYSE listing standards. The Board of Directors also has determined that each of Messrs. Mulhern, Okel, Switzer,
In addition, any stockholder who wishes to propose a nominee
Knapp, and Byers and Mses. Olmstead and Lancaster-Beal meet the current independence requirements of Rule 10A-3 of the Exchange Act and NYSE listing standards.
Compensation Committee
The Compensation Committee is responsible for determining, or recommending to the Board of Directors for approval, the compensation of the Company’s independent directors; determining, or proposerecommending to the Board of Directors for determination, the compensation, if any, of the Company’s chief executive officer and all other executive officers of the Company; and assisting the Board of Directors with matters related to compensation generally.
In connection with reviewing, and recommending to the Board of Directors, the compensation of the independent directors, the Compensation Committee evaluates the independent directors’ performance in light of goals and objectives relevant to the independent directors and sets independent directors’ compensation based on such evaluation and such other factors as the Compensation Committee deems appropriate and in the best interests of the Company (including the cost to the Company of such compensation and a review of data of comparable business to be considereddevelopment companies).
Currently none of the Company’s executive officers is compensated by the stockholders (other thanCompany and, as a stockholder proposalresult, the Compensation Committee does not produce and/or review a report on executive compensation practices. The Compensation Committee also has the authority to be included in our proxy materials pursuantengage compensation consultants, legal counsel or other advisors (each, a “Consultant”) following consideration of certain factors related to Rule 14a-8such Consultants’ independence and has the authority to form and delegate any of its responsibilities to a subcommittee of the Exchange Act) must complyCompensation Committee. The Compensation Committee Charter is available under “Governance Documents” on the Investor Relations section of our website at https://ir.barings.com/governance-docs.
The members of the Compensation Committee are Messrs. Mulhern, Okel, Switzer, Knapp and Byers, and Mses. Olmstead and Lancaster-Beal, each of whom is not an "interested person" for purposes of Section 2(a)(19) of the 1940 Act and is independent under the applicable NYSE corporate governance listing standards. Ms. Olmstead serves as the chair of the Compensation Committee. No members of the Compensation Committee during 2022 had any relationship with the advance notice provisionsCompany requiring disclosure under Item 404 of Regulation S-K under the Exchange Act.
Compensation Committee Interlocks and Insider Participation
No interlocking relationship, as defined by the rules adopted by the SEC, existed during the year ended December 31, 2022 between any member of the Board of Directors or the Compensation Committee and an executive officer of the Company.
Nominating and Corporate Governance Committee
The Nominating and Corporate Governance Committee is responsible for identifying, researching and recommending for nomination directors for election by the Company's stockholders, recommending for appointment nominees to fill vacancies on the Board of Directors or a committee of the Board of Directors, developing and recommending to the Board of Directors a set of corporate governance principles and overseeing the evaluation of the Board of Directors. The Nominating and Corporate Governance Committee’s policy is to consider nominees properly recommended by the Company's stockholders in accordance with the Company's charter, Bylaws and applicable law. For more information on how the Company's stockholders may recommend a nominee for a seat on the Board of Directors, see "Stockholder Nominations and Proposals for the 2024 Annual Meeting" in this proxy statement. The Nominating and Corporate Governance Committee also has the authority to retain, at the Company’s expense, such consultants or advisors as the Committee may deem necessary or appropriate to carry out its duties. The Committee has sole authority to retain or terminate any search firm or individual used to identify any director candidate, including the sole authority to approve the search firm’s fees and retention terms.
The Nominating and Corporate Governance Committee Charter is publicly available under “Governance Documents” on the Investor Relations section of the Company's website at https://ir.barings.com/governance-docs.
The members of the Nominating and Corporate Governance Committee are Messrs. Mulhern, Okel, Switzer, Knapp, and Byers and Mses. Olmstead and Lancaster-Beal, each of whom is not an "interested person" for purposes of Section 2(a)(19) of the 1940 Act and is independent under the NYSE corporate governance listing standards. Mr. Okel serves as the chairman of the Nominating and Corporate Governance Committee. Each nominee for election under Proposal No. 1 at the Annual Meeting was recommended by the members of the Nominating and Corporate Governance Committee to the Board of Directors, which approved such nominees.
Communication with the Board of Directors
Barings BDC, Inc. stockholders and other requirementsinterested parties may communicate with any member of our Sixth AmendedBoard (including the chairman), the chairman of any of our Board committees, or with our non-management directors as a group by sending communications to Barings BDC, Inc., 300 South Tryon St., Suite 2500, Charlotte, North Carolina 28202, or via e-mail to BDCinvestorrelations@barings.com, or by calling the Barings BDC, Inc.’s investor relations department at 1-888-401-1088. All such communications should indicate clearly the director or directors to whom the communication is being sent so that each communication, other than unsolicited commercial solicitations, may be forwarded directly to the appropriate director(s).
The Composition of the Board of Directors and Restated Bylaws,Leadership Structure
The 1940 Act requires that at least a majority of the Company’s directors not be “interested persons” (as defined in the 1940 Act) of the Company. Currently, seven of the Company’s ten directors have been determined to qualify as independent directors (and to not be “interested persons”). However, Mr. Lloyd, our Chief Executive Officer and the President of Barings LLC, and therefore an interested person of the Company, serves as Executive Chairman of the Board of Directors. The Board of Directors believes that it is in the best interests of investors for Mr. Lloyd to lead the Board of Directors because of his role as Chief Executive Officer of the Company and President of Barings LLC and his broad experience with the day-to-day management of cross-asset class investment teams, corporate strategy, business development and product management. In addition, the Board of Directors has designated Mr. Okel as lead independent director to preside over all executive sessions of independent directors. The Board of Directors believes that its leadership structure is appropriate in light of the Company’s characteristics and circumstances because the structure allocates areas of responsibility among the individual directors and the committees in a manner that enhances effective oversight. The Board of Directors also believes that its meeting frequency and governance structure provides ample opportunity for direct communication and interaction between the Board of Directors and the Company’s management.
The Oversight Role of the Board of Directors
The Board of Directors’ role in management of the Company is one of oversight. Oversight of the Company’s investment activities extends to oversight of the risk management processes employed by Barings as part of its day-to-day management of the Company’s investment activities. The Board of Directors reviews risk management processes throughout the year, consulting with appropriate representatives of Barings as necessary and periodically requesting the production of risk management reports or presentations and receiving reports from vendors and service providers regarding cybersecurity threats and incidents. The goal of the Board of Directors’ risk oversight function is to ensure that the risks associated with the Company’s investment activities are accurately identified, thoroughly investigated and responsibly addressed. The Audit Committee (which consists of all the independent directors) is responsible for approving the Company’s independent accountants, reviewing with the Company’s independent accountants the plans and results of the audit engagement, approving professional services provided by the Company’s independent accountants, reviewing the independence of the Company’s independent accountants and reviewing the adequacy of the Company’s internal accounting controls. The Audit Committee also monitors the application of the valuation policies used for determining the fair value of the Company’s investments that are not publicly traded or for which current market values are not readily available. Stockholders should note, however, that the Board of Directors’ oversight function cannot eliminate all risks or ensure that particular events do not adversely affect the value of investments.
In accordance with the 1940 Act, the Company’s directors have adopted and implemented written policies and procedures reasonably designed to prevent violation of the U.S. federal securities laws, and we review these
compliance policies and procedures annually for their adequacy and the effectiveness of their implementation. In addition, we have designated Gregory MacCordy as the Company’s Chief Compliance Officer. As such, Mr. MacCordy is responsible for administering the Company’s compliance program and meeting with the Board of Directors at least annually to assess its effectiveness.
Code of Business Conduct and Ethics and Corporate Governance Guidelines
The Company and Barings are subject to Barings LLC's Global Code of Ethics Policy, and the Company has adopted a set of corporate governance guidelines covering ethics and business conduct. These documents apply to the Company's directors and officers, among other Barings employees. Barings LLC's Global Code of Ethics Policy and the Company's corporate governance guidelines are available on the Investor Relations section of the Company's website at https://ir.barings.com/governance-docs. Any material amendments to or waivers of a required provision of the Barings LLC Global Code of Ethics Policy and/or the Company's corporate governance guidelines will be reported on our Bylaws,website and/or in a copyCurrent Report on Form 8-K within four business days of whichthe amendment or waiver.
Under Barings LLC's Global Code of Ethics Policy, officers, directors and certain employees of Barings must first obtain pre-clearance from Barings' compliance department before trading in the Company's securities. In addition, the Company's Insider Trading Policy includes restrictions that prohibit directors and officers of the Company from, among other things, engaging in short sales or hedging transactions with respect to the Company's securities, including through the use of financial instruments such as prepaid variable forward contracts, equity swaps, collars and exchange funds.
EXECUTIVE OFFICERS AND INVESTMENT COMMITTEE
The Company’s officers serve at the discretion of the Board of Directors. The biographical information of each of the Company’s executive officers (in alphabetical order) who is not a director, as well as the Company's Secretary and Chief Compliance Officer, who are not executive officers of the Company, is as follows:
Ian Fowler, 59, is the Company’s President and is Co-Head of Barings LLC’s Global Private Finance Group, as well as a member of the group’s North American, European and Asia-Pacific Private Finance Investment Committees. Mr. Fowler has also served as the President and Chief Executive Officer of BCIC since inception and as Co-Chief Executive Officer of BPCC since May 2021 until being appointed as sole Chief Executive Officer in December 2022. He is responsible for leading a team that originates, underwrites and manages global private finance investments. Mr. Fowler has worked in the industry since 1988 and his experience has encompassed middle market commercial finance, including originating, underwriting and managing senior secured loans, mezzanine and co-investment transactions. Prior to joining Barings LLC in 2012, he was a Senior Managing Director with Harbour Group and co-founded Freeport Financial LLC where he was a member of the Executive Credit Committee and responsible for all business development and capital market initiatives. While at Freeport, he helped build the company into one of the top five non-bank affiliated middle market sponsor finance companies in the United States. Before Freeport, Mr. Fowler was Managing Director and Global Group Leader for GE Capital’s Global Sponsor Finance Group. Prior to GE Capital, Mr. Fowler held various leveraged finance and investment positions with NationsBank and Mellon Bank. Mr. Fowler holds a B.A. (Honors) from the University of Western Ontario and is a member of the CFA Institute.
Jonathan Landsberg, 38, serves as the Company's Chief Financial Officer and is a Managing Director at Barings LLC. He also serves as the Chief Financial Officer and Treasurer of BPCC and the Chief Financial Officer of BCIC. Mr. Landsberg also has roles with several Barings-complex BDC-related joint ventures, including Principal of Jocassee Partners LLC, and a Board member of Banff Partners LP, Thompson Rivers LLC, and Waccamaw River LLC. Mr. Landsberg has worked in the industry since 2006. Prior to joining Barings LLC in 2018, Mr. Landsberg was a Fixed Income Research Analyst at Wells Fargo Securities, covering the bank and specialty finance sectors. Before Wells Fargo, he spent eight years at Merrill Lynch / Bank of America in roles across debt origination and syndicated lending. Mr. Landsberg holds a B.A. degree in Engineering Sciences and Economics from Dartmouth College and is a member of the CFA Institute.
Gregory MacCordy, 63, serves as the Company's Chief Compliance Officer and is a Director at ACA Group (“ACA”). Mr. MacCordy is an experienced compliance, risk and subject matter expert with over 30 years of regulatory and financial services experience. He serves as chief compliance officer or chief risk officer for SEC registered investment advisers and investment companies such as business development companies and interval funds. Prior to ACA, Mr. MacCordy worked at the U.S. Securities & Exchange Commission where he was an Industry Expert and Specialized Compliance Examiner in the Asset Management Unit (Enforcement Division) conducting enforcement investigations of investment companies, investment advisers, and mutual funds in the areas of business development companies, CLOs, private equity, hedge funds, real estate and fixed income trading. Mr. MacCordy also spent 18 years at The Teachers Insurance and Annuity Association of America-College Retired Equity Fund (TIAA) beginning as a securities analyst and ultimately becoming a Managing Director. During his time at TIAA, he was responsible for investment decisions, credit research, valuation and stress testing, regulatory filings, and the development of risk and compliance program policies and procedures. Mr. MacCordy holds a Bachelor of Science and Business Administration in Accounting from University of Missouri and a MBA in Finance from New York University Stern School of Business.
Elizabeth Murray, 45, serves as the Company’s Chief Operating Officer and Chief Accounting Officer and also serves as the Principal Accounting Officer of BCIC and BPCC. She also serves as the Treasurer for PEOC. Ms. Murray previously was the Director of External Reporting for the Company and previously served as the Vice President of Financial Reporting at Triangle Capital Corporation prior to the externalization of the investment management of the Company to Barings LLC. Prior to joining Triangle Capital Corporation in 2012, she worked in Financial Planning and Analysis for RBC Bank, the U.S. retail banking division for Royal Bank of Canada. Prior to RBC Bank, Ms. Murray spent seven years at Progress Energy, Inc. and held various positions in finance, accounting and tax, most recently in Strategy and Financial Planning. Ms. Murray began her career as a Tax Consultant with
PricewaterhouseCoopers. Ms. Murray is a graduate of North Carolina State University where she obtained a B.S. degree in Accounting and a Master of Accounting degree. She is also a North Carolina Certified Public Accountant.
Alexandra Pacini, 30, is the Company's Secretary and a Director at Barings LLC. Ms. Pacini also serves as the Secretary of BCIC, BPCC, Barings Global Short Duration High Yield Fund, PEOC, Barings Corporate Investors and Barings Participation Investors
Ashlee Steinnerd, 41, is the Company’s Chief Legal Officer and the Head of Regulatory at Barings LLC. Ms. Steinnerd also serves as Chief Legal Officer of BCIC, BPCC, Barings Global Short Duration High Yield Fund, Barings Corporate Investors, PEOC, and Barings Participation Investors. Ms. Steinnerd has been a member of the Barings LLC legal team since 2019, advising Barings LLC on file witha variety of regulatory issues. Prior to joining Barings LLC, Ms. Steinnerd was Senior Counsel in the Securities and Exchange Commission’s Office of the Investor Advocate. Ms. Steinnerd held several roles during her tenure at the Securities and Exchange Commission between 2011 and 2019. Ms. Steinnerd holds a B.S. in Applied International Finance and Applied International Economics from the American University of Paris, France and a J.D. from Rutgers School of Law.
Investment Committee
The Company is externally managed by Barings LLC, which is registered with the SEC under the Investment Advisers Act of 1940, as amended. Barings also provides the administrative services necessary for us to operate. Barings, a wholly-owned subsidiary of MassMutual Life Insurance Company (“MassMutual”), is a leading global asset management firm, whose primary investment capabilities include fixed income, private credit, real estate, equity, and alternative investments. Subject to the overall supervision of our Board, a majority of which is made up of directors that are not “interested persons,” as defined in Section 2(a)(19) of the 1940 Act, of the Company or Barings, Barings’ Global Private Finance Group (“Barings GPFG”) manages our day-to-day operations, and provides investment advisory and management services to us. Barings GPFG is part of Barings' $300 billion (as of December 31, 2022) Global Fixed Income Platform that invests in liquid, private and structured credit. Barings GPFG manages private funds and separately managed accounts, along with multiple public vehicles.
Included in Barings GPFG is Barings North American Private Finance Team (the “U.S. Investment Team”), which consists of 51 investment professionals (as of December 31, 2022) located in four offices in the U.S. The U.S. Investment Team provides a full set of solutions to the North American middle market, including revolvers, first and second lien senior secured loans, unitranche structures, mezzanine debt and equity co-investments. The U.S. Investment Team averages over 20 years of industry experience at the Managing Director and Director level.
The Barings North American Private Finance investment committee (the “Investment Committee”), which is responsible for our investment origination and portfolio monitoring activities for middle-market companies in North America, consists of six members: Salman Mukhtar, Managing Director; Terry Harris, Managing Director and Head of Global Private Finance Portfolio Management; Ian Fowler, Managing Director, Fund Portfolio Manager and Co-Head of Global Private Finance; Adam Wheeler, Managing Director, Co-Head of Global Private Finance; Mark Flessner, Managing Director and Fund Portfolio Manager; and Brian Baldwin, Managing Director. Collectively, the Investment Committee has over 160 years of industry experience, and each member averages approximately 27 years of industry experience. A majority of the votes cast at a meeting at which a majority of the members of the Investment Committee is present is required to approve all investments in new middle-market companies.
Terry Harris, Ian Fowler and Adam Wheeler also sit on the European and Asia Pacific Investment Committees, which is responsible for our investment origination and portfolio monitoring activities for middle-market companies in European and Asia-Pacific geographies, affording them a unique relative value perspective across all of Barings' investment geographies. Ian Fowler, Mark Flessner and Brian Baldwin have all worked together at prior firms including GE Capital, Freeport Financial and Harbour Group. Barings believes that the individual and shared experiences of these senior team members provides the Investment Committee with an appropriate balance of shared investment philosophy and difference of background and opinion.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information with respect to the beneficial ownership of the Company's common stock as of March 6, 2023, the record date, by the Company's directors and executive officers, both individually and as a group, and by each person known to the Company to beneficially own 5% or more of the outstanding shares of the Company’s common stock. With respect to persons known to the Company to beneficially own 5% or more of the outstanding shares of the Company’s common stock, the Company bases such knowledge on beneficial ownership filings made by the holders with the SEC and mayother information known to the Company. Other than as set forth in the table below, none of the Company's directors or executive officers are deemed to beneficially own shares of the Company's common stock. Beneficial ownership is determined in accordance with the rules of the SEC and includes voting or investment power with respect to the securities. There is no common stock subject to options or warrants that are currently exercisable or exercisable within 60 days of March 6, 2023. Percentage of beneficial ownership is based on 107,916,166 shares of common stock outstanding as of March 6, 2023. Unless otherwise indicated by footnote, the business address of each person listed below is 300 South Tryon Street, Suite 2500, Charlotte, North Carolina 28202.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Name of Beneficial Owner | | Number of Shares
Beneficially
Owned(1) | | | | Percentage
of Class(2) | | Dollar Range of Equity
Securities Beneficially
Owned(3) |
| Directors and Executive Officers: | | | | | | | | |
| Interested Directors | | | | | | | | |
| Eric Lloyd | | 33,437 | | | | | * | | over $100,000 |
| David Mihalick | | 20,000 | | | | | * | | over $100,000 |
Dr. Bernard Harris, Jr.(4) | | — | | | | | * | | None |
| Non-Interested Directors | | | | | | | | |
| Mark F. Mulhern | | 14,855 | | | | | * | | over $100,000 |
| Thomas W. Okel | | 10,037 | | | | | * | | $50,001 - $100,000 |
| Jill Olmstead | | 4,000 | | | | | * | | $10,001 - $50,000 |
| John A. Switzer | | 6,000 | | | | | * | | $50,001 - $100,000 |
| Robert Knapp | | 361,034 | | | | | * | | over $100,000 |
| Steve Byers | | 20,019 | | | | | * | | over $100,000 |
| Valerie Lancaster-Beal | | — | | | | | * | | None |
| Executive Officers Who Are Not Directors | | | | | | | | |
| Ian Fowler | | — | | | | | * | | None |
| Jonathan Landsberg | | 8,423 | | | | | * | | $50,001 - $100,000 |
| Elizabeth Murray | | 12,982 | | | | | * | | over $100,000 |
| Ashlee Steinnerd | | — | | | | | * | | None |
| All directors and executive officers as a group (14 persons) | | 490,787 | | | | | * | | over $100,000 |
| Five-Percent Stockholders: | | | | | | | | |
| Barings LLC | | 13,639,681 | | | | | 12.6 | % | | over $100,000 |
* Less than 1.0%
(1)Beneficial ownership in this column has been determined in accordance with Rule 13d-3 of the Exchange Act. Except as otherwise noted, each beneficial owner of more than five percent of the Company's common stock and each director and executive officer has sole voting and/or investment power over the shares reported.
(2)Based on a total of 107,916,166 shares issued and outstanding as of March 6, 2023.
(3)Beneficial ownership in this column has been determined in accordance with Rule 16a-1(a)(2) of the Exchange Act. The dollar range of equity securities beneficially owned is based on a stock price of $8.71 per share as of March 6, 2023. Dollar ranges are as follows: None, $1 — $10,000, $10,001 — $50,000, $50,001 — $100,000, or over $100,000.
(4)Dr. Harris will not stand for re-election to the Board at the end of his current term at the Annual Meeting.
DELINQUENT SECTION 16(A) REPORTS
Section 16(a) of the Exchange Act requires the Company’s officers and directors, and persons who own more than 10% of our common stock, to file reports of securities ownership and changes in such ownership with the SEC. Officers, directors, and greater than 10% stockholders also are required by SEC rules to furnish the Company with copies of all Section 16(a) forms they file.
Based solely on the Company’s review of Forms 3, 4 and 5 filed by such persons and information provided by the Company’s directors and officers, the Company believes that during the year ended December 31, 2022, all Section 16(a) filing requirements applicable to such persons were met in a timely manner, with the following inadvertent exception: Steve Byers, one of the Company's directors, failed to timely file a Form 4 with respect to one transaction in shares of our common stock during the reporting period.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Related Party Transactions Policy and Procedure
The Company has procedures in place for the review, approval and monitoring of transactions involving the Company and certain persons related to it. For example, the Company has a code of conduct that generally prohibits any employee, officer or director of the Company from engaging in any transaction where there is a conflict between such individual's personal interest and the interests of the Company. Waivers to the code of conduct can generally only be obtained from our Corporate Secretary upon request. Proposals must be sent to our Corporate Secretary at Triangle Capital Corporation, 3700 Glenwood Avenue, Suite 530, Raleigh, North Carolina 27612. These notice provisions require that nominationsthe Chief Compliance Officer, a majority of persons for election to the Board of Directors and proposals of business to be considered byor the stockholders for the 2019 Annual Meeting of Stockholders must be made in writing and submitted to our Corporate Secretary at the address above no earlier than November 1, 2018 and no later than December 1, 2018. We advise you to review our Bylaws, which contain additional requirements about advance notice of stockholder proposals and director nominations, including the different notice submission date requirements in the event that our 2019 Annual Meeting of Stockholders is held before April 2, 2019 or after June 1, 2019. In accordance with our Bylaws, the chairmanchairperson of the 2019 Annual MeetingAudit Committee and are publicly disclosed as required by applicable law and regulations. In addition, the members of Stockholders may determine, if the facts warrant,Audit Committee oversee, on an ongoing basis, and conduct a prior review of all transactions between the Company and related persons (as defined in Item 404 of Regulation S-K) that a matter has not been properly brought before the meeting and, therefore, may not be considered at the meeting.
If a stockholder is recommending a candidate to serve on the Board of Directors, the recommendation must include all information specified in our Bylaws, including the following:
1. Information as to each individual whom the stockholder proposes to nominate for election or reelection, including all information relating to the candidate that would beare required to be disclosed in the Company's proxy statement.
As a BDC, the Company is also subject to certain regulatory requirements that restrict the Company's ability to engage in certain related-party transactions. The Company has separate policies and procedures that have been adopted to ensure that it does not enter into any such prohibited transactions without seeking necessary approvals, including prohibited transactions under the 1940 Act.
BDCs generally are prohibited under the 1940 Act from knowingly participating in certain transactions with their affiliates without the prior approval of their independent directors and, in some cases, of the U.S. Securities and Exchange Commission (the “SEC”). Those transactions include purchases and sales, and so-called “joint” transactions, in which a BDC and one or more of its affiliates engage in certain types of profit-making activities. Any person that owns, directly or indirectly, 5.0% or more of a BDC’s outstanding voting securities will be considered an affiliate of the BDC for purposes of the 1940 Act, and a BDC generally is prohibited from engaging in purchases or sales of assets or joint transactions with such affiliates, absent the prior approval of the BDC’s independent directors. Additionally, without the approval of the SEC, a BDC is prohibited from engaging in purchases or sales of assets or joint transactions with the BDC’s officers and directors, and investment adviser, including funds managed by the investment adviser and its affiliates.
BDCs may, however, invest alongside certain related parties or their respective other clients in certain circumstances where doing so is consistent with current law and SEC staff interpretations. For example, a BDC may invest alongside such accounts consistent with guidance promulgated by the SEC staff permitting the BDC and such other accounts to purchase interests in a single class of privately placed securities so long as certain conditions are met, including that the BDC’s investment adviser, acting on the BDC’s behalf and on behalf of other clients, negotiates no term other than price. Co-investment with such other accounts is not permitted or appropriate under this guidance when there is an opportunity to invest in different securities of the same issuer or where the different investments could be expected to result in a conflict between the BDC’s interests and those of other accounts.
The 1940 Act generally prohibits BDCs from making certain negotiated co-investments with certain affiliates absent an order from the SEC permitting the BDC to do so. Pursuant to Barings’ existing SEC co-investment exemptive relief under the 1940 Act (the "Exemptive Relief"), the Company is generally permitted to co-invest with funds affiliated with Barings if a "required majority" (as defined in Section 57(o) of the 1940 Act) of the Company's independent directors make certain conclusions in connection with a co-investment transaction, including that (1) the terms of the transaction, including the consideration to be paid, are reasonable and fair to the Company and its stockholders and do not involve overreaching in respect of the Company or its stockholders on the part of any person concerned and (2) the transaction is consistent with the interests of the Company's stockholders and is consistent with the Company's investment objective and strategies. Co-investments made under the Exemptive Relief are subject to compliance with the conditions and other requirements contained in the Exemptive Relief, which could limit the Company’s ability to participate in a co-investment transaction.
The Company’s executive officers and the members of Barings’ Investment Committee, as well as the other principals of Barings, manage other funds affiliated with Barings, including BCIC and BPCC and other closed-end investment companies. In addition, Barings' investment team has responsibilities for managing U.S. and global middle-market debt investments for certain other investment funds and accounts. Accordingly, they have obligations
to investors in those entities, the fulfillment of which may not be in the best interests of, or may be adverse to the interests of, the Company or its stockholders. In addition, certain of the other funds and accounts managed by Barings may provide for higher management or incentive fees, greater expense reimbursements or overhead allocations, or permit Barings and its affiliates to receive higher origination and other transaction fees, all of which may contribute to this conflict of interest and create an incentive for Barings to favor such other funds or accounts. Although the professional staff of Barings will devote as much time to the Company’s management as appropriate to enable Barings to perform its duties in accordance with the Advisory Agreement, the investment professionals of Barings may have conflicts in allocating their time and services among the Company, on the one hand, and the other investment vehicles managed by Barings or one or more of its affiliates on the other hand.
Barings may face conflicts in allocating investment opportunities between the Company and affiliated investment vehicles that have overlapping investment objectives with ours, including BCIC and BPCC. In addition, the Company may not be made aware of and/or be given the opportunity to participate in certain investments made by investment funds which are managed by advisers affiliated with Barings and do not participate in the co-investment program described in the Exemptive Relief. In situations where co-investment with other affiliated funds or accounts is not permitted or appropriate, Barings will need to decide which account will proceed with the investment in accordance with its allocation policies and procedures. Although Barings will endeavor to allocate investment opportunities in a fair and equitable manner in accordance with its allocation policies and procedures, it is possible that, in the future, the Company may not be given the opportunity to participate in investments made by investment funds managed by Barings or an investment manager affiliated with Barings if such investment is prohibited by the Exemptive Relief or the 1940 Act. These restrictions, and similar restrictions that limit the Company's ability to transact business with its officers or directors or their affiliates, including funds managed by Barings, may limit the scope of investment opportunities that would otherwise be available to the Company.
Advisory Agreement
The Company is party to the Advisory Agreement with Barings, in which certain directors and officers of the Company and members of the Investment Committee may have indirect ownership and pecuniary interests. For the year ended December 31, 2022, the base management fee determined in accordance with the terms of the Advisory Agreement was approximately $29.5 million. For the year ended December 31, 2022, the income-based fee determined in accordance with the terms of the Advisory Agreement was approximately $6.6 million.
Administration Agreement
Pursuant to the terms of the Administration Agreement between Barings and the Company, Barings provides the Company with certain administrative and other services necessary to conduct the Company's day-to-day operations. The Company reimburses Barings, in its capacity as administrator, for the costs and expenses incurred and billed to the Company by Barings in performing its obligations and providing personnel and facilities under the Administration Agreement, or such lesser amount as may be agreed to by the Company and Barings from time to time. If the Company and Barings agree to a reimbursement amount for any period which is less than the full amount otherwise permitted under the Administration Agreement, then Barings will not be entitled to recoup any difference thereof in any subsequent period or otherwise. See "Compensation Discussion" above for more information. For the fiscal year ended December 31, 2022, the Company incurred and was invoiced by Barings for expenses of approximately $3.4 million under the terms of the Administration Agreement.
Barings Credit Support Agreements
In connection with the solicitationCompany’s merger with MVC Capital, Inc., the Company entered into a Credit Support Agreement (the “MVC Capital Credit Support Agreement”) with Barings, pursuant to which Barings has agreed to provide credit support to the Company in the amount of proxies forup to $23.0 million relating to the electionnet cumulative realized and unrealized losses on the acquired MVC Capital, Inc. investment portfolio over a 10-year period. The MVC Capital Credit Support Agreement is intended to give stockholders of the candidate as a directorcombined company following the merger of the Company and MVC Capital, Inc. downside protection from net cumulative realized and unrealized losses on the acquired MVC Capital, Inc. portfolio and insulate the combined company’s stockholders from potential value volatility and losses in an election contest (even if an election contestMVC Capital, Inc.’s portfolio following the closing of the merger. There is not involved),no fee or would otherwise be required in connection with such solicitation, in each case pursuantother
payment by the Company to Regulation 14A (or any successor provision) under the Exchange Act and its rules (including the candidate’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected).
2. As to the stockholder giving the notice, any candidate and any stockholder associated person (a “stockholder associated person” is a person who acts in concert with the stockholder giving notice, beneficially owns Triangle’s securities with such stockholder (other than a stockholder that is a depository) or directly or indirectly controls, or is controlled by, or is under common control with such stockholder):
the class, series and number of all shares of stock or other securities of TriangleBarings or any of its affiliates in connection with the MVC Capital Credit Support Agreement. Any cash payment from Barings to the Company under the MVC Capital Credit Support Agreement will be excluded from the incentive fee calculations under the Advisory Agreement.
In connection with the Company’s merger with Sierra Income Corporation, the Company entered into a Credit Support Agreement (the “SIC Credit Support Agreement”) with Barings, pursuant to which are owned (beneficially or of record) by such stockholder, candidate or stockholder associated person;
Barings has agreed to provide credit support to the date on which each security of Triangle was acquired and the investment intent of such acquisition, and any short interest (including any opportunity to profit or share in any benefit from any decreaseCompany in the priceamount of such stockup to $100.0 million relating to the net cumulative realized and unrealized losses on the acquired Sierra Income Corporation investment portfolio over a 10-year period. The SIC Credit Support Agreement is intended to give stockholders of the combined company following the merger of the Company and Sierra Income Corporation downside protection from net cumulative realized and unrealized losses on the acquired Sierra Income Corporation portfolio and insulate the combined company’s stockholders from potential value volatility and losses in Sierra Income Corporation’s portfolio following the closing of the merger. There is no fee or other security) in any such security of any such person;
payment by the candidate holder for, and number of, any security of Triangle owned beneficially but not of record by such stockholder, candidate or stockholder associated person;
whether and the extentCompany to which such stockholder, candidate or stockholder associated person, directly or indirectly, is subject to or during the last six months has engaged in any hedging, derivative or other transaction or series of transactions or entered into any other agreement, arrangement or understanding (including any short interest, any borrowing or lending of securities or any proxy or voting agreement),
the effect or intent of which is (1) to manage risk or benefit of changes in the price of any security of Triangle or the security of any entity that was listed in the peer group in the stock performance graph in the most recent annual report to security holders of Triangle (a "peer group company) for such stockholder, candidate or stockholder associated person or (2) to increase or decrease the voting power of such stockholder, candidate or stockholder associated person in TriangleBarings or any of its affiliates (or, as applicable, in any peer group company) disproportionatelyconnection with the SIC Credit Support Agreement. Any cash payment from Barings to the Company under the SIC Credit Support Agreement will be excluded from the incentive fee calculations under the Advisory Agreement.
August 2020 Note Purchase Agreement
On August 3, 2020, the Company entered into a Note Purchase Agreement (the “August 2020 NPA”) with Massachusetts Mutual Life Insurance Company, which wholly-owns Barings, governing the issuance of (1) $50.0 million in aggregate principal amount of Series A senior unsecured notes due August 2025 (the “Series A Notes due 2025”) with a fixed interest rate of 4.66% per year, and (2) up to $50.0 million in aggregate principal amount of additional senior unsecured notes due August 2025 with a fixed interest rate per year to be determined (the “Additional Notes” and, collectively with the Series A Notes due 2025, the “August 2025 Notes”), in each case, to qualified institutional investors in a private placement. The Company issued an aggregate principal amount of $25.0 million of the Series A Notes due 2025 on September 24, 2020 and an aggregate principal amount of $25.0 million of the Series A Notes due 2025 on September 29, 2020, both of which will mature on August 4, 2025 unless redeemed, purchased or prepaid prior to such person’s economic interestdate in Triangle’s securities (or, as applicable,accordance with their terms. Interest on the August 2025 Notes is due semiannually in any peer group company);
any substantial interest, direct or indirect,March and September of each year, beginning in March 2021. The August 2025 Notes are guaranteed by security holdings or otherwise,certain of such stockholder, candidate or stockholder associated person, in Triangle or anythe Company’s subsidiaries and are the Company’s general unsecured obligations that rank pari passu with all outstanding and future unsecured unsubordinated indebtedness issued by the Company. Upon the occurrence of its affiliates, other than an interest arising fromevent of default, the ownership of any security of Triangle where such stockholder, candidate or stockholder associated person receives no extra or special benefit not shared on a pro rata basis by all other holders of at least 66-2/3% in principal amount of the same class August 2025 Notes at the time outstanding may declare all August 2025 Notes then outstanding to be immediately due and payable.
On November 4, 2020, the Company amended the August 2020 NPA to reduce the aggregate principal amount of unissued Additional Notes from $50.0 million to $25.0 million. The Company's permitted issuance period for the Additional Notes under the August 2020 NPA expired on February 3, 2022, prior to which date the Company had issued no Additional Notes.
November 2020 Note Purchase Agreement
On November 4, 2020, the Company entered into a Note Purchase Agreement (the “November 2020 NPA”) governing the issuance of (1) $62.5 million in aggregate principal amount of Series B senior unsecured notes due November 2025 (the “Series B Notes”) with a fixed interest rate of 4.25% per year and (2) $112.5 million in aggregate principal amount of Series C senior unsecured notes due November 2027 (the “Series C Notes” and, collectively with the Series B Notes, the “November Notes”) with a fixed interest rate of 4.75% per year, in each case, to qualified institutional investors in a private placement. Each stated interest rate is subject to a step up of (x) 0.75% per year, to the extent the applicable November Notes do not satisfy certain investment grade conditions and/or series;(y) 1.50% per year, to the extent the ratio of the Company’s secured debt to total assets exceeds specified thresholds, measured as of each fiscal quarter end. The November Notes were delivered and paid for on November 5, 2020.
whetherThe Series B Notes will mature on November 4, 2025, and the Series C Notes will mature on November 4, 2027 unless redeemed, purchased or prepaid prior to such stockholder believes any candidatedate by the Company in accordance with their terms. Interest on the November Notes is due semiannually in May and November, beginning in May 2021. The November Notes are
guaranteed by certain of the Company’s subsidiaries, and are the Company's general unsecured obligations that rank pari passu with all outstanding and future unsecured unsubordinated indebtedness issued by the Company.
Barings’ parent company, Massachusetts Mutual Life Insurance Company, holds $25.0 million in aggregate principal amount of the Series B Notes.
February 2021 Note Purchase Agreement
On February 25, 2021, the Company entered into a Note Purchase Agreement (the “February 2021 NPA”) governing the issuance of (1) $80.0 million in aggregate principal amount of Series D senior unsecured notes due February 26, 2026 (the “Series D Notes”) with a fixed interest rate of 3.41% per year and (2) $70.0 million in aggregate principal amount of Series E senior unsecured notes due February 26, 2028 (the “Series E Notes” and, collectively with the Series D Notes, the “February Notes”) with a fixed interest rate of 4.06% per year, in each case, to qualified institutional investors in a private placement. Each stated interest rate is subject to a step up of (x) 0.75% per year, to the extent the applicable February Notes do not satisfy certain investment grade rating conditions and/or (y) 1.50% per year, to the extent the ratio of the Company’s secured debt to total assets exceeds specified thresholds, measured as of each fiscal quarter end. The February Notes were delivered and paid for on February 26, 2021.
The Series D Notes will mature on February 26, 2026, and the Series E Notes will mature on February 26, 2028 unless redeemed, purchased or prepaid prior to such date by the Company in accordance with the terms of the February 2021 NPA. Interest on the February Notes is not, an “interested person”due semiannually in February and August of Triangle, as definedeach year, beginning in August 2021. The February Notes are guaranteed by certain of the 1940 Act,Company’s subsidiaries, and information regarding such candidateare the Company's general unsecured obligations that is sufficient,rank pari passu with all outstanding and future unsecured unsubordinated indebtedness issued by the Company.
Barings’ parent company, Massachusetts Mutual Life Insurance Company, holds $25.0 million in aggregate principal amount of the discretion of ourSeries D Notes.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee and Board of Directors, including a majority of the independent directors, have selected KPMG LLP as the Company's independent registered public accounting firm for the fiscal year ending December 31, 2023. KPMG LLP also will serve as the independent auditors for all of the Company’s wholly-owned subsidiaries and its joint ventures, Jocassee Partners LLC, Thompson Rivers LLC, Waccamaw River LLC, and Sierra Senior Loan Strategy JV I LLC.
We expect representatives of KPMG LLP will be present at the Annual Meeting and will have an opportunity to make a statement if they desire to do so and to respond to appropriate questions.
Independent Registered Public Accounting Firm's Fees
Fees Paid to Independent Registered Public Accounting Firm
The following table provides information regarding the fees billed by KPMG LLP for work performed for the fiscal years ended December 31, 2022 and 2021, or attributable to the audit of the Company's 2022 or 2021 financial statements, including out-of-pocket expenses:
| | | | | | | | | | | | | | | | | |
| | Fiscal Year Ended
December 31, 2022 | | Fiscal Year Ended
December 31, 2021 | |
| Audit Fees | | $ | 1,292,758 | | | $ | 891,400 | | |
| Audit Related Fees | | 1,210,652 | | (3) | 42,024 | | (1) |
| Tax Fees | | 138,950 | | | 94,013 | | (2) |
| Other Fees | | — | | | — | | |
| TOTAL FEES | | $ | 2,642,360 | | | $ | 1,027,437 | | |
(1)Includes fees of $7,950 related to accounting and auditing matters associated with the Sierra Income Corporation merger.
(2)Includes fees of $14,013 related to tax fees associated with the MVC Capital, Inc. merger.
(3)Includes fees of $1,200,000 related to audit fees of Sierra Income Corporation as of December 31, 2021.
During the fiscal years ended December 31, 2022 and 2021, KPMG LLP billed aggregate non-audit fees of $182,337 (comprised of $43,387 related to Barings LLC and $138,950 related to Barings BDC, Inc.) and $135,966 (comprised of $41,953 related to Barings LLC and $94,013 related to Barings BDC, Inc.), respectively, for services rendered to the Company and for services rendered to Barings LLC.
Audit Fees. Audit fees include fees for services that normally would be provided by the accountant in connection with statutory and regulatory filings or engagements and that generally only the independent accountant can provide. In addition to fees for the audit of the Company's annual financial statements, the audit of the effectiveness of the Company's internal control over financial reporting and the review of the Company's quarterly financial statements in accordance with generally accepted auditing standards, this category contains fees for comfort letters, statutory audits, consents, and assistance with and review of documents filed with the SEC.
Audit Related Fees. Audit related fees are assurance related services that traditionally are performed by the independent accountant, such as attest services that are not required by statute or regulation.
Tax Fees.Tax fees include corporate and subsidiary compliance and consulting.
All Other Fees. Fees for other services would include fees for products and services other than the services reported above, including any non-audit fees.
Pre-Approval Policies and Procedures
The Audit Committee has established, and the Board of Directors has approved, a pre-approval policy that describes the permitted audit, audit-related, tax and other services to be provided by the Company’s independent registered accounting firm. The policy requires that the Audit Committee pre-approve the audit and non-audit services
performed by the independent registered accounting firm in order to assure that the provision of such service does not impair the firm’s independence.
Any requests for audit, audit-related, tax and other services that have not received general pre-approval must be submitted to the Audit Committee for specific pre-approval, irrespective of the amount, and cannot commence until such approval has been granted. Normally, pre-approval is provided at regularly scheduled meetings of the Audit Committee. However, the Audit Committee may delegate pre-approval authority to one or more of its committeesmembers. The member or members to whom such authority is delegated shall report any authorized officer of Triangle, to make such determination.
3. Aspre-approval decisions to the stockholder givingAudit Committee at a subsequent meeting. The Audit Committee does not delegate its responsibilities to pre-approve services performed by the notice, any stockholder associated personindependent registered accounting firm to management. During 2022 and 2021, 100% of the Company’s audit fees, audit-related fees, tax fees and fees for other services provided by the Company's independent registered public accounting firm were pre-approved by the Audit Committee.
AUDIT COMMITTEE REPORT
The Audit Committee assists the Board of Directors in its oversight of the Company’s financial reporting process and implementation and maintenance of effective controls to prevent, deter and detect fraud by management. In addition, the Audit Committee is directly responsible for the appointment, compensation and oversight of the Company’s independent registered public accounting firm. Each of the members of the Audit Committee qualifies as an “independent” director in accordance with an interest or ownership and any candidate:
the name and address of such stockholder, as they appear on Triangle’s stock ledger,NYSE listing standards, SEC rules and the current name and business address, if different, of each such stockholder associated person and any candidate;Company’s corporate governance guidelines.
In overseeing the investment strategy or objective, if any, of such stockholder and each such stockholder associated person who is not an individual and a copypreparation of the prospectus, offering memorandumCompany’s financial statements, the Audit Committee met with both management and KPMG LLP, the Company’s independent registered public accounting firm for the fiscal year ended December 31, 2022, to review and discuss the audited financial statements prior to their issuance and to discuss significant accounting issues. Management advised the Audit Committee that all financial statements were prepared in accordance with generally accepted accounting principles, and the Audit Committee discussed the financial statements with both management and KPMG LLP.
The Audit Committee also is responsible for assisting the Board of Directors in the oversight of the qualification, independence and performance of the Company’s independent auditor. In connection with the audit of the Company’s financial statements for the fiscal year ended December 31, 2022, the Audit Committee regularly met in separate, executive sessions with certain members of senior management and KPMG LLP. The Audit Committee has discussed with KPMG LLP the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board, or similar document, if any, providedPCAOB, and the SEC. The Audit Committee has received from KPMG LLP the written disclosures and the letter required by applicable requirements of the PCAOB regarding KPMG LLP’s communications with the Audit Committee concerning independence and has discussed with KPMG LLP its independence. In addition, the Audit Committee has considered whether the provision of non-audit services, and the fees charged for such services, by KPMG LLP are compatible with KPMG LLP maintaining its independence from the Company.
Based upon the review and discussions referred to investors or potential investors in such stockholder, and each such stockholder associated person;
above, the Audit Committee recommended to the extent known byCompany’s Board of Directors that the stockholder givingCompany’s audited consolidated financial statements be included in the notice, the name and address of any other stockholder supporting the candidate for election or reelection as a director or the proposal of other business on the date of such stockholder’s notice; and
as to any candidate, the candidate’s certification that he or she currently intends to serve as a director for the full term for which he or she is standing (if so elected).
The above procedures are only a summary of the provisions regarding stockholder nominations of directors in our Bylaws. Please refer to the Bylaws for more information on nomination requirements.
How can I obtain Triangle’s Annual Report on Form 10-K?
A letter to stockholders and a copy of ourCompany’s Annual Report on Form 10-K for the fiscal year ended December 31, 20172022. In addition, the Audit Committee has selected, and recommended to the Board of Directors that it approve the appointment of KPMG LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2023.
| | |
| THE AUDIT COMMITTEE1 |
| Mark F. Mulhern, Chair |
| Thomas W. Okel |
| Robert Knapp |
| Jill Olmstead |
| John A. Switzer |
| Steve Byers |
| Valerie Lancaster-Beal |
The foregoing report shall not be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act of 1933, as amended (the “Securities Act”), which together constitute our 2017 Annual Report, are being mailed along withor the Exchange Act, except to the extent that the Company specifically incorporates this proxy statement. Our 2017 Annual Report is not incorporated into this proxy statementAudit Committee report by reference, and shall not otherwise be considered proxy solicitation material.deemed filed under such Securities Act and/or Exchange Act.
We will
1Reflects the membership of the Audit Committee as of the date of the Audit Committee's recommendations and approval referenced in this Audit Committee report.
PROPOSAL NO. 2
APPROVAL TO SELL SHARES OF COMMON STOCK BELOW NET ASSET VALUE (BOOK VALUE)
The Company is a closed-end investment company that has elected to be treated as a BDC under the 1940 Act. The 1940 Act generally prohibits the Company, as a BDC, from issuing and selling shares of its common stock at a price below the then-current net asset value (i.e., book value) per share of such stock, with certain exceptions. One such exception would permit the Company to issue and sell shares of its common stock at a price below net asset value per share at the time of sale if the Company’s stockholders have approved a sale below net asset value per share within the one-year period immediately prior to any such sale, provided that the Board of Directors also mailmakes certain determinations prior to you without charge, upon written request,any such sale.
Pursuant to this provision, the Company is seeking the approval of its stockholders so that it may, in one or more public or private offerings of its common stock, issue and sell shares of its common stock at a copyprice below its then-current net asset value per share in one or more offerings, subject to certain conditions discussed below. It should be noted that the maximum number of any specificallyshares that the Company could issue and sell at a per share price below net asset value per share pursuant to this authority would be limited to 30% of its then-outstanding common stock. If approved, the authorization would be effective for a period expiring on the first anniversary of the date of the stockholders’ approval of this proposal and would permit the Company to engage in such transactions at various times within that period, subject to further approval from the Board of Directors.
Generally, equity securities sold in public securities offerings are priced based on public market prices quoted on exchanges such as NYSE, rather than net asset value, or book value, per share. Since the Company’s IPO, the Company’s common stock has traded both above and below its net asset value per share. At each of the Company’s Annual Meetings of Stockholders from 2008 to 2017, and at its 2020, 2021, and 2022 Annual Meetings of Stockholders, the Company requested exhibitand received approval from its stockholders to our Annual Report on Form 10-Ksell its stock at a price per share below net asset value under certain circumstances. As in such prior years, the Company is seeking the approval of a majority of its stockholders of record to offer and sell shares of its common stock at prices that, net of underwriting discount or commissions, may be less than net asset value per share in one or more offerings. This stockholder approval would permit the Company to issue and sell shares of its common stock in accordance with pricing standards that market conditions generally require, and would also assure stockholders that the number of shares issued and sold pursuant to such authority does not exceed 30% of the Company’s then-outstanding common stock immediately prior to each such offering. If stockholders approve this proposal, the Company should have greater flexibility in taking advantage of changing market and financial conditions in connection with an equity offering. Of the Company’s ten underwritten follow-on equity offerings completed since its IPO, only two were priced below the then-current net asset value per share (both during 2009).
Reasons to Offer Common Stock Below Net Asset Value
Market Conditions Have Created, and May in the Future Create, Attractive Investment and Acquisition Opportunities
From time to time, capital markets may experience periods of disruption and instability. For example, between 2008 and 2009, the global capital markets were unstable as evidenced by periodic disruptions in liquidity in the debt capital markets, significant write-offs in the financial services sector, the re-pricing of credit risk in the broadly syndicated credit market and the failure of major financial institutions. Despite actions of the U.S. federal government and foreign governments, these events contributed to worsening general economic conditions that materially and adversely impacted the broader financial and credit markets and reduced the availability of debt and equity capital for the fiscal year ended December 31, 2017. Requests should be sent to: Steven C. Lilly, Corporate Secretary, Triangle Capital Corporation, 3700 Glenwood Avenue, Suite 530, Raleigh, North Carolina 27612,market as a whole and financial services firms in particular. As a result of the disruption and volatility in the credit markets during this time, the Company saw some measure of reduction in capital available to certain specialty finance companies and other capital providers, causing a reduction in competition. These conditions also generally coincided with lower stock prices for BDCs, with BDCs trading below net asset value. The Company believes that favorable investment opportunities to invest at attractive risk-adjusted returns, including opportunities to make acquisitions of other companies or such requestsinvestment portfolios at attractive values, may be created during these periods of disruption and volatility.
While market conditions have largely recovered from the events of 2008 and 2009, there have been continuing periods of volatility, some lasting longer than others, including recently as a result of the ongoing effects of the global COVID-19 pandemic starting in 2020. Since the Company’s IPO in 2007, the Company’s common stock has traded both at a premium and at a discount in relation to its net asset value, which is the equivalent of “book value,” rather than market or publicly traded value. As of the record date of March 6, 2023, the Company's common stock traded at a discount to net asset value per share. The possibility that shares of the Company’s common stock will continue to trade at a discount from net asset value or trade at premiums that are unsustainable over the long-term are separate and distinct from the risk that the Company’s net asset value will decrease. It is not possible to predict whether any shares of the Company’s common stock issued in the future will trade at, above, or below net asset value.
Since the 2008 recession, lingering economic conditions in the U.S. credit markets from periods of contraction or recession have contributed to significant stock price volatility for capital providers such as the Company and have made by calling (919) 719-4770. A copyaccess to capital more challenging for many smaller businesses. However, these changes in the credit market conditions also have beneficial effects for capital providers like the Company because small business are selling for lower prices, are generally willing to pay higher interest rates and are generally willing to accept contractual terms that are more favorable to the Company in their investment agreements. Accordingly, for firms that continue to have access to capital, the Company believes that a challenging economic environment could provide investment opportunities on more favorable terms than have been available in recent periods. In addition, in light of our Annual Reportthe fact that any debt capital that may be available may be at a higher cost and on Form 10-K has also been filedless favorable terms and conditions than in past periods, the Company’s ability to take advantage of these opportunities may be largely dependent upon its access to equity capital.
Stockholder approval of the proposal to sell shares of the Company's common stock at a price below its then-current net asset value per share, subject to the conditions set forth in this proposal, would provide the Company with the SEC and mayflexibility to invest in such attractive investment opportunities, which typically need to be accessed through the SEC’s homepage (http://www.sec.gov).made expeditiously.
Who is paying for this proxy solicitation?
We will pay for the entire cost of soliciting proxies. We estimate that we will pay Alliance Advisors, LLC, our proxy solicitor, a fee, including reimbursement of out-of-pocket expenses, of approximately $200,000 to solicit proxies, though the costs of this proxy solicitation process could be lower or higher than our estimate. In addition to
these written proxy materials, our proxy solicitor, directors and employees may also solicit proxies in person, by telephone or by other means of communication; however, our directors and employees will not be paid any additional compensation for soliciting proxies. We may also reimburse brokerage firms, banks and other agents for the cost of forwarding proxy materials to beneficial owners and obtaining your voting instructions.
How many copies should I receive if I share an address with another stockholder?Trading History
The SEC has adopted rules that permit companies and intermediaries, such as brokers, to satisfyfollowing table, reflecting the delivery requirements for proxy statements and annual reports with respect to two or more stockholders sharing the same address by delivering a single proxy statement addressed to those stockholders. This process, which is commonly referred to as “householding,” potentially provides extra convenience for stockholders and cost savings for companies.
Brokers may be householding our proxy materials by delivering a single proxy statement and 2017 Annual Report to multiple stockholders sharing an address, unless contrary instructions have been received from the affected stockholders. Once you have received notice from your broker that they will be householding materials to your address, householding will continue until you are notified otherwise or until you revoke your consent. If you did not respond that you did not want to participate in householding, you were deemed to have consented to the process. If at any time you no longer wish to participate in householding and would prefer to receive a separate proxy statement and Annual Report, or if you are receiving multiple copies of the proxy statement and 2017 Annual Report and wish to receive only one, please notify your broker if your shares are held in a brokerage account, or us if you are a stockholder of record. You can notify us by sending a written request to: Steven C. Lilly, Corporate Secretary, Triangle Capital Corporation, 3700 Glenwood Avenue, Suite 530, Raleigh, North Carolina 27612, or by calling (919) 719-4770. In addition, we will promptly deliver, upon written or oral request to the address or telephone number above, a separate copy of the 2017 Annual Report and proxy statement to a stockholder at a shared address to which a single copy of the documents was delivered.
Whom should I contact if I have any questions?
If you have any questions about the Annual Meeting, these proxy materials or your ownershippublic trading history of our common stock since January 1, 2020, lists the high and low closing sales prices for our common stock, and such closing sales prices as percentages of the net asset values per share for the relevant periods. On March 6, 2023, the record date, the last reported closing sale price of our common stock on the NYSE was $8.71. Net asset value per share in the table below is determined as of the last day in the relevant quarter and therefore may not reflect the net asset value per share on the date of the high and low closing sales prices. The net asset values shown are based on outstanding shares at the end of each period.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Net Asset
Value | | Closing Sales Price | | Premium (Discount) of High Closing Sales Price
to Net Asset Value | | Premium (Discount) of Low Closing Sales Price
to Net Asset Value |
| High | | Low | |
| Year ended December 31, 2020 | | | | | | | | | | |
| First Quarter | | $ | 9.23 | | | $ | 10.54 | | | $ | 5.34 | | | 14.2 | % | | (42.1) | % |
| Second Quarter | | $ | 10.23 | | | $ | 8.41 | | | $ | 6.22 | | | (17.8) | % | | (39.2) | % |
| Third Quarter | | $ | 10.97 | | | $ | 8.44 | | | $ | 7.36 | | | (23.1) | % | | (32.9) | % |
| Fourth Quarter | | $ | 10.99 | | | $ | 9.28 | | | $ | 7.51 | | | (15.6) | % | | (31.7) | % |
| Year ended December 31, 2021 | | | | | | | | | | |
| First Quarter | | $ | 11.14 | | | $ | 10.20 | | | $ | 8.83 | | | (8.4) | % | | (20.7) | % |
| Second Quarter | | $ | 11.39 | | | $ | 10.77 | | | $ | 10.16 | | | (5.4) | % | | (10.8) | % |
| Third Quarter | | $ | 11.40 | | | $ | 11.07 | | | $ | 10.36 | | | (2.9) | % | | (9.1) | % |
| Fourth Quarter | | $ | 11.36 | | | $ | 11.47 | | | $ | 10.62 | | | 1.0 | % | | (6.5) | % |
| Year ended December 31, 2022 | | | | | | | | | | |
| First Quarter | | $ | 11.86 | | | $ | 11.20 | | | $ | 10.07 | | | (5.6) | % | | (15.1) | % |
| Second Quarter | | $ | 11.41 | | | $ | 10.90 | | | $ | 9.24 | | | (4.5) | % | | (19.0) | % |
| Third Quarter | | $ | 11.28 | | | $ | 10.41 | | | $ | 8.32 | | | (7.7) | % | | (26.2) | % |
| Fourth Quarter | | $ | 11.05 | | | $ | 9.26 | | | $ | 8.06 | | | (16.2) | % | | (27.1) | % |
| Year ending December 31, 2023 | | | | | | | | | | |
| First Quarter (through March 6, 2023) | | * | | $ | 8.95 | | | $ | 8.22 | | | * | | * |
* Net asset value has not yet been calculated for this period.
Greater Investment Opportunities Due to Larger Capital Resources
The additional capital raised through an offering of the Company’s common stock may help the Company generate additional deal flow. With more capital to make investments, the Company could be a more meaningful capital provider and such additional capital would allow it to compete more effectively for high quality investment opportunities. Such investment opportunities may be funded with proceeds of an offering of shares of the Company’s common stock.
Status as a BDC and RIC and Maintaining a Favorable Debt-to-Equity Ratio
As a BDC and a regulated investment company, or RIC, for tax purposes, the Company is dependent on its ability to raise capital through the issuance of its common stock. RICs generally must distribute substantially all of their earnings to stockholders as dividends in order to achieve pass-through tax treatment, which prevents the Company from retaining any meaningful amount of earnings to support operations, which may include making new investments (including investments in existing portfolio companies). Further, under the 1940 Act, the Company must meet a debt-to equity ratio of less than approximately 2:1 in order to incur debt or issue senior securities. Therefore, to continue to build the Company’s investment portfolio, the Company endeavors to maintain consistent access to capital through the public and private debt markets and the public equity markets enabling it to take advantage of investment opportunities as they arise.
Exceeding the approximate 2:1 debt-to-equity ratio could have severe negative consequences for a BDC, including the inability to pay dividends, breach of applicable debt covenants and failure to qualify for tax treatment as a RIC. Although the Company does not currently expect that it will exceed this debt-to-equity ratio, the markets it operates in and the general economy may be volatile and uncertain. Even though the underlying performance of a particular portfolio company may not indicate an impairment or its inability to repay all principal and interest in full, volatility in the capital markets may negatively impact the valuations of investments and create unrealized losses on certain investments. Any such write-downs in value, as well as unrealized losses based on the underlying performance of the Company’s portfolio companies, if any, will negatively impact stockholders’ equity and the resulting debt-to-equity ratio. Issuing additional equity would allow the Company to realign its debt-to-equity ratio and take steps to avoid these negative consequences. In addition to meeting legal requirements applicable to BDCs, having a more favorable debt-to-equity ratio would also generally strengthen the Company’s balance sheet and give it more flexibility to fully execute its business strategy.
Summary
The Board of Directors believes it is desirable to have the flexibility to issue shares of the Company’s common stock at a price below the Company’s then-current net asset value per share in certain instances when it is in the best interests of the Company and its stockholders. This would, among other things, provide access to capital markets to pursue attractive investment and acquisition opportunities during periods of volatility, improve capital resources to enable the Company to compete more effectively for high quality investment opportunities and add financial flexibility to comply with regulatory requirements and any applicable debt facility covenants, including the 2:1 debt-to-equity ratio limit under the 1940 Act. It could also minimize the likelihood that the Company would be required to sell assets that the Company would not otherwise sell, which sales could occur at times and at prices that are disadvantageous to the Company.
The final terms of any sale of the Company’s common stock at a price below the then-current net asset value per share will be determined by the Board of Directors in connection with such issuance, and the shares of common stock will not include preemptive rights. Any transaction in which the Company issues such shares of common stock, including the nature and amount of consideration that would be received by the Company at the time of issuance and the use of any proceeds therefrom, will be reviewed and approved by the Board of Directors at the time of issuance. If this proposal is approved, no further authorization from the stockholders will be solicited prior to any such issuance in accordance with the terms of this proposal. If approved, the authorization would be effective for a period expiring on the first anniversary of the date of the stockholders’ approval of this proposal and would permit the Company to engage in such transactions at various times within that period, subject to further approval from the Board of Directors.
Conditions to Sales Below Net Asset Value
Stockholder approval is a condition that must be satisfied prior to any sales of the Company’s common stock at a price below the then-current net asset value per share, and the Company is seeking such approval in this proposal. If this proposal is approved by the Company’s stockholders, the Company would not issue and sell its common stock at a price below its per share net asset value unless the number of shares issued and sold pursuant to such authority does not exceed 30% of the Company’s then-outstanding common stock immediately prior to each such offering. To the extent the Company issues and sells shares of its common stock, regardless of the price at which such shares are sold, the Company’s market capitalization and the amount of its publicly tradable common stock will increase, thus affording all common stockholders potentially greater liquidity in the market for the Company’s shares.
In addition, if this proposal is approved, the Company will issue and sell shares of its common stock at a price below net asset value per share only if the following conditions are met:
▪a majority of the Company’s directors who have no financial interest in the issuance and sale and a majority of such directors who are not interested persons of the Company have determined that any such sale would be in the best interests of the Company and its stockholders; and
▪a majority of the Company’s directors who have no financial interest in the issuance and sale, and a majority of such directors who are not interested persons of the Company, in consultation with the underwriter or underwriters of the offering if it is to be underwritten, and as of a time immediately prior to the first solicitation by or on behalf of the Company of firm commitments to purchase such securities or immediately prior to the issuance of such securities, have determined in good faith that the price at which such securities are to be issued and sold is not less than a price which closely approximates the market value of those securities, less any distributing commission or discount.
In determining whether or not to sell additional shares of the Company’s common stock at a price below the net asset value per share, the Board of Directors will be obligated to act in the best interests of the Company and its stockholders.
Key Stockholder Considerations
Before voting on this proposal or giving proxies with regard to this matter, stockholders should consider the dilutive effect on the net asset value per outstanding share of common stock of the issuance of shares of the Company’s common stock at less than net asset value per share. Any sale of common stock at a price below net asset value would result in an immediate dilution to existing common stockholders. Since under this proposal shares of the Company’s common stock could be issued at a price that is substantially below the net asset value per share, the dilution could be substantial. This dilution would include reduction in the net asset value per share as a result of the issuance of shares at a price below the net asset value per share and a proportionately greater decrease in a stockholder’s interest in the earnings and assets of the Company and voting interest in the Company than the increase in the assets of the Company resulting from such issuance. If this Proposal No. 2 is approved, the Board of Directors of the Company may, consistent with its fiduciary duties, approve the sale of the Company’s common stock at any discount to its then-current net asset value per share; however, the Board of Directors will consider the potential dilutive effect of the issuance of shares of common stock at a price below the net asset value per share when considering whether to authorize any such issuance and will act in the best interests of the Company and its stockholders in doing so. It should be noted that the maximum number of shares that the Company could issue and sell at a per share price below net asset value per share pursuant to this authority would be limited to 30% of the Company’s then-outstanding common stock immediately prior to each such offering.
The 1940 Act establishes a connection between common share sale price and net asset value because, when shares of common stock are sold at a sale price below net asset value per share, the resulting increase in the number of outstanding shares is not accompanied by a proportionate increase in the net assets of the issuer. Further, if current stockholders of the Company do not purchase any shares to maintain their percentage interest, regardless of whether such offering is above or below the then-current net asset value, their voting power will be diluted. For an illustration of the potential dilutive effect of an offering of our common stock at a price below net asset value, please contact Steven C. Lilly c/o Triangle Capital Corporation, 3700 Glenwood Avenue, Suite 530, Raleigh, North Carolina 27612, Telephone: (919) 719-4770,see the table below under the heading “Examples of Dilutive Effect of the Issuance of Shares Below Net Asset Value.”
Finally, any sale of substantial amounts of the Company’s common stock or other securities in the open market may adversely affect the market price of the Company’s common stock and may adversely affect the Company’s ability to obtain future financing in the capital markets. In addition, future sales of the Company’s common stock to the public may create a potential market overhang, which is the existence of a large block of shares readily available for sale that could lead the market to discount the value of shares held by Fax: (919) 719-4777.
other investors. In the event the Company were to continue to sell its common stock at prices below net value for sustained periods of time, such offerings may result in sustained discounts in the marketplace.
PROPOSAL NO. 1Examples of Dilutive Effect of the Issuance of Shares Below Net Asset Value
The table on the following page illustrates the level of net asset value dilution that would be experienced by a nonparticipating stockholder in four different hypothetical offerings of different sizes and levels of discount from net asset value per share, although it is not possible to predict the level of market price decline that may occur. Actual sales prices and discounts may differ from the presentation below.
The examples assume that Company XYZ has 1,000,000 shares of common stock outstanding, $15,000,000 in total assets and $5,000,000 in total liabilities. The current net asset value and net asset value per share are thus $10,000,000 and $10.00. The table illustrates the dilutive effect on nonparticipating Stockholder A of (1) an offering of 50,000 shares (5% of the outstanding shares) at $9.50 per share after offering expenses and commission (a 5% discount from net asset value), (2) an offering of 100,000 shares (10% of the outstanding shares) at $9.00 per share after offering expenses and commissions (a 10% discount from net asset value), (3) an offering of 200,000 shares (20% of the outstanding shares) at $8.00 per share after offering expenses and commissions (a 20% discount from net asset value) and (4) an offering of 250,000 shares (25% of the outstanding shares) at $0.01 per share after offering expenses and commissions (a 100% discount from net asset value). Because we are not limited as to the amount of discount from net asset value at which we can offer shares, the fourth example on the following table (an offering at a price of $0.01 per share) is included, however, the Company will not offer shares at a 100% discount to net asset value. “NAV” in the table below stands for “net asset value.”
Dilutive Effect of the Issuance of Shares by Company XYZ Below Net Asset Value
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Example 1
5% Offering
at 5% Discount | | Example 2
10% Offering
at 10% Discount | | Example 3
20% Offering
at 20% Discount | | Example 4
25% Offering
at 100% Discount |
| | | Prior to Sale
Below NAV | | Following
Sale | | %
Change | | Following
Sale | | %
Change | | Following
Sale | | %
Change | | Following
Sale | | %
Change |
| Offering Price | | | | | | | | | | | | | | | | | | |
| Price per Share to Public | | — | | | $ | 10.00 | | | — | | | $ | 9.47 | | | — | | | $ | 8.42 | | | — | | | $ | 0.01 | | | — | |
| Net Proceeds per Share to Issuer | | — | | | $ | 9.50 | | | — | | | $ | 9.00 | | | — | | | $ | 8.00 | | | — | | | $ | 0.01 | | | — | |
| Decrease to NAV | | | | | | | | | | | | | | | | | | |
| Total Shares Outstanding | | 1,000,000 | | | 1,050,000 | | | 5.00 | % | | 1,100,000 | | | 10.00 | % | | 1,200,000 | | | 20.00 | % | | 1,250,000 | | | 25.00 | % |
| NAV per Share | | $ | 10.00 | | | $ | 9.98 | | | (0.24) | % | | $ | 9.91 | | | (0.91) | % | | $ | 9.67 | | | (3.33) | % | | $ | 8.00 | | | (19.98) | % |
| Dilution to Stockholder | | | | | | | | | | | | | | | | | | |
| Shares Held by Stockholder A | | 10,000 | | | 10,000 | | | — | | | 10,000 | | | — | | | 10,000 | | | — | | | 10,000 | | | — | |
| Percentage Held by Stockholder A | | 1.0 | % | | 0.95 | % | | (4.76) | % | | 0.91 | % | | (9.09) | % | | 0.83 | % | | (16.67) | % | | 0.80 | % | | (20.00) | % |
| Total Asset Values | | | | | | | | | | | | | | | | | | |
| Total NAV Held by Stockholder A | | $ | 100,000 | | | $ | 99,762 | | | (0.24) | % | | $ | 99,091 | | | (0.91) | % | | $ | 96,667 | | | (3.33) | % | | $ | 80,020 | | | (19.98) | % |
| Total Investment by Stockholder A (Assumed to Be $10.00 per Share) | | $ | 100,000 | | | $ | 100,000 | | | — | | | $ | 100,000 | | | — | | | $ | 100,000 | | | — | | | $ | 100,000 | | | — | |
| Total Dilution to Stockholder A (Total NAV Less Total Investment) | | — | | | $ | (238) | | | — | | | $ | (909) | | | — | | | $ | (3,333) | | | — | | | $ | (19,980) | | | — | |
| Per Share Amounts | | | | | | | | | | | | | | | | | | |
| NAV per Share Held by Stockholder A | | — | | | $ | 9.98 | | | — | | | $ | 9.91 | | | — | | | $ | 9.67 | | | — | | | $ | 8.00 | | | — | |
| Investment per Share Held by Stockholder A (Assumed to be $10.00 per Share on Shares Held Prior to Sale) | | $ | 10.00 | | | $ | 10.00 | | | — | | | $ | 10.00 | | | — | | | $ | 10.00 | | | — | | | $ | 10.00 | | | — | |
| Dilution per Share Held by Stockholder A (NAV per Share Less Investment per Share) | | — | | | $ | (0.02) | | | — | | | $ | (0.09) | | | — | | | $ | (0.33) | | | — | | | $ | (2.00) | | | — | |
| Percentage Dilution to Stockholder A (Dilution per Share Divided by Investment per Share) | | — | | | — | | | (0.24) | % | | — | | | (0.91) | % | | — | | | (3.33) | % | | — | | | (19.98) | % |
The Board of Directors recommends a vote “FOR” the proposal to authorize the Company, with the subsequent approval of its Board of Directors, to issue and sell shares of its common stock (during the 12 months following such authorization) at a price below its then-current net asset value per share in one or more offerings, subject to certain limitations set forth herein (including, without limitation, that the number of shares issued and sold pursuant to such authority does not exceed 30% of the Company’s then-outstanding common stock immediately prior to each such offering).
Required Vote.
Approval of this proposal requires the affirmative vote of each of the following: (1) a majority of the outstanding shares of the Company's common stock; and (2) a majority of the outstanding shares of the Company's common stock that are not held by affiliated persons of the Company. For purposes of this proposal, the 1940 Act defines a "majority of the outstanding shares” as the vote of the lesser of: (1) 67% or more of the voting securities of the Company present at the Annual Meeting if the holders of more than 50% of the outstanding voting securities of the Company are present virtually or represented by proxy; or (2) more than 50% of the outstanding voting securities of the Company. Abstentions and broker non-votes, if any, will have the effect of votes cast against this proposal.
ELECTION OF DIRECTORS
Our Bylaws provide that ourThe Board of Directors is currently comprised of ten Directors divided into three (3) classes, with terms expiring in 2023, 2024 and 2025. The term of office of Class II Directors ends on the date of the Annual Meeting (or on the date their respective successors are elected and qualify, if later). After providing exceptional service to our Board since August 2021, Dr. Bernard Harris, Jr. will consistnot stand for re-election to the Board at the end of no less than one directorhis current term, and no greater than twelve directors, as determined by our directors from time to time. Currently,therefore, will not stand for re-election at the Annual Meeting. In connection with Dr. Harris's departure, the Board passed a resolution reducing the number of directors is set at eight. Directors are elected for a termthat constitutes the full board to nine directors from ten directors, effective as of one year and serve until their successors are duly elected and qualified.the close of business on May 4, 2023.
The current directors, Messrs. Dunwoody, Gambill, Goldstein, Lilly, Mulhern, Poole, Rich,remaining three Class II Directors of the Company—Steve Byers, Valerie Lancaster-Beal, and Tucker, John Switzer—have been nominated by ourthe Board of Directors (upon the recommendation by ourof the Nominating and Corporate Governance Committee) for election for a one-yearthree-year term expiring in 2019. With the exception of Mr. Gambill, who was initially appointed by the Board of Directors in August of 2009, Mr. Poole, who was initially appointed by the Board of Directors in July of 2013, and Mr. Mulhern, who was initially appointed by the Board of Directors in October of 2016, each director was initially elected as a director by the sole stockholder of the Company prior to our initial public offering in February 2007.2026. No person being nominated as a directorClass II Director is being proposed for election pursuant to any agreement or understanding between ussuch person, on the one hand, and the Company or any such person.other person or entity, on the other hand. Each directorClass II Director has agreed to serve as a director if elected and has consented to be named as a nominee.
Pursuant to ourthe Company's Seventh Amended and Restated Bylaws (the “Bylaws”), a nominee for director is elected to the Board of Directors if the number of votes cast for such nominee’s election exceed the number of votes cast against such nominee’s election. Pursuant to Triangle’sthe Company's corporate governance guidelines, incumbent directors must agree to tender their resignation if they fail to receive the required number of votes for re-election, and in such event the Board of Directors will act within 90 days following certification of the stockholder vote to determine whether to accept the director’s resignation. These procedures are described in more detail in ourthe Company's corporate governance guidelines, which are available under “Corporate Governance”“Governance Documents” on the Investor Relations section of ourthe Company's website at http:https://ir.tcap.com.ir.barings.com/governancedocs. The Board of Directors may consider any factors it deems relevant in deciding whether to accept a director’s resignation. If a director’s resignation offer is not accepted by the Board of Directors, the Company expects that such director would continue to serve until Triangle’s next annual meeting of stockholders or until his or her successor is duly elected and qualified,qualifies, or until the director’s earlier death, resignation, or removal. Any such director will be eligible for nomination for election as a director at future Annual Meetings.
The Board of Directors recommends that you vote “FOR” the election of the nominees named in this proxy statement.
In the absence of instructions to the contrary, it is the intention of the persons named as proxies to vote such proxy for the election of all the nominees named below. If any of the nominees should decline or be unable to serve as a director, it is intended that the proxy will be voted for the election of such person or persons who are nominated as replacements. The Board of Directors has no reason to believe that any of the persons named below will be unable or unwilling to serve.
Information about the Nominees for Director and Other Directors
Certain information, asThe following chart summarizes the professional experience and additional considerations that contributed to the Nominating and Corporate Governance Committee’s and the Board of February 22, 2018, with respect to each of the eight nominees for election at the Annual Meeting, all of whom currently serve as our directors, is set forth below, including their names, ages, a brief description of their recent business experience, including present occupations and employment, certain directorshipsDirectors’ conclusion that each nominee holds,for Director and the year in which each nominee became a director of the Company. Each director’s current term expiresother Director should serve on May 2, 2018, the Annual Meeting date.
Certain of our directors who are also officers of the Company may serve as directors of, or on the boards of managers of, certain of our portfolio companies. In addition, the Board of Directors of Triangle Mezzanine Fund LLLP, or Triangle Mezzanine Fund, our wholly-owned consolidated subsidiary that has elected to be treated as aDirectors. The term “Fund Complex” included in the director biographies included in this proxy statement includes the Company, Barings Capital Investment Corporation (“BCIC”) (a non-listed business development company, or BDC, undercompany), Barings Private Credit Corporation (“BPCC”) (a perpetually offered non-listed business development company), Barings Global Short Duration High Yield Fund (a closed-end fund), Barings Corporate Investors (a closed-end fund), Barings Participation Investors (a closed-end fund), and Barings Private Equity Opportunities and Commitments Fund (“PEOC”) (a non-diversified, closed-end management investment company). The director information in the following chart is organized by class and, within each class, by “Interested Directors” and “Non-Interested Directors.” “Interested Directors” are “interested persons,” as defined in Section 2(a)(19) of the 1940 Act, is composed of all of the Company’s directors.Company.
NOMINEES FOR CLASS II DIRECTORS
| | | | | | | | | | | | | | | | | |
Name, Address and Age(1) | Position(s) Held with Company | Term and Length of Time Served | Principal Occupations
During Past 5 Years | Number of Portfolios Overseen in Fund Complex (2) | Other Directorships of Public or Registered Investment Companies Held by Director or Nominee for Director During Past 5 Years |
| Non-Interested Directors | | | | | |
Steve Byers(69) | Director | Class II Director; Term expires 2023; Director since February 2022 | Independent Consultant (since 2014). | 1 | Director (since 2011), Chairman (since 2016) Deutsche Bank DBX ETF Trust; Trustee (since 2016), The Arbitrage Funds Trust; Director (2012-2022), Chairman (2012-2022), Sierra Income Corporation. |
| Valerie Lancaster-Beal (68) | Director | Class II Director; Term expires 2023; Director since February 2022 | President and Chief Executive Officer (since 2014), VLB Associates, LLC (management consulting firm providing financial and operational advisory services); Chief Financial Officer (2015-2021), Odyssey Media (marketing and communications company). | 1 | Director (2012-2022), Sierra Income Corporation; Director (since 2012), KIPP NYC; Trustee (2000-2014), City University of New York; Board Member (2006 - 2010), Georgetown University Board of Regents. |
| John A. Switzer (66) | Director | Class II Director; Term expires 2023; Director since August 2018 | Director, Carolina Tractor and Equipment Company (since 2017); Managing Partner (1978-2016), KPMG LLP (registered public accounting firm). | 2 | Director (since March 2021), BCIC; Director and Audit Committee member (since 2019), HomeTrust Bancshares, Inc. |
(1) The business address of each nominee listed belowfor director is 3700 Glenwood Avenue,300 South Tryon Street, Suite 530, Raleigh, North Carolina 27612.2500, Charlotte, NC 28202. The age of each individual is as of the date of the Annual Meeting.
(2) Including the Company.
Nominees for Directors
CLASS III DIRECTORS: TERM EXPIRING 2024
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Name, Address and Age(1) | Position(s) Held with Company | Term and Length of Time Served | Principal Occupations During Past 5 Years | Number of Portfolios Overseen in Fund Complex (2) | Other Directorships of Public or Registered Investment Companies Held by Director or Nominee for Director During Past 5 Years |
| Interested Director | | | | | |
David Mihalick(3) (50) | Director | Class III Director; Term expires 2024; Director since November 2020 | Head of Private Assets (since 2021), Head of U.S. Public Fixed Income and Member of Global Investment Grade Allocation Committee (2019-2021), Head of U.S. High Yield and Member of Global High Yield Allocation Committee (2017-2021), U.S. High Yield Research Analyst and Portfolio Manager (2008-2017), Barings LLC (global asset manager). | 5 | Director (since March 2021), BCIC; Trustee (since 2020), Barings Global Short Duration High Yield Fund (closed-end investment company advised by Barings); Trustee (since 2022), Barings Corporate Investors (a closed-end fund advised by Barings); Trustee (since 2022), Barings Participation Investors (a closed-end fund advised by Barings); Trustee (2020-2021), Barings Funds Trust (open-end investment company advised by Barings until 2021. |
| | | | | | | | | | | | | | | | | |
| Non-Interested Directors | | | | | |
Thomas W. Okel (60)
| Director | Class III Director; Term expires 2024; Director since August 2018 | Executive Director (2011 - 2019), Catawba Lands Conservancy; Global Head of Syndicated Capital Markets (1989-2010), Bank of America Merrill Lynch. | 5 | Trustee (since 2022), PEOC; Director (since 2021), BPCC; Director (since 2020), BCIC; Trustee (since 2012), Barings Global Short Duration High Yield Fund (closed-end investment company advised by Barings); Trustee (since 2015), Horizon Funds (mutual fund complex); Trustee (2013-2021), Barings Funds Trust (open-end investment company advised by Barings until 2021). |
Jill Olmstead (59)
| Director | Class III Director; Term expires 2024; Director since August 2018 | Chief Human Resources Officer, (since 2018), LendingTree, Inc.; Founding Partner (2010-2018), Spivey & Olmstead, LLC (talent and leadership consulting firm). | 5 | Trustee (since 2022), PEOC; Director (since 2021), BPCC; Trustee (since Aug. 2021), Barings Global Short Duration High Yield Fund (closed-end investment company advised by Barings); Director (since 2020), BCIC. |
(1) The business address of each director is 300 South Tryon Street, Suite 2500, Charlotte, NC 28202. The age of each individual is as of the date of the Annual Meeting.
(2) Including the Company.
(3) Interested Directors
Messrs. Poole and Lilly are interested persons as defined in the 1940 ActDirector due to their positions as officers of the Company.Mr. Tucker is an interested person as defined in the 1940 Act due to his serving as a senior advisor to the Company during 2017.affiliations with Barings LLC.
CLASS I DIRECTORS: TERM EXPIRING 2025 | | | | | | | | | | | | | | | | | |
Name, Address and Age(1) | Position(s) Held with Company | Term and Length of Time Served | Principal Occupations During Past 5 Years | Number of Portfolios Overseen in Fund Complex (2) | Other Directorships of Public or Registered Investment Companies Held by Director or Nominee for Director During Past 5 Years |
| Interested Director | | | | | |
NameEric Lloyd(3) (54) | | Age | | Background Information |
E. Ashton Poole | | 51 | | Mr. Poole was appointed Chairman of our Board of Directors in May 2017 and also serves as our President and Chief Executive Officer. Prior to his promotion to Chief Executive Officer in February 2016, Mr. Poole served as President and Chief Operating Officer since 2013. Mr. Poole has also served as a member of our Board of Directors since July 2013 and is a member of our investment committee. Prior to joining Triangle, he was a Managing Director in the investment banking division of Morgan Stanley from 1994 to 2013, where he specialized, at various times, in each of the Power & Utility and Diversified Industrial Groups. Prior to Morgan Stanley, Mr. Poole was a strategy consultant with Gemini Consulting, where he provided advisory services to companies on strategic and financing matters. Mr. Poole is a graduate of the University of North Carolina at Chapel Hill and the Kellogg School of Management at Northwestern University. Currently, Mr. Poole does not serve on the board of directors of any other public company. |
Steven C. Lilly | | 48 | | Mr. Lilly has served as our Chief Financial Officer, Secretary and member of our Board of Directors since 2006 and Chief Compliance Officer since 2007, and is a member of our investment committee. From 2005 to 2006, Mr. Lilly served as Chief Financial Officer of Triangle Capital Partners, LLC. Prior to joining Triangle Capital Partners in December 2005, Mr. Lilly spent more than six years with SpectraSite, Inc., which prior to its sale in August 2005, was the third largest independent wireless tower company in the United States. At SpectraSite, Mr. Lilly served as Senior Vice President-Finance & Treasurer and Interim Chief Financial Officer. Prior to SpectraSite, Mr. Lilly was Vice President of the Media & Communications Group with First Union Capital Markets (now Wells Fargo and Company), specializing in arranging financings for high growth, financial sponsor driven companies across the media and telecommunications sectors. Mr. Lilly is a graduate of Davidson College and has completed an executive-sponsored education program at the University of North Carolina’s Kenan-Flagler Business School. Currently, Mr. Lilly does not serve on the board of directors of any other public company. |
Garland S. Tucker, III | | 70 | | Mr. Tucker served as Chairman of our Board of Directors from 2006 to May 2017. Prior to his retirement in February 2016, Mr. Tucker also served as our Chief Executive Officer and a member of our investment committee since 2006. Mr. Tucker was a co-founder of Triangle Capital Partners, LLC, the former external manager of Triangle Mezzanine Fund prior to our initial public offering. Prior to co-founding Triangle Capital Partners, LLC in 2000, Mr. Tucker and an outside investor group operated and then sold First Travelcorp, a corporate travel services company that he and the investors founded in 1991. For the two years preceding the founding of First Travelcorp, Mr. Tucker served as Group Vice President, Chemical Bank, New York, with responsibility for southeastern corporate finance. Prior to Chemical Bank, Mr. Tucker spent a decade with Carolina Securities Corporation, serving as President and Chief Executive Officer until 1988. During his tenure, Carolina Securities Corporation was a member of the NYSE, and Mr. Tucker served a term as President of the Mid-Atlantic Securities Industry Association. Mr. Tucker entered the securities business in 1975 with Investment Corporation of Virginia. He is a graduate of Washington & Lee University and Harvard Business School. Currently, Mr. Tucker does not serve on the board of directors of any other public company. |
Independent Directors
Messrs. Dunwoody, Gambill, Goldstein, Mulhern, and Rich are considered independent as defined by the standards of the NYSE and for purposes of the 1940 Act.
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| | | | |
Name | | Age | | Background Information |
W. McComb Dunwoody | | 73 | | Since 2007, Mr. Dunwoody has served on our Board of Directors and is a member of our Compensation Committee. He is the founder of The Inverness Group Incorporated and since 1976 he has been a Managing Member of Inverness Management LLC, a private equity investment firm that specializes in management buyout transactions. Inverness is not a parent, subsidiary or other affiliate of Triangle. Prior to Inverness, Mr. Dunwoody began the Corporate Finance Department of First City National Bank of Houston as a Senior Vice President. From 1968 to 1975, he worked in New York as an investment banker with The First Boston Corporation and Donaldson, Lufkin & Jenrette. Mr. Dunwoody currently serves on various corporate boards of directors and was formerly the Chairman of the Executive Committee of the Board of Directors | Class I Director; Term Expires 2025; Director since August 2018 | President (since 2021), Global Head of National-Oilwell, Inc. Mr. Dunwoody’s community involvement includes serving asPrivate Assets (2020-2021), Deputy Head of Global Markets & Head of Private Fixed Income (2019-2020), Head of Global Private Finance (2013-2019), Barings LLC (global asset manager). | 3 | Director (since 2020), Chairman of Project GRAD USA and Imagine College, education programs serving over 100,000 at risk K-12 students. He received an undergraduate degree in Business Administration from the University of Texas Honors Program. Currently, Mr. Dunwoody does not serve on the board of directors of any other public company.(since 2021), BCIC; Director (Chairman) (since 2021), BPCC. |
Mark M. GambillNon-Interested Directors | | | 67 | | Since 2009, Mark M. Gambill has served on our Board of Directors. In addition, Mr. Gambill serves as a member of our Nominating and Corporate Governance Committee. Mr. Gambill currently serves as Chairman Emeritus of Luxon Financial, LLC, the parent company of Cary Street Partners, a Richmond, Virginia based advisory and wealth management firm. Mr. Gambill is a co-founder of Cary Street Partners, where he served as Chairman from 2002 to 2017. From 1972 to 1999, Mr. Gambill was employed by Wheat First Butcher Singer (“Wheat”). He served as head of Wheat’s capital markets group in the late 1980s, where he was responsible for investment banking, public finance, taxable fixed income, municipal sales and trading, equity sales, trading and research. He became President of Wheat in 1996. Wheat merged with First Union Corporation in January 1998. Subsequent to Wheat’s merger with First Union, Mr. Gambill served as President of Wheat First Union. He later was named Head of Equity Capital Markets of Wheat First Union. He currently serves on the Board of Directors of Speedway Motorsports, Inc. (NYSE: TRK) where he is Chairman of its Audit Committee and a member of its Compensation Committee. Mr. Gambill is also a director of NewMarket Corporation (NYSE: NEU) and serves as Chairman of its Audit Committee and as a member of its Nominating and Governance Committee. Neither of these entities is an affiliate of Triangle. Mr. Gambill graduated summa cum laude from Hampden-Sydney College.
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Name | | Age | | Background Information |
Benjamin S. Goldstein | | 62 | | Mr. Goldstein has served on our Board of Directors since 2007 and is a member of our Compensation Committee and chairs our Audit Committee. From 1997 to 2010, Mr. Goldstein was the President and co-founder of The Advisory Group, LLC, a real estate advisory, development and investment firm based in Raleigh, North Carolina. Since 2010, he has served as Chief Operating Officer for CAPTRUST Financial Advisors, a financial and fiduciary advisory firm based in Raleigh, North Carolina. Neither The Advisory Group, LLC, nor CAPTRUST Financial Advisors is a parent, subsidiary or other affiliate of Triangle. Prior to co-founding The Advisory Group, Mr. Goldstein was President and Partner of Roanoke Properties, the developer of a residential resort real estate community on the Outer Banks of North Carolina. He spent three years in the securities business, serving as the Chief Financial Officer of Carolina Securities Corporation for one year, and was later named to head the Carolina Securities Division of Thomson McKinnon Corporation, which had acquired Carolina Securities. He began his career at KPMG, where he worked with audit and consulting clients with an emphasis on the real estate industry. Mr. Goldstein is also active in his community, as he currently serves on the leadership council of the Wake Education Partnership, based in Raleigh, North Carolina, as well as on the Board of Directors of the YMCA of the Triangle. A native of North Carolina, Mr. Goldstein is a CPA and graduated from University of North Carolina at Chapel Hill with a degree in business. Currently, Mr. Goldstein does not serve on the board of directors of any other public company. |
| Mark F. Mulhern (63) | Director | 58Class I Director; Term Expires 2025; Director since October 2016 (Triangle Capital) | | Mr. Mulhern was appointed to our Board of Directors in October 2016. In addition, Mr. Mulhern serves as a member of our Audit Committee, our Nominating and Corporate Governance Committee, and chairs our Compensation Committee. Mr. Mulhern currently serves as Senior Vice President and Chief Financial Officer at Highwoods Properties, Inc., a Raleigh, North Carolina based publicly-traded (NYSE: HIW) real estate investment trust. Mr. Mulhern joined Highwoods in September 2014. Mr. Mulhern previously served on the Highwoods Board of Directors and Audit Committee from January 2012 through August 2014. Prior to joining Highwoods, he served as Executive Vice President and Chief Financial Officer of Exco Resources,(2014 - 2022), Highwood Properties, Inc. Prior to Exco, he served as Senior Vice President and Chief Financial Officer of Progress Energy, Inc. from 2008 until its merger with Duke Energy Corporation in 2012. He joined Progress Energy in 1996 as Vice President and Controller and served in a number of roles at Progress Energy, including Vice President of Strategic Planning, Senior Vice President of Finance and President of Progress Ventures. He also spent eight years at Price Waterhouse. Mr. Mulhern is a Certified Public Accountant and is a graduate of St. Bonaventure University. He currently serves on the board of(publicly traded real estate investment trust). | 5 | Trustee (since 2022), PEOC; Director (since 2021), BPCC; Trustee (since 2021), Barings Global Short Duration High Yield Fund (closed-end investment company advised by Barings); Director (since 2020), Intercontinental Exchange (NYSE: ICE); Director (since 2020), ICE Mortgage Technology; Director (since 2020), BCIC; Director (since 2015), McKim and Creed a North Carolina based professional engineering services firm. Mr. Mulhern does not serve on the board of directors of any other public company. |
| | | | (engineering service firm); Director and Audit Committee member (2012-2014), Highwood Properties (real estate investment trust); Director (2015-2017), Azure MLP (midstream oil and gas). |
| | | | | | | | | | | | | | | | | |
Robert Knapp(57) | Director | Class I Director; Term Expires 2025; Director since December 2020 | Chief Investment Officer (since 2007), Ironsides Partners LLC (investment management firm). | |
Name1 | | Age | | Background Information |
Simon B. Rich, Jr. | | 73 | | Mr. Rich has served on our Board of Directors since 2007Director (since 2007), Africa Opportunity Fund Ltd.; Director (since 2010), Pacific Alliance Asia Opportunity Fund and is a member of our Audit Committee and chairs our Nominating and Corporate Governance Committee. Mr. Rich also serves as our lead independent director. Prior to his retirement in 2001, Mr. Rich held positions as President of Louis Dreyfus Holding Co. and Chairman of Louis Dreyfus Natural Gas, and as CEO of Louis Dreyfus Natural Gas, two affiliated Delaware and Oklahoma companies, respectively, neither of which was a parent, subsidiary or other affiliate of Triangle. As CEO, Mr. Rich’s companies’ combined operations included oil refinery processing, petroleum product storage and distribution, natural gas production and distribution and the merchandising and distribution of electricity in North America and Europe, as well as the merchandising and processing of agricultural products in North America, South America and Europe. During Mr. Rich’s tenure, his companies successfully partnered with Electricite de France, creating EDF Trading, a company that currently dispatches France’s electric generation system. From 2005 to 2006, Mr. Rich also served as a director and member of the Audit Committee of Fisher Scientific. His work experience, which spans more than forty years, includes all aspects of the energy and agriculture industries. His expertise involves private equity investments with an emphasis on sustainability in energy and agriculture. Mr. Rich is also the former Chairman of the Board of Visitors of The NicholasPacific Alliance Group Asset Management Ltd.; Director (since 2010), Sea Education Association; Director (since 2015), Mass Eye & Ear; Director (since 2016), Children's School of the Environment and Earth Sciences at Duke University, where he is now Emeritus. Mr. Rich holds an undergraduate degree in Economics from Duke University. Currently, Mr. Rich does not serve on the board of directors of any other public company.Science; Director (since 2017), Lamington Road DAC (successor to Emergent Capital Inc.); Director (since 2018), Okeanis Eco Tankers Corp.; Director (2003-2020), MVC Capital; Director (2017-2018), MPC Container Ships; Director (2012-2019), Castle Private Equity. |
Required Vote. A nominee for
(1) The business address of each director is elected to300 South Tryon Street, Suite 2500, Charlotte, NC 28202. The age of each individual is as of the Boarddate of Directors if the number of votes cast for such nominee’s election at the Annual Meeting at which a quorum is present exceedsMeeting.
(2) Including the number of votes cast against such nominee’s election. For purposes of the vote on this proposal, abstentions and broker non-votes will not be counted as votes cast and will have no effect on the result of the vote.Company.
The Board of Directors recommends that you vote “FOR” the election of the nominees named in this proxy statement.(3) Interested Director due to affiliations with Barings LLC.
Qualifications of Director Nominees and Other Directors.
When considering whether our director nominees haveThe following provides an overview of the experience, qualifications, attributes and skills, taken as a whole, to enable our Board of Directors to satisfy its oversight responsibilities effectively in light of our operational and organizational structure,considerations that led the Nominating and Corporate Governance Committee and the Board of Directors focused primarily onto recommend and approve the information discussed in eachelection or appointment of the director nominees’ individual biographies set forth aboveindividuals serving as a Director or nominee for Director. Each of the Directors has demonstrated superior credentials and onrecognition in his or her respective field and the following particular attributes:
Mr. Poole: Therelevant expertise and experience upon which to be able to offer advice and guidance to the Company’s management. In recommending the election or appointment of the Board members or nominees, the Nominating and Corporate Governance Committee andgenerally considers certain factors including the current composition of the Board of Directors, considered his prior service tooverall business expertise, gender, cultural and racial diversity, whether the Company as its Chairman, Chief Executive Officer, President and Chief Operating Officer and his extensive experience incomposition of the capital markets, corporate strategy, investment banking and consulting and determined that his strong leadership skills are critical to the oversight of our operations and evaluation of our performance.
Mr. Lilly: The Nominating and Corporate Governance Committee and Board of Directors considered his prior servicecontains a majority of independent directors as determined under the NYSE listing standards and the 1940 Act, the candidate’s character and integrity, whether the candidate possesses an inquiring mind, vision and the ability to work well with others, conflicts of interest interfering with the proper performance of the responsibilities of a director, a candidate’s overall business experience, what type of diversity he or she brings to the Board of Directors, whether the candidate has sufficient time to devote to the affairs of the Company, as its Chief Financial Officer, Secretary, Treasurerincluding consistent attendance at Board of Directors and Chief Compliance Officercommittee meetings and his broad experienceadvance review of materials and leadershipwhether each candidate can be trusted to act in the financial industry and determined that his intimate knowledgebest interests of the Company and extensive public company operatingits stockholders.
Nominees for Class II Directors; Term expiring at the 2023 Annual Stockholder Meeting
•Mr. Byers — Mr. Byers is a senior executive with over 30 years of leadership experience in finance, operations and knowledge of the financial industrycontrol, investment management and the capital markets are crucial towith leading national firms in asset management, banking and brokerage. Mr. Byers serves as the achievementIndependent Chairman of our operational and financial goals.
Mr. Tucker: The Nominating and Corporate Governance Committee andthe Board of Directors considered his prior serviceof Deutsche Bank DBX ETF Trust and as a member of the audit and nominating committees. Since 2016, Mr. Byers has also served as a board member of the Mutual Fund Directors Forum, an independent, non-profit organization serving independent directors of U.S. funds registered with the Securities and Exchange Commission under the 1940 Act. Mr. Byers served as an Independent Director and Chairman of Sierra Income Corporation, a non-traded business development company (BDC) sponsored by Medley LLC (NYSE:MCC), from 2012 to 2022. Sierra Income merged with Barings BDC, Inc. in February, 2022, in connection with which Mr. Byers was appointed to the CompanyBoard of Directors of Barings BDC, Inc. From 2002 to 2012, Mr. Byers also served as itsTrustee for the College of William and Mary Graduate School of Business. Since 2014, Mr. Byers has been engaged periodically as an independent consultant to provide expert reports and opinions in financial and investment related matters. From 2000 to 2006, Mr. Byers served as an investment executive with Dreyfus Corporation and served as Vice Chairman, Executive Vice President, Chief Investment Officer, member of the Board of Directors and Executive Committee, and fund officer of 90 investment companies, responsible for investment performance of approximately $200 billion in assets under management. Prior to joining Dreyfus Corporation, Mr. Byers served in executive positions at PaineWebber Group from 1986 to 1997, and served in such capacities as chairman of the Investment Policy and Risk Oversight Committee, Capital Markets Director of Risk and Credit Management, and was NASD registered as General Principal, Financial and Operations Principal and Branch Principal. Prior to PaineWebber, Mr. Byers was an executive at Citibank/Citicorp from 1979 to 1986. Mr. Byers received his M.B.A. in Finance from Roth Graduate School of Business, Long Island University and his B.A. in Economics from Long Island University. In December 2014, Mr. Byers was recognized by the National Association of Corporate Directors as a Board Leadership Fellow.
•Ms. Lancaster-Beal — Ms. Lancaster-Beal is a financial professional with extensive management and board level experience in corporate governance, credit and financial analysis. Ms. Lancaster-Beal is the President and Chief Executive Officer of VLB Associates, a management consulting firm she founded in January 2014 that provides financial and hisoperational advisory services to middle-market businesses, investment firms and non-profit organizations. In this capacity, she previously served as the Chief Financial Officer of Odyssey Media from 2015 to 2021, and as the Chief Administrative and Finance Director of Data Capital Management from 2015 to 2017. Prior to this, she served as Managing Director at M.R. Beal & Company, which she co-founded in April 1988, until 2014. Ms. Lancaster-Beal was a Senior Vice President of Drexel Burnham Lambert from 1984 to 1988 and as Vice President of Citicorp
Investment Bank from 1978 to 1984. Ms. Lancaster-Beal served as an Independent Director and Chair of the Nominating and Governance committee and the Audit committee of Sierra Income Corporation, a non-traded business development company (BDC) sponsored by Medley LLC (NYSE:MCC), from 2021 to 2022. Sierra Income merged with Barings BDC, Inc. in February, 2022, in connection with which Ms. Lancaster-Beal was appointed to the Board of Directors of Barings BDC, Inc. Ms. Lancaster-Beal currently serves on the Board of Directors of KIPP NYC, a network of free, public charter schools. She also previously served as a Trustee on the Board of the City University of New York from 2000 to 2014, where she chaired the Faculty, Staff and Administration Committee and served on the Finance Committee. Additionally, Ms. Lancaster-Beal served on the Board of Regents of Georgetown University from 2006 to 2010. Ms. Lancaster-Beal holds a B.A. in Economics from Georgetown University and an M.B.A. from the Wharton School of Business of the University of Pennsylvania.
•Mr. Switzer — Mr. Switzer brings over forty35 years of public accounting firm experience to the Board. Mr. Switzer has served as a member of the Board of Directors of Barings Capital Investment Corporation (a business development company advised by Barings) since March 2021, and since May 2017, has served as a member of the Board of Directors of Carolina Tractor and Equipment Company (CTE), a large, privately held Southeastern supplier of construction, forestry, paving, and material handling equipment. Since September 2019, Mr. Switzer has also served as a member of the Board of Directors of HomeTrust Bancshares, Inc., a publicly traded regional banking organization, where he also serves on the Audit Committee. Previously, Mr. Switzer served as managing partner of KPMG's Charlotte office (starting in 2009) until retirement in 2016, where he was also the market leader for KPMG’s Carolinas, Florida, and San Juan offices. Prior to these positions, he served as managing partner of KPMG’s Cleveland (1999 to 2007) and Kentucky (Louisville and Lexington) (1988 to 1998) offices. Mr. Switzer currently serves on the boards of The Foundation for the Mint Museum and the National Association of Corporate Directors, Carolinas Chapter. Mr. Switzer is a Certified Public Accountant and holds a B.S. in Accounting from the University of Kentucky.
Directors Continuing in Office
Class III Directors; Term expiring at the 2024 Annual Stockholder Meeting
•Mr. Mihalick — Mr. Mihalick brings over 16 years of experience in the financial services industry. He is Barings LLC's Head of Private Assets, managing the firm's global private assets businesses, including global direct lending, private placement and investment industriesinfrastructure debt, private structured finance, funds and determined thatco-investments and private equity real assets. He is also a member of Barings LLC's Senior Leadership Team. Prior to his intimate knowledgecurrent role, Mr. Mihalick served as Head of the
CompanyU.S. Public Fixed Income and his familiarityHead of U.S. High Yield, where he was responsible for the U.S. High Yield and Investment Grade Investment Groups. Prior to joining Barings LLC in 2008, he was a Vice President with Wachovia Securities Leveraged Finance Group. At Wachovia (now Wells Fargo) he was responsible for sell-side origination of leveraged loans and high yield bonds to support both corporate and private equity issuers. Prior to entering the financial services industry, he served as an officer in the United States Air Force and worked in the telecommunications industry for 7 years. Mr. Mihalick serves as a trustee or director of Barings Capital Investment Corporation, a business development company advised by Barings, Barings Global Short Duration High Yield Fund, a closed-end investment industries are criticalcompany advised by Barings, Barings Corporate Investors and Barings Participation Investors, both closed-end funds advised by Barings. Mr. Mihalick holds a B.S. from the United States Air Force Academy, an M.S. from the University of Washington and an M.B.A. from Wake Forest University.
•Mr. Okel — Mr. Okel brings over 20 years of experience in the underwriting, structuring, distribution and trading of debt used for corporate acquisitions, leveraged buyouts, recapitalizations and refinancings. He previously served as Executive Director of Catawba Lands Conservancy, a non-profit land trust. Prior to joining Catawba Lands Conservancy, he served as Global Head of Syndicated Capital Markets at Bank of America Merrill Lynch, where he managed capital markets, sales, trading and research for the oversightUnited States, Europe, Asia and Latin America from 1989 to 2010. He currently serves as trustee or director of our strategic goals and the evaluation of our operational performance.
Mr. Dunwoody: The Nominating and Corporate Governance Committee and Board of Directors considered his extensive experience and leadership inseveral public and private companies and determined that his broad experience enhances his participation tonon-profit organizations, including Barings Private Credit Corporation and Barings Capital Investment Corporation (both business development companies advised by Barings);
Barings Global Short Duration High Yield Fund, a closed-end investment company advised by Barings; Barings Private Equity Opportunities and Commitments Fund, a non-diversified, closed-end management investment company advised by Barings; and is Chairman of the Board of Directors of Horizon Funds, a mutual fund complex. Mr. Okel holds a Bachelor of Arts in Economics from Davidson College and oversighta Masters of our compensation objectives.
Management, Finance, Accounting and Marketing from Kellogg School of Management, Northwestern University.•Ms. Olmstead — Ms. Olmstead brings over 21 years of senior leadership experience in Human Resources in the financial services industry to her role as the Chair of the Company’s Compensation Committee. She is currently the Chief Human Resources Officer at LendingTree, Inc. and was a Founding Partner of Spivey & Olmstead, LLC, a Talent and Leadership Consulting firm with expertise in the fields of executive development and talent management founded in June 2010. She also currently serves on the boards of Barings Private Credit Corporation and Barings Capital Investment Corporation (both business development companies advised by Barings); Barings Global Short Duration High Yield Fund, a closed-end investment company advised by Barings; and Barings Private Equity Opportunities and Commitments Fund, a non-diversified, closed-end management investment company advised by Barings. The Board benefits from her experience with C-suite executives in helping lead companies' efforts on talent strategies, including succession planning, building strong performance cultures, and diversity and inclusion work. She has a strategic and pragmatic approach to talent management with an eye toward bottom line results. In her capacity as Managing Director (2006 to 2009) and Executive Vice President (2000 to 2006) at Wachovia Corporation (now Wells Fargo) she was both the Head of Human Resources for the Corporate and Investment Bank and the Head of Human Resources for the International Businesses. Prior to this, she formed and led the Leadership Practices Group at Wachovia to create and implement a company-wide talent management process that identified, developed, tracked and promoted high potential leaders throughout their careers. Ms. Olmstead received a Bachelor of Science at Clemson University and a Masters in Organization Behavior and Development at Fielding University, Santa Barbara, CA.
Class I Directors; Term expiring at the 2025 Annual Stockholder Meeting
•Mr. Gambill: The NominatingLloyd — Mr. Lloyd brings over 30 years of experience in investment management, investment banking, leveraged finance and Corporate Governancerisk management to the Board. Mr. Lloyd is President of Barings LLC where he leads and manages cross-asset investment teams, corporate strategy, business development, product management, investment business management, research analytics and quant, permanent capital, special situations, marketing and communication. Mr. Lloyd also works closely with all the investment teams at Barings LLC. Prior to his current role, Mr. Lloyd served as Head of Private Assets. Mr. Lloyd has worked in the industry since 1990 and his experience has encompassed leadership positions in investment management, investment banking, leveraged finance and risk management. Prior to joining Barings in 2013, Mr. Lloyd served as Head of Market and Institutional Risk for Wells Fargo, was on Wells Fargo’s Management Committee and was a member of the Board of Directors considered his involvementof Wells Fargo Securities. Before the acquisition of Wachovia, Mr. Lloyd worked in Wachovia’s Global Markets Investment Banking division and served on the capital markets for over thirty-five years, supervisingdivision’s Operating Committee where he had various areasleadership positions, including financing and research, and determined that his experience in servingHead of Wachovia’s Global Leveraged Finance Group. Mr. Lloyd serves as an advisor to internal operations and proper capitalization and structure in a varietythe Chairman of settings bring crucial skills and contributions to the Board of Directors.
Directors to Barings Private Capital Corporation and Barings Capital Investment Corporation, both business development companies advised by Barings. Mr. Lloyd holds a B.S. in Finance from the University of Virginia's McIntire School of Commerce.Mr. Goldstein: The Nominating and Corporate Governance Committee and Board of Directors considered his extensive experience in directly auditing engagements of private and public companies and determined that his experience of over twenty-five years of work with various financial and accounting matters and in public accounting enhances his ability to provide effective leadership as chairman of our Audit Committee and to provide effective oversight of compensation decisions in his capacity as member of our Compensation Committee.
•Mr. Mulhern: The Nominating and Corporate Governance Committee and Board of Directors considered his — Mr. Mulhern brings significant public company experience, both as a senior executive and as a board member,member. From September 2014 until his retirement on January 1, 2022, he served as Executive Vice President and determined that his accounting, taxChief Financial Officer of Highwoods Properties, Inc., a Raleigh, North Carolina based publicly-traded real estate investment trust. Prior to joining Highwoods, Mr. Mulhern served as Executive Vice President and corporate strategy background provide valuable contributionsChief Financial Officer of Exco Resources, Inc. Prior to the oversightExco, he served as Senior Vice President and Chief Financial Officer of our company’s compensationProgress Energy, Inc. from 2008 until its merger with Duke Energy Corporation in 2012. He joined Progress Energy in 1996 as Vice President and financial objectives.Controller and served in a number of leadership roles at Progress Energy, including Vice President of Strategic Planning, Senior Vice President of Finance and President of Progress Ventures. He also spent eight years at Price
Waterhouse, now known as PwC. Mr. Rich: The Nominating and Corporate Governance Committee andMulhern previously served on the Highwoods Board of Directors considered his publicand Audit Committee from January 2012 through August 2014. He currently serves on the boards of Barings Private Credit Corporation and Barings Capital Investment Corporation, both business development companies advised by Barings); Barings Global Short Duration High Yield Fund, a closed-end investment company advised by Barings; and Barings Private Equity Opportunities and Commitments Fund, a non-diversified, closed-end management investment company advised by Barings. Additionally, Mr. Mulhern serves on the board of the Intercontinental Exchange, a Fortune 500 company and provider of marketplace infrastructure, data service and technology solutions to a broad range of customers. He also serves on the board of Ellie Mae, Inc., the operating company of ICE Mortgage Technology, both of which are subsidiaries of Intercontinental Exchange. Mr. Mulhern also currently serves on the board of McKim and Creed, a North Carolina based professional engineering services firm. Mr. Mulhern is a Certified Public Accountant and is a graduate of St. Bonaventure University.
•Mr. Knapp — Mr. Knapp brings over 25 years of experience in the financial services industry to the Board. He is the Founder and Chief Investment Officer of Ironsides Partners LLC, a Boston-based investment manager specializing in closed-end funds, holding companies, and asset value investing generally. Ironsides and related entities serve as wellthe manager and general partner to various funds and managed accounts for institutional clients. Mr. Knapp is also a director of Okeanis Eco Tankers, the Pacific Alliance Asia Opportunity Fund and its related entities and Pacific Alliance Group Asset Management Ltd., based in Hong Kong, and Lamington Road DAC, the successor to Emergent Capital. He is a principal and director of Africa Opportunity Partners Limited, a Cayman Islands company that serves as his successful leadershipthe investment manager to Africa Opportunity Fund Limited. Additionally, Mr. Knapp serves as a member of the Board of Managers of Veracity Worldwide LLC. Mr. Knapp previously served as the Lead Independent Director of MVC Capital, Inc. until completion of its merger with the Company in December 2020 and was previously an independent, nonexecutive director of Castle Private Equity AG and MPC Container Ships. He also acted as Managing Director for over ten years at Millennium Partners in New York. In the non-profit sector, Mr. Knapp serves as a director of the Massachusetts Eye and Ear Infirmary, and is a Trustee of the Children’s School of Science and the Sea Education Association, both based in Woods Hold, Massachusetts.
COMPENSATION DISCUSSION
The Company’s executive officers are employees of Barings and do not receive any direct compensation from the Company. Barings serves as our external investment adviser and manages the Company’s investment portfolio under the terms of a varietysecond amended and restated investment advisory agreement (the "Advisory Agreement"), in connection with which the Company pays Barings a base management fee and an incentive fee, the details of entitieswhich are disclosed in the Company’s annual report on Form 10-K for the fiscal year ended December 31, 2022, which is being mailed to stockholders along with this proxy statement.
The Company’s day-to-day investment operations are managed by Barings and determined that his leadershipservices necessary for its business, including the origination and public company experience provide valuable contributionsadministration of its investment portfolio are provided by individuals who are employees of Barings, as investment adviser and administrator, pursuant to the terms of the Advisory Agreement and an administration agreement (the "Administration Agreement"). The Company reimburses Barings, in its capacity as administrator, for the costs and expenses incurred by it in performing its obligations and providing personnel and facilities under the Administration Agreement in an amount to be negotiated and mutually agreed to by the Company and Barings quarterly in arrears. In no event will the agreed-upon quarterly expense amount exceed the amount of expenses that would otherwise be reimbursable by the Company under the Administration Agreement for the applicable quarterly period, and Barings will not be entitled to the recoupment of any amounts in excess of the agreed-upon quarterly expense amount. The costs and expenses incurred by Barings on our behalf under the Administration Agreement include, but are not limited to:
▪the allocable portion of Barings' rent for the Company’s Chief Financial Officer and Chief Compliance Officer and their respective staffs, which is based upon the allocable portion of the usage thereof by such personnel in connection with their performance of administrative services under the Administration Agreement;
▪the allocable portion of the salaries, bonuses, benefits and expenses of the Company’s Chief Financial Officer and Chief Compliance Officer and their respective staffs, which is based upon the allocable portion of the time spent by such personnel in connection with performing administrative services for the Company under the Administration Agreement;
▪the actual cost of goods and services used for the Company and obtained by Barings from entities not affiliated with the Company, which is reasonably allocated to the Company on the basis of assets, revenues, time records or other methods conforming with generally accepted accounting principles;
▪all fees, costs and expenses associated with the engagement of a sub-administrator, if any; and
▪costs associated with (a) the monitoring and preparation of regulatory reporting, including registration statements and amendments thereto, prospectus supplements, and tax reporting, (b) the coordination and oversight of our company’s governance guidelinesservice provider activities and the direct cost of such contractual matters related thereto and (c) the preparation of all financial records.statements and the coordination and oversight of audits, regulatory inquiries, certifications and sub-certifications.
DIRECTOR COMPENSATION
OurThe Company's directors are divided into two groups — interested directorsInterested Directors and independent directors.Independent Directors. Interested directorsDirectors are “interested persons” as defined in Section 2(a)(19) of the 1940 Act. During 2022,Interested Directors did not receive any compensation from the Company for their service as members of the Board of Directors. The compensation table below sets forth compensation that our independent directors (none of which are employees of the Company)Company's Independent Directors earned during the year ended December 31, 2017. 2022.
| | | | | | | | | | | | | | | | | | | | |
| Name | | Fees Earned
or Paid in
Cash | | All Other Compensation(1) | | Total |
| Mark Mulhern | | $ | 130,000 | | | $ | — | | | $ | 130,000 | |
| John A. Switzer | | $ | 120,000 | | | $ | — | | | $ | 120,000 | |
| Thomas W. Okel | | $ | 130,000 | | | $ | — | | | $ | 130,000 | |
| Jill Olmstead | | $ | 120,000 | | | $ | — | | | $ | 120,000 | |
| Robert Knapp | | $ | 120,000 | | | $ | — | | | $ | 120,000 | |
Steve Byers(2) | | $ | 90,000 | | | $ | — | | | $ | 90,000 | |
Valerie Lancaster-Beal(2) | | $ | 90,000 | | | $ | — | | | $ | 90,000 | |
(1) All other compensation includes reimbursement of out-of-pocket expenses
(2) Each of Mr. Byers and Ms. Lancaster-Beal became a director of the Company effective February 25, 2022, immediately after the closing of the Company's merger with Sierra Income Corporation.
Director Fees
Each Independent Director of the Board of Directors is paid an annual board retainer of $120,000, payable by the Company in quarterly installments, and the Board’s lead independent director and the chair of the Board’s Audit Committee will each receive an additional $10,000 annual retainer in recognition of the increased responsibilities associated with each such position.
In 2017, our interested directors wereaddition, the Company reimburses Independent Directors for any out-of-pocket expenses related to their service as members of the Board of Directors. The Independent Directors of the Board of Directors do not compensatedreceive any stock-based compensation for their service as members of ourthe Board of Directors.
|
| | | | | | | | | | | | | | | | | | |
| Name | | Year | | Fees Earned or Paid in Cash | | Stock Awards(1) | | All Other Compensation | | Total |
| W. McComb Dunwoody | | 2017 | | $ | 38,500 |
| | $ | 50,000 |
| | $ | — |
| | $ | 88,500 |
|
| Mark M. Gambill | | 2017 | | $ | 38,500 |
| | $ | 50,000 |
| | $ | — |
| | $ | 88,500 |
|
| Benjamin S. Goldstein | | 2017 | | $ | 78,250 |
| | $ | 50,000 |
| | $ | — |
| | $ | 128,250 |
|
| Mark Mulhern | | 2017 | | $ | 81,583 |
| | $ | 50,000 |
| | $ | — |
| | $ | 131,583 |
|
| Simon B. Rich, Jr.(2) | | 2017 | | $ | 62,750 |
| | $ | 50,000 |
| | $ | — |
| | $ | 112,750 |
|
| Sherwood H. Smith, Jr.(3) | | 2017 | | $ | 8,000 |
| | $ | — |
| | $ | — |
| | $ | 8,000 |
|
| |
(1) | Grant date fair value of restricted stock awards granted to each non-employee director on May 3, 2017. SEC disclosure rules require reporting of the aggregate grant date fair value computed in accordance with Financial Accounting Standards Board, or FASB, Accounting Standards Codification, or ASC, Topic 718, or FASB ASC Topic 718, Compensation – Stock Compensation. |
| |
(2) | Effective December 1, 2017, Mr. Rich is paid a cash fee of $12,500 per month for his services as chair of the independent directors in connection with the Strategic Review. See “Director Fees” below for more information. |
| |
(3) | Mr. Smith did not stand for election at our 2017 Annual Meeting of Stockholders, therefore his term expired on May 3, 2017. |
Director Fees
For fiscal year 2017, each non-employee member The Company's Interested Directors do not receive any compensation from the Company for their service as members of the Board of Directors, with the exception of Mr. Smith, was paid a $20,000 annual cash retainer fee. Also in 2017, each of our non-employee directors, with the exception of Mr. Smith, earned an annual fee of $50,000 worth of our restricted stock, calculated based on the share price of our common stock as of the close of the NYSE on May 3, 2017, the date of grant. Based on this calculation, each of our independent directors, with the exception of Mr. Smith, received 2,694 shares of restricted stock, which will vest on May 3, 2018. These restricted stock grants historically have occurred on the date of our annual stockholders meeting. Mr. Mulhern was paid a $23,333 cash retainer fee for his service for the first four months of 2017, in lieu of receiving a grant of restricted stock in May of 2016, which would have been for the service period from May 2016 to April of 2017.Directors.
Our independent directors receive a fee of $2,500 for each Board of Directors meeting attended in person and $1,250 for each Board of Directors meeting attended by conference telephone or similar communications equipment; Audit Committee members receive a fee of $1,500 for each Audit Committee meeting attended in person and $750 for each Audit Committee meeting attended by conference telephone or similar communication equipment; and members of our Compensation Committee and Nominating and Corporate Governance Committee receive a fee of $1,000 for each committee meeting attended in person and $500 for each committee meeting attended by conference telephone or similar communication equipment. Finally, our Audit Committee chairman receives an annual fee of $30,000, our Compensation Committee chairman receives an annual fee of $10,000 and our Nominating and Corporate Governance Committee chairman receives an annual fee of $5,000 for their services as chairmen of their respective committees. We also reimburse our independent directors for all reasonable direct out-of-pocket expenses incurred in connection with their service on the Board of Directors. Directors who are also our employees or employees of our subsidiaries do not receive compensation for their services as directors.
In November 2017, the Company announced that the Board of Directors was beginning a process of exploring and evaluating a range of certain strategic alternatives to enhance long-term stockholder value (the "Strategic Review"). This process included the engagement of Houlihan Lokey as a financial advisor to assist the Board of Directors. As part of this process, the Board of Directors approved the appointment of Simon B. Rich, Jr. as chair of the independent directors in connection with the Strategic Review and any related decisions with respect thereto. As compensation for Mr. Rich’s increased duties, responsibilities and time commitment associated with this appointment, effective December 1, 2017, he will receive an additional cash fee of $12,500 per month. The Compensation Committee, in its sole discretion, is authorized to adjust this monthly cash fee based upon any changes in the duties, responsibilities and time commitment associated with Mr. Rich’s service as chair of the independent directors; provided, however, that in no event will the fee exceed $20,000 per month.
Non-Employee Director Equity Compensation
On March 18, 2008, we received an order from the SEC granting exemptive relief with respect to our ability to issue restricted stock to our employees and non-employee directors pursuant to the terms of our Amended and Restated 2007 Equity Incentive Plan, or the Equity Incentive Plan. In connection with receiving the necessary exemptive relief, our Board of Directors approved the Equity Incentive Plan and our stockholders voted to approve the Equity Incentive Plan at our 2008 Annual Meeting of Stockholders. On February 22, 2017, both our Compensation Committee and our Board of Directors adopted the Company’s Omnibus Incentive Plan, or the Omnibus Plan, which was approved by our stockholders at the 2017 Annual Meeting of Stockholders. Prior to adoption of the Omnibus Plan, the Company compensated its professional through two separate plans; the Equity Incentive Plan and the 2012 Executive Cash Incentive Plan. The Omnibus Plan was created primarily for the purpose of combining the Equity Incentive Plan and the 2012 Executive Cash Incentive Plan in order to reduce the administrative burden of monitoring the terms and conditions of two separate plans. The terms of the Equity Incentive Plan and the 2012 Executive Cash Incentive Plan, as combined and reflected in the Omnibus Plan, are substantially similar to the respective terms of each standalone plan.
The Omnibus Plan provides that our non-employee directors each receive an automatic grant of restricted stock at the beginning of each one-year term of service on the Board of Directors, for which forfeiture restrictions lapse one year from the grant date. The grant of restricted stock to non-employee directors under the Omnibus Plan is automatic and the terms thereunder may not be changed without SEC approval. On March 21, 2013, the SEC approved an increase in the amount of the automatic grant to non-employee directors to $50,000 worth of restricted stock each year, and our stockholders approved this increase at our 2013 Annual Meeting of Stockholders. Shares granted pursuant to a restricted stock award will not be transferable until such shares have vested in accordance with the terms of the award agreement, unless the transfer is by will or by the laws of descent and distribution.
CORPORATE GOVERNANCE
Director Independence
In accordance with the NYSE’s listing standards, our Board of Directors annually determines each director’s independence. We do not consider a director independent unless ourThe Board of Directors has determined that he or she has no material relationship with us. We monitor the relationshipsa majority of our directors through the activities of our Nominating and Corporate Governance Committee and through a questionnaire each director completes no less frequently than annually and updates periodically if information provided in the most recent questionnaire changes.
In order to evaluate the materiality of any such relationship, the Board of Directors uses the definition of director independence set forth inwho are independent under the listing standards promulgated byof the NYSE. Rule 303A.00 providesNew York Stock Exchange (“NYSE”). The NYSE Listed Company Rules provide that a director of a business development companyBDC shall be considered to be independent if he or she is not an “interested person”"interested person" of the Company, as defined in Section 2(a)(19) of the 1940 Act. Section 2(a)(19) of the 1940 Act defines an "interested person" to include, among other things, any person who has, or within the last two years had, a material business or professional relationship with the Company.
In addition, our Chief Compliance Officer reviews a listThe Board of each director’s securities transactionsDirectors has determined that Mses. Olmstead and holdings in order to ensure that our directors haveLancaster-Beal and Messrs. Mulhern, Okel, Switzer, Knapp, and Byers are independent (or not entered into any transactions with, or own any interest in, companies that would cause one or more of them to be considered “interested persons” of the Company). Based upon information requested from each such director concerning his or her background, employment and affiliations, the Board of Directors has affirmatively determined that none of the independent directors has a material business or professional relationship with the Company, other than in his or her capacity as a member of the Board of Directors or any committee thereof. None of the members of the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee are "interested persons," as defined in Section 2(a)(19) of the 1940 Act. For a more detailed description of these policies, please see “Certain Relationships and Related Party Transactions” herein.
The Board of Directors has determined that Messrs. Dunwoody, Gambill, Goldstein, Mulhern and Rich are independent and have no relationship with us, except as directors and stockholders. AllAct, of the members of our Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee are not "interested persons" as defined in Section 2(a)(19) of the 1940 Act.Company.
Meetings of the Board of Directors and Committees
During 2017, ourIn 2022, the Board of Directors held ten meetings. Ourfive meetings of the Board of Directors, has established anas well as four Audit Committee meetings, one Compensation Committee meeting, and a Nominating and Corporate Governance Committee. Each of the Audit Committee, Compensation Committee andone Nominating and Corporate Governance Committee operates pursuant to a charter, each of which is available under “Corporate Governance” on the Investor Relations section of our website at the following URL: http://ir.tcap.com, and is also available in print to any stockholder who requests a copy.meetings. During 2017,2022, none of our directorsthe members of the Board of Directors attended less than 75% of the aggregate number of meetings of the Board of Directors and of the respective committees on which they served.
Each of ourthe Company's directors makes a diligent effort to attend all board and committee meetings, as well as each Annual Meeting of Stockholders. EightWe encourage, but do not require, our directors to attend annual meetings of our then nine directorsstockholders. All members of the then-constituted Board of Directors attended our 2017 Annual Meeting of Stockholders. Mr. Smith's term expired on the date of our 2017Company's 2022 Annual Meeting of Stockholders.
We have designated Simon B. Rich, Jr. as our lead independent director to preside over all executive sessions of non-employee directors. Executive sessions of non-employee directors are held at each board meeting. Interested parties, stockholders and holders of our senior notes, may communicate with Mr. Rich by writing to: Board of Directors, Triangle Capital Corporation, 3700 Glenwood Avenue, Suite 530, Raleigh, North Carolina 27612.
Audit Committee
We haveThe Company has a separately-designatedseparately designated standing Audit Committee, as defined in Section 3(a)(58)(A) of the Securities Exchange Act.Act of 1934, as amended (the “Exchange Act”). The Audit Committee is responsible for compliance with applicable legaloversight matters, financial statement and regulatory requirements, selecting ourdisclosure oversight matters, matters relating to the hiring, retention and oversight of the Company’s independent registered public accounting firm, reviewing the plans, scope and results of the audit engagement with ourthe Company’s independent registered public accounting firm, approving professional services provided by ourthe Company’s independent registered public accounting firm, reviewing the independence of ourthe Company’s independent registered public accounting firm, reviewing the integrity of the audits of the financial statements and reviewing the adequacy of ourthe Company’s internal accounting controls. The Audit Committee also assists our Board of Directors in establishing and monitoring the application of the valuation policies used for determining the fair value of the Company’s investments that are not publicly traded or for which current market values are not readily available.
OurThe Audit Committee Charter is publicly available under “Corporate Governance”“Governance Documents” on the Investor Relations section of ourthe Company’s website at http:https://ir.tcap.com.ir.barings.com/governance-docs. The contents of the Company’s website are not intended to be incorporated by reference into this proxy statement or in any other report or document it files with the SEC, and any references to the Company’s website are intended to be inactive textual references only.
The members of ourthe Company’s Audit Committee are Messrs. Goldstein, Mulhern, Okel, Switzer, Knapp and Rich.Byers and Mses. Olmstead and Lancaster-Beal. Mr. GoldsteinMulhern serves as the chairman of the Audit Committee. OurThe Board of Directors has determined that Mr. GoldsteinMulhern is an “audit committee financial expert” as defined under Item 407(d)(5) of Regulation S-K of the Exchange Act and that all members of the Audit Committee are financially literate under NYSE listing standards. The Board of Directors also has determined that each of Messrs. Goldstein, Mulhern, Okel, Switzer,
Knapp, and RichByers and Mses. Olmstead and Lancaster-Beal meet the current independence requirements of Rule 10A-3 of the Exchange Act and NYSE listing standards, and, in addition, is not an “interested person” of the Company, as defined in Section 2(a)(19) of the 1940 Act. Our Audit Committee held five meetings during 2017.standards.
Compensation Committee
OurThe Compensation Committee is appointed byresponsible for determining, or recommending to the Board of Directors to discharge its responsibilities relating tofor approval, the compensation of ourthe Company’s independent directors; determining, or recommending to the Board of Directors for determination, the compensation, if any, of the Company’s chief executive officer and all other executive officers of the Company; and assisting the Board of Directors with matters related to compensation generally.
In connection with reviewing, and recommending to the Board of Directors, the compensation of the independent directors, the Compensation Committee evaluates the independent directors’ performance in light of goals and objectives relevant to the independent directors and sets independent directors’ compensation based on such evaluation and such other factors as the Compensation Committee deems appropriate and in the best interests of the Company (including the cost to the Company of such compensation and a review of data of comparable business development companies).
Currently none of the Company’s executive officers is compensated by the Company and, other key employees. Theas a result, the Compensation Committee has the responsibility for recommending appropriate compensation levels for our executive officers, evaluating and approving executive officer compensation plans, policies and programs, reviewing benefit plans for executive officers and other employees and producing an annualdoes not produce and/or review a report on executive compensation for inclusion in our proxy statement.practices. The Compensation Committee also has the authority to engage compensation consultants, legal counsel or other advisors (each, a “Consultant”) following consideration of certain factors related to such Consultants’ independence and has the authority to form and delegate any of its responsibilities to a subcommittee of the Compensation Committee so long as such subcommittee is solely composed of one or more members of the Compensation Committee. The Compensation Committee Charter is available under “Corporate Governance”“Governance Documents” on the Investor Relations section of our website at http:https://ir.tcap.com.
Our Compensation Committee has the authority to and is charged with performing the following, among other responsibilities:
review annually and approve goals and objectives relevant to our executive officers’ compensation, including annual performance objectives;
evaluate annually the performance of our Chief Executive Officer and other executive officers, and recommend to the independent members of the Board of Directors the compensation level for each such person based on this evaluation;
review on a periodic basis our executive compensation programs to determine whether they are properly coordinated and achieve their intended purposes;
review and recommend to the Board of Directors for approval any changes in incentive compensation plans and equity-based compensation plans;
review and approve all equity-based compensation plans of Triangle, whether or not final approval rests with the Company’s stockholders, and review and recommend to the Board of Directors for approval, equity-based awards pursuant to such plans in compliance with the 1940 Act;
review and approve compensation packages, including any special supplemental benefits or perquisites for our executive officers; and
review employee compensation strategies, including salary levels and ranges and employee fringe benefits, as well as compensation consultants’ analyses and various industry comparables including both public and private investment funds that operate and invest in a manner similar to the Company.
In determining executive compensation levels for our executive officers, the Compensation Committee meets at least annually with our Chief Executive Officer, and may meet with independent compensation consultants, in order to determine whether current methods of executive compensation are effective in achieving Triangle’s short and long-term strategies. The Compensation Committee, in conjunction with a compensation consultant if necessary, will analyze the compensation of executive officers and directors of other BDCs and financial services companies in order to establish the compensation levels necessary to attract and retain quality executive officers and investment professionals. In 2017, the Compensation Committee engaged McLagan, a compensation consultant, to advise the Compensation Committee on these matters. McLagan does no work for management, receives no compensation from the Company other than for its work in advising the Compensation Committee and maintains no other economic relationships with the Company or any of its affiliates. From time to time, McLagan receives input from the Company's Chief Executive Officer regarding the Company's strategic goals and the manner in which the executive compensation program should support these goals. For more information regarding the role of the Company's management in determining compensation, please see the discussion in “Compensation Discussion and Analysis — Establishing Compensation Levels — Role of the Compensation Committee and Management.”ir.barings.com/governance-docs.
The members of the Compensation Committee are Messrs. Dunwoody, GoldsteinMulhern, Okel, Switzer, Knapp and Mulhern,Byers, and Mses. Olmstead and Lancaster-Beal, each of whom is not an "interested person" for purposes of Section 2(a)(19) of the 1940 Act and is independent under the applicable NYSE corporate governance listing standards. Mr. MulhernMs. Olmstead serves as the chairmanchair of the Compensation Committee. OurNo members of the Compensation Committee held four meetings during 2017.2022 had any relationship with the Company requiring disclosure under Item 404 of Regulation S-K under the Exchange Act.
Compensation Committee Interlocks and Insider Participation
No interlocking relationship, as defined by the rules adopted by the SEC, existed during the year ended December 31, 2022 between any member of the Board of Directors or the Compensation Committee and an executive officer of the Company.
Nominating and Corporate Governance Committee
OurThe Nominating and Corporate Governance Committee is responsible for identifying, researching and nominatingrecommending for nomination directors for election by ourthe Company's stockholders, selectingrecommending for appointment nominees to fill vacancies on ourthe Board of Directors or a committee of the Board of Directors, developing and recommending to the Board of Directors a set of corporate governance principles and overseeing the evaluation of the Board of Directors and our management.Directors. The Nominating and Corporate Governance Committee’s policy is to consider nominees properly recommended by ourthe Company's stockholders in accordance with ourthe Company's charter, Bylaws and applicable law. For more information on how ourthe Company's stockholders may recommend a nominee for a seat on ourthe Board of Directors, see our answer to"Stockholder Nominations and Proposals for the question “How and when may I submit a stockholder proposal for Triangle’s 20192024 Annual Meeting?” under the section “Additional Information”Meeting" in this proxy statement.
In considering possible candidates for nomination, the The Nominating and Corporate Governance Committee will consider certain factorsalso has the authority to retain, at the Company’s expense, such consultants or advisors as the Committee may deem necessary or appropriate to carry out its duties. The Committee has sole authority to retain or terminate any search firm or individual used to identify any director candidate, including the current composition ofsole authority to approve the Board of Directors, overall business expertise, gender, culturalsearch firm’s fees and racial diversity, whether the composition of the Board of Directors contains a majority of independent directors as determined under the NYSE listing standards and the 1940 Act, the candidate’s character and integrity, whether the candidate possesses an inquiring mind, vision and the ability to work well with others, conflicts of interest interfering with the proper performance of the responsibilities of a director, a candidate’s overall business experience, what type of diversity he or she brings to the Board of Directors, whether the candidate has sufficient time to devote to the affairs of Triangle, including consistent attendance at Board of Directors and committee meetings and advance review of materials and whether each candidate can be trusted to act in the best interests of us and all of our stockholders.retention terms.
The Nominating and Corporate Governance Committee Charter is publicly available under “Corporate Governance”“Governance Documents” on the Investor Relations section of ourthe Company's website at http:https://ir.tcap.com.ir.barings.com/governance-docs.
The members of the Nominating and Corporate Governance Committee are Messrs. Gambill, Mulhern, Okel, Switzer, Knapp, and Rich,Byers and Mses. Olmstead and Lancaster-Beal, each of whom is not an "interested person" for purposes of Section 2(a)(19) of the 1940 Act and is independent under the NYSE corporate governance listing standards. Mr. Okel serves as the chairman of the Nominating and Corporate Governance Committee. Each nominee for election under Proposal No. 1 at the Annual Meeting was recommended by the members of the Nominating and Corporate Governance Committee to ourthe Board of Directors, which approved such nominees. Mr. Rich serves as the chairman of the Nominating and Corporate Governance Committee. Our Nominating and Corporate Governance Committee held one meeting during 2017.
Communication with the Board of Directors
Stockholders with questions about Triangle Capital Corporation are encouraged to contact Steven C. Lilly, at 3700 Glenwood Avenue, Suite 530, Raleigh, North Carolina 27612, (919) 719-4770. However, ifBarings BDC, Inc. stockholders feel their questions have not been addressed, theyand other interested parties may communicate with any member of our Board (including the chairman), the chairman of Directors directlyany of our Board committees, or with our non-management directors as a group by sending their communications to: Triangle Capital Corporation Board of Directors, c/o Simon B. Rich, Jr.to Barings BDC, Inc., 3700 Glenwood Avenue,300 South Tryon St., Suite 530, Raleigh,2500, Charlotte, North Carolina 27612. In addition, stockholders28202, or via e-mail to BDCinvestorrelations@barings.com, or by calling the Barings BDC, Inc.’s investor relations department at 1-888-401-1088. All such communications should indicate clearly the director or directors to whom the communication is being sent so that each communication, other than unsolicited commercial solicitations, may communicate with us by clicking “Contact IR” onbe forwarded directly to the Investor Relations section of our website at http://ir.tcap.com. All stockholder communications received by our corporate secretary in this manner will be delivered to one or more membersappropriate director(s).
The Composition of the Board of Directors.
CorporateDirectors and Leadership Structure
The 1940 Act requires that at least a majority of the Company’s directors not be “interested persons” (as defined in the 1940 Act) of the Company. Currently, seven of the Company’s ten directors have been determined to qualify as independent directors (and to not be “interested persons”). However, Mr. Poole was appointed as the Chairman of our Board of Directors on May 3, 2017 and was named asLloyd, our Chief Executive Officer on February 3, 2016.and the President of Barings LLC, and therefore an interested person of the Company, serves as Executive Chairman of the Board of Directors. The Board of Directors believes that it is in the best interests of investors for Mr. Lloyd to lead the Board of Directors because of his role as Chief Executive Officer of the Company and President of Barings LLC and his broad experience with the day-to-day management of cross-asset class investment teams, corporate strategy, business development and product management. In addition, we havethe Board of Directors has designated Mr. RichOkel as our lead independent director to preside over all executive sessions of non-employeeindependent directors. The Board of Directors believes that its leadership structure is appropriate in light of the Company’s characteristics and circumstances because the structure allocates areas of responsibility among the individual directors and to lead the decision-making processescommittees in a manner that enhances effective oversight. The Board of our independent directors with respect toDirectors also believes that its meeting frequency and governance structure provides ample opportunity for direct communication and interaction between the Strategic Review. We believe that consolidating our leadership structure without an independent chairman provides an efficient and effective management model which fosters direct accountability, effective decision making and alignment of corporate strategy between our Board of Directors and management. Mr. Poole is, and Mr. Rich is not, an “interested person” as defined in Section 2(a)(19) of the 1940 Act.Company’s management.
The Oversight of Risk Management
On behalfRole of the Board of Directors
The Board of Directors’ role in management of the Audit Committee oversees our enterpriseCompany is one of oversight. Oversight of the Company’s investment activities extends to oversight of the risk management function. To this end, the Audit Committee meets at least annually (i)processes employed by Barings as a committee to discusspart of its day-to-day management of the Company’s investment activities. The Board of Directors reviews risk management guidelines, policiesprocesses throughout the year, consulting with appropriate representatives of Barings as necessary and exposuresperiodically requesting the production of risk management reports or presentations and (ii) with our independent auditors to review our internal control environmentreceiving reports from vendors and other risk exposures. Additionally, on behalfservice providers regarding cybersecurity threats and incidents. The goal of the Board of Directors,Directors’ risk oversight function is to ensure that the Compensation Committee overseesrisks associated with the management of risks relating to our executive compensation programCompany’s investment activities are accurately identified, thoroughly investigated and other employee benefit plans. In fulfillment of its duties, the Compensation Committee reviews at least annually our executive compensation program and meets regularly with our Chief Executive Officer to understand the financial, human resources and stockholder implications of all compensation decisions.responsibly addressed. The Audit Committee (which consists of all the independent directors) is responsible for approving the Company’s independent accountants, reviewing with the Company’s independent accountants the plans and results of the Compensationaudit engagement, approving professional services provided by the Company’s independent accountants, reviewing the independence of the Company’s independent accountants and reviewing the adequacy of the Company’s internal accounting controls. The Audit Committee each report toalso monitors the application of the valuation policies used for determining the fair value of the Company’s investments that are not publicly traded or for which current market values are not readily available. Stockholders should note, however, that the Board of Directors on a regular basis to appriseDirectors’ oversight function cannot eliminate all risks or ensure that particular events do not adversely affect the Boardvalue of Directors regarding the status of remediation efforts of known risks and of any new risks that may have arisen since the previous report.
Compliance Policies and Proceduresinvestments.
In accordance with the 1940 Act, wethe Company’s directors have adopted and implemented written policies and procedures reasonably designed to prevent violation of the U.S. federal securities laws, and we review these
compliance policies and procedures annually for their adequacy and the effectiveness of their implementation. In addition, we have designated Mr. LillyGregory MacCordy as ourthe Company’s Chief Compliance Officer. As such, Mr. LillyMacCordy is responsible for administering ourthe Company’s compliance program and meeting with ourthe Board of Directors at least annually to assess its effectiveness.
Code of Business Conduct and Ethics and Corporate Governance Guidelines
We haveThe Company and Barings are subject to Barings LLC's Global Code of Ethics Policy, and the Company has adopted a codeset of business conduct and ethics and corporate governance guidelines covering ethics and business conduct. These documents apply to ourthe Company's directors and officers, among other Barings employees. Barings LLC's Global Code of Ethics Policy and employees. Our code of business conduct and ethics andthe Company's corporate governance guidelines are available on the Investor Relations section of ourthe Company's website at http:https://ir.tcap.com/corporate-governance. We will report anyir.barings.com/governance-docs. Any material amendments to or waivers of a required provision of our codethe Barings LLC Global Code of conductEthics Policy and/or the Company's corporate governance guidelines will be reported on our website and/or in a Current Report on Form 8-K.8-K within four business days of the amendment or waiver.
Under Barings LLC's Global Code of Ethics Policy, officers, directors and certain employees of Barings must first obtain pre-clearance from Barings' compliance department before trading in the Company's securities. In addition, the Company's Insider Trading Policy includes restrictions that prohibit directors and officers of the Company from, among other things, engaging in short sales or hedging transactions with respect to the Company's securities, including through the use of financial instruments such as prepaid variable forward contracts, equity swaps, collars and exchange funds.
EXECUTIVE OFFICERS AND INVESTMENT COMMITTEE
Our executiveThe Company’s officers serve at the discretion of ourthe Board of Directors. The following persons serve as ourbiographical information of each of the Company’s executive officers in(in alphabetical order) who is not a director, as well as the following capacities:
|
| | | | |
Name | | Age | | Position(s) Held |
E. Ashton Poole | | 51 | | Chairman, President and Chief Executive Officer |
Steven C. Lilly | | 48 | | Chief Financial Officer, Secretary and Chief Compliance Officer |
Jeffrey A. Dombcik | | 51 | | Senior Managing Director and Chief Credit Officer |
Cary B. Nordan | | 42 | | Senior Managing Director and Chief Origination Officer |
Douglas A. Vaughn | | 48 | | Senior Managing Director and Chief Administrative Officer |
All of ourCompany's Secretary and Chief Compliance Officer, who are not executive officers are members of ourthe Company, is as follows:
Ian Fowler, 59, is the Company’s President and is Co-Head of Barings LLC’s Global Private Finance Group, as well as a member of the group’s North American, European and Asia-Pacific Private Finance Investment Committee. The Investment CommitteeCommittees. Mr. Fowler has also served as the President and Chief Executive Officer of BCIC since inception and as Co-Chief Executive Officer of BPCC since May 2021 until being appointed as sole Chief Executive Officer in December 2022. He is responsible for all aspects of our investment process,leading a team that originates, underwrites and manages global private finance investments. Mr. Fowler has worked in the industry since 1988 and his experience has encompassed middle market commercial finance, including approval of such investments. All of our executive officers also serve as directors, managers and/or officers of Triangle Mezzanine Fund.
For more information on Messrs. Pooleoriginating, underwriting and Lilly, see the biographical information under "Proposal No. 1 Election of Directors" above.
Messrs. Dombcik, Nordanmanaging senior secured loans, mezzanine and Vaughn joined Mr. Poole and Mr. Lilly on the Company’s Management Committee and became Executive Officers of the Company on October 2, 2016. The biographical information for Messrs. Dombcik, Nordan and Vaughn are as follows:
Jeffrey A. Dombcik joined the Companyco-investment transactions. Prior to joining Barings LLC in 2007 and currently serves as2012, he was a Senior Managing Director with Harbour Group and Chiefco-founded Freeport Financial LLC where he was a member of the Executive Credit OfficerCommittee and responsible for all business development and capital market initiatives. While at Freeport, he helped build the company into one of the top five non-bank affiliated middle market sponsor finance companies in the United States. Before Freeport, Mr. Fowler was Managing Director and Global Group Leader for GE Capital’s Global Sponsor Finance Group. Prior to GE Capital, Mr. Fowler held various leveraged finance and investment positions with NationsBank and Mellon Bank. Mr. Fowler holds a B.A. (Honors) from the University of Western Ontario and is a member of the Company’s Management CommitteeCFA Institute.
Jonathan Landsberg, 38, serves as the Company's Chief Financial Officer and Investment Committee.is a Managing Director at Barings LLC. He also serves as the Chief Financial Officer and Treasurer of BPCC and the Chief Financial Officer of BCIC. Mr. Landsberg also has roles with several Barings-complex BDC-related joint ventures, including Principal of Jocassee Partners LLC, and a Board member of Banff Partners LP, Thompson Rivers LLC, and Waccamaw River LLC. Mr. Landsberg has worked in the industry since 2006. Prior to joining the Company,Barings LLC in 2018, Mr. DombcikLandsberg was a Managing DirectorFixed Income Research Analyst at Wells Fargo Securities, covering the bank and specialty finance sectors. Before Wells Fargo, he spent eight years at Merrill Lynch / Bank of South Franklin Street Partners,America in roles across debt origination and syndicated lending. Mr. Landsberg holds a Small Business Investment Company (SBIC) focused on providing junior capital to middle-market companies. Prior to joining South Franklin Street Partners, Mr. Dombcik served as Executive Vice PresidentB.A. degree in Engineering Sciences and Partner of Edgewater Capital Partners, L.P., a private equity investment firm focused on the acquisition of middle market companies. Mr. Dombcik also served as a Senior Vice President of investment banking for McDonald Investments, Inc. (a wholly owned subsidiary of Key Corp) and Vice President of Brown, Gibbons, Lang & Company L.P., a middle market investment bank with offices in Chicago and Cleveland. Mr. Dombcik began his career as a commercial banking officer with Bank One. Mr. Dombcik has over 20 years of experience in a variety of corporate finance transactions including initial public offerings, mergers and acquisitions, preferred stock underwritings, senior and subordinated debt placements, recapitalizations, leveraged ESOPs and restructurings. He is a graduate of Miami University and John Carroll University.
Cary B. Nordan joined the Company in 2004 and currently serves as Senior Managing Director and Chief Origination OfficerEconomics from Dartmouth College and is a member of the Company’s Management Committee and Investment Committee.CFA Institute.
Prior to joining the Company, Mr. Nordan served as Vice President with BB&T Asset Management (BB&T Funds), a $14 billion mutual fund complex. Preceding his employment with BB&T Asset Management, he worked in corporate finance with Stanford Keene, Inc., an investment bank specializing in the technology industry, and Nuance Capital Group, LLC, an advisory firm to private companies. Prior to that, Mr. Nordan served as an Analyst and Associate in the corporate finance group of Trident Securities, a subsidiary of McDonald Investments, where he specialized in investment banking and advisory services to lower- and middle-market financial institutions throughout the United States. Mr. Nordan has over 10 years of experience investing in private equity transactions and public equity securities as well as corporate finance transactions including IPOs, M&As, senior and subordinated debt placements, recapitalizations, and restructurings. He holds a BSBA, magna cum laude, from Appalachian State University and an MBA from Duke University. Mr. Nordan is a Chartered Financial Analyst and former member of the Board of Directors for the Chartered Financial Analyst North Carolina Society.
Douglas A. Vaughn joined the Company in 2008 and currentlyGregory MacCordy, 63, serves as Senior Managing Director andthe Company's Chief AdministrativeCompliance Officer and is a memberDirector at ACA Group (“ACA”). Mr. MacCordy is an experienced compliance, risk and subject matter expert with over 30 years of the Company’s Management Committeeregulatory and Investment Committee.
Mr. Vaughn has extensive management experience operating businessesfinancial services experience. He serves as chief compliance officer or chief risk officer for SEC registered investment advisers and has served in investment companies such as business development companies and advisory roles for middle-market companies, portfolio businesses, and divisions of large multinational corporations.interval funds. Prior to joiningACA, Mr. MacCordy worked at the Company, Mr. Vaughn was President and a Director of VIETRI, Inc., America’s largest importer, distributor and marketer of handmade Italian ceramic and home décor items. Immediately prior to his eight years at VIETRI, Inc., Mr. Vaughn advised business owners and managers, including private equity funds, on strategic initiatives including acquisitions and corporate finance — first as a Senior Consultant at Deloitte Consulting and later as a Partner at Chatham Partners. Prior to Deloitte Consulting, Mr. Vaughn served in management roles for Sara Lee Corporation, specifically for Sara Lee Personal Products Europe,U.S. Securities & Exchange Commission where he was an original memberIndustry Expert and Specialized Compliance Examiner in the Asset Management Unit (Enforcement Division) conducting enforcement investigations of investment companies, investment advisers, and mutual funds in the areas of business development companies, CLOs, private equity, hedge funds, real estate and fixed income trading. Mr. MacCordy also spent 18 years at The Teachers Insurance and Annuity Association of America-College Retired Equity Fund (TIAA) beginning as a securities analyst and ultimately becoming a Managing Director. During his time at TIAA, he was responsible for investment decisions, credit research, valuation and stress testing, regulatory filings, and the development of risk and compliance program policies and procedures. Mr. MacCordy holds a Bachelor of Science and Business Administration in Accounting from University of Missouri and a MBA in Finance from New York University Stern School of Business.
Elizabeth Murray, 45, serves as the Company’s Chief Operating Officer and Chief Accounting Officer and also serves as the Principal Accounting Officer of BCIC and BPCC. She also serves as the Treasurer for PEOC. Ms. Murray previously was the Director of External Reporting for the Company and previously served as the Vice President of Financial Reporting at Triangle Capital Corporation prior to the externalization of the team that establishedinvestment management of the Company to Barings LLC. Prior to joining Triangle Capital Corporation in 2012, she worked in Financial Planning and managedAnalysis for RBC Bank, the company’s firstU.S. retail banking division for Royal Bank of Canada. Prior to RBC Bank, Ms. Murray spent seven years at Progress Energy, Inc. and held various positions in Eastern Europe including manufacturing, distribution, marketing,finance, accounting and sales operations. Mr. Vaughn holdstax, most recently in Strategy and Financial Planning. Ms. Murray began her career as a BA from the University of Virginia and an MBA from The UniversityTax Consultant with
PricewaterhouseCoopers. Ms. Murray is a graduate of North Carolina’s Kenan-Flagler SchoolCarolina State University where she obtained a B.S. degree in Accounting and a Master of Business. HeAccounting degree. She is also a North Carolina Certified Public Accountant.
Alexandra Pacini, 30, is the Company's Secretary and a Director at Barings LLC. Ms. Pacini also serves as the Secretary of BCIC, BPCC, Barings Global Short Duration High Yield Fund, PEOC, Barings Corporate Investors and Barings Participation Investors
Ashlee Steinnerd, 41, is the Company’s Chief Legal Officer and the Head of Regulatory at Barings LLC. Ms. Steinnerd also serves as Chief Legal Officer of BCIC, BPCC, Barings Global Short Duration High Yield Fund, Barings Corporate Investors, PEOC, and Barings Participation Investors. Ms. Steinnerd has been a member of the Young Presidents’ Organization, a Chartered Financial Analyst, and has servedBarings LLC legal team since 2019, advising Barings LLC on a variety of for-profitregulatory issues. Prior to joining Barings LLC, Ms. Steinnerd was Senior Counsel in the Securities and non-profit boards.
COMPENSATION DISCUSSION AND ANALYSIS
General
The following Compensation Discussion and Analysis, or CD&A, provides information relating to the 2017 compensationExchange Commission’s Office of the Company's named executive officers, or NEOs, for 2017, who were:
E. Ashton Poole, Chairman, President & Chief Executive Officer;
Steven C. Lilly, Chief Financial Officer, Secretary and Chief Compliance Officer;
Jeffrey A. Dombcik, Senior Managing Director and Chief Credit Officer;
Cary B. Nordan, Senior Managing Director and Chief Origination Officer; and
Douglas A. Vaughn, Senior Managing Director and Chief Administrative Officer.
Our executive compensation program is designed to encourage our executive officers to think and act like stockholders of the Company. The structure of the NEOs’ compensation programs was designed to encourage and reward the following factors, among others:
sourcing and pursuing attractively priced investment opportunities in lower middle market companies;
achievement of the Company’s dividend objectives;
maintaining credit quality, monitoring financial performance and ultimately managing a successful exit of the Company’s investment portfolio; and
development of management team and employees.
We completed our initial public offering, or IPO, in February 2007. Our first eleven years of operation as a publicly traded BDC have represented a period of development and growth. As a result, our Compensation Committee continues to focus on creating an executive compensation program that achieves our desired objectives stated above.
In May 2017, weInvestor Advocate. Ms. Steinnerd held a stockholder advisory vote on the compensation of our NEOs, commonly referred to as a say-on-pay vote. Our stockholders approved the compensation of our NEOs, with over 86% of stockholder votes cast in favor of our say-on-pay resolution. Subsequently, the Compensation Committee considered the results of the advisory vote, which affected the Company’s executive compensation decisions and policies by reaffirming the Company’s compensation philosophies. The Compensation Committee will continue to use these philosophies and past practice in determining future compensation decisions. In addition, in May 2017, our stockholders voted, on an advisory basis, to conduct an advisory vote on executive compensation annually. In accordance with the results of this vote, the Board of Directors determined to implement an advisory vote on executive compensation annually until the next required vote on the frequency of stockholder votes on the compensation of executives, which is scheduled to occurseveral roles during her tenure at the 2023 Annual Meeting of Stockholders. The advisory say-on-pay vote proposal will be considered by our stockholders at the Annual Meeting.
Executive Compensation Policy
The compensation programs of the Company adopted by our Compensation Committee are designed with the goal of providing compensation that is fair, reasonableSecurities and competitive. These programs are intended to align the compensation paid to our NEOs with both our short-termExchange Commission between 2011 and long-term objectives2019. Ms. Steinnerd holds a B.S. in Applied International Finance and the interests of stockholders, which we believe will contribute to the achievement of long-term sustainable investment returns. The key elements of our compensation philosophy include: (i) designing compensation programs that enable us to attract and retain the best talent in the financial industries in which we compete; (ii) aligning executive compensation packages with the Company’s performance; and (iii) using long-term equity awards to align employee and stockholder interests.
As a BDC, we must comply with the requirements of the 1940 Act. The 1940 Act imposes certain limitations on the structure of our compensation programs, including limitations on our ability to issue certain equity-based
compensation to our employees and directors. We have received exemptive reliefApplied International Economics from the SEC that permits us to grant restricted stock in exchange for or in recognitionAmerican University of services by our executive officers and employees. Pursuant to the Omnibus Incentive Plan, the Board of Directors may award shares of restricted stock to plan participants in such amounts and on such terms as the Board of Directors determines in its sole discretion, provided that such awards are consistent with the conditions set forth in the SEC’s exemptive order.
Overview
Our performance-driven compensation policy consists primarily of the following three components:
base salary;
annual cash bonus; and
long-term compensation pursuant to the Omnibus Incentive Plan.
Other compensation components may include contributions to our 401(k) and deferred compensation plans, and health, life and disability insurance premiums paid by the Company.
The compensation packages for our NEOs are structured to reflect what we believe to be appropriate practices in corporate governance and executive compensation. We designed each NEO’s compensation package to appropriately reward the NEO for his contribution to the Company. Our compensation philosophy has not historically been, and going forward will not be, a mechanical process, and our Compensation Committee will continue to use its judgment and experience, working in conjunction with our Chief Executive Officer and, potentially, an independent compensation consultant, to determine the appropriate mix of compensation for each NEO. Cash compensation consisting of base salary and discretionary cash bonuses tied to achievement of performance goals set by the Compensation Committee, such as the surpassing of certain operating thresholds related to investment performance, are intended to incentivize NEOs to remain with us in their roles and work hard to achieve our goals. Stock-based compensation in the form of restricted stock is awarded based on individual and Company performance expectations set by the Compensation Committee.
Establishing Compensation Levels
Role of the Compensation Committee and Management
As set forth in the Compensation Committee Charter, our Compensation Committee’s primary responsibility is to evaluate the compensation of our executive officers and ensure that they are compensated effectively and in a manner consistent with our stated compensation objectives. The Compensation Committee also periodically reviews our corporate goals and objectives relevant to executive compensation, our executive compensation structure to ensure that it is designed to achieve the objectives of rewarding our executive officers appropriately for their contributions to corporate growth and profitability and our other goals and objectives. At least annually, the Compensation Committee will evaluate the compensation of our executive officers and determine the amounts and individual elements of total compensation for executive officers consistent with our corporate goals and objectives and will communicate to stockholders the factors and criteria on which the executive officers’ compensation is based, including the relationship of our performance to the executive officers’ compensation. Our executive officers are eligible for variable compensation based on individual, team, and overall corporate performance. With respect to the compensation of our executive officers other than the Chief Executive Officer, the committee works with the chief executive officer to conduct these reviews. The committee will also periodically evaluate the terms and administration of our annual and long-term incentive plans, including equity compensation plans, to ensure that they are structured and administered in a manner consistent with our goals and objectives as to participation in such plans, target annual incentive awards, corporate financial goals, actual awards paid to executive officers and total funds allocated for payment under the compensation plans.
Role of Compensation Consultant
In 2017, the Compensation Committee engaged McLagan, a compensation consultant, to assist the Compensation Committee in its review of executive and Board of Director compensation and to opine on market-
competitive compensation levels and mix necessary to attract and retain quality executive officers and investment professionals. From time to time and in support of McLagan's role as an adviser to the Compensation Committee, McLagan receives input regarding the Company's strategic goals and the manner in which the executive compensation program should support these goals. The Compensation Committee evaluated McLagan's independence from the Company and determined that McLagan is independent primarily because it does no work for management, receives no compensation from the Company other than for its work in advising the Compensation Committee and maintains no other economic relationships with the Company or any of its affiliates.
Assessment of Market Data
From time to time, to assess the competitiveness of our executive compensation program, the Compensation Committee considers compensation information from a comparative group of internally managed BDCs (including Capital Southwest Corporation, Hercules Capital, Inc., KCAP Financial, Inc. and Main Street Capital Corporation) as well as groups of other financial services companies, such as asset managers, specialty lenders and banks and real estate investment trusts. The Compensation Committee performs comprehensive analyses of competitive performance and compensation levels. However, the Compensation Committee does not specifically benchmark the compensation of our NEOs against that paid by other companies with publicly traded securities. This is because the Compensation Committee believes that our primary competitors in both our business and for recruiting executives are investment banks, private equity firms, private debt lenders, hedge funds and other specialty finance companies, including certain specialized commercial banks. Many of these entities do not publicly report the compensation of their executive officers nor do they typically report publicly information on their corporate performance. While various salary surveys from other private sources may become available to the Compensation Committee with regard to these private equity firms, the Compensation Committee believes that without accurate, publicly disclosed information on these private entities that would serve as benchmarks, it is inappropriate for the Compensation Committee to set formal benchmarking procedures.
The Compensation Committee's analyses center around key elements of compensation practices within financial services industries in general and, more specifically, compensation practices at companies closer in asset size, typical investment size, typical investment type, market capitalization, and general business scope to our Company. Items the Compensation Committee reviews from time to time include, but are not necessarily limited to, base compensation, bonus compensation and restricted stock awards. In addition to actual levels of compensation, the Compensation Committee also analyzes the approach other companies take with regard to their compensation practices. Items the Compensation Committee reviews from time to time include, but are not necessarily limited to, certain corporate and executive performance measures established to achieve total returns for stockholders and our “efficiency ratio” compared to the BDCs in our comparative group (which is calculated by taking total general and administrative expenses and dividing it by the company’s total revenue). The Compensation Committee believes that the companies it utilizes are the most relevant comparable companies available with disclosed executive compensation data, and they provide a good representation of competitive compensation levels for our executives.
Chief Executive Officer Pay Ratio
Mr. Poole's total compensation for 2017 was $2,009,260 as reflected in the Summary Compensation Table included in this proxy statement. The total compensation of our median employee, excluding Mr. Poole, for 2017 was $353,029. As a result, Mr. Poole's total compensation was approximately 5.7 times that of our median employee in 2017.
We selected December 31, 2017 as the date used to identify our “median employee” whose annual total compensation was the median of the annual total compensation of all our employees (other than our Chief Executive Officer) for 2017. As of December 31, 2017, our employee population consisted of 26 individuals (excluding Mr. Poole), all located in our Raleigh, North Carolina office. To identify our median employee, we compared the annual total compensation for each of our employees, as determined in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K, which included salary, bonus, restricted stock awards, employer contributions to employee accounts in our 401(k) plan, employer contributions to employee accounts in our deferred compensation plan and earnings thereon, and company-paid life insurance premiums. In making this determination, we annualized the compensation of three employees who were hired in 2017 but did not work for us the entire fiscal year. Given that
we had an even number of employees (excluding Mr. Poole) in the employee population for 2017, the calculation of the compensation of the median employee was the average compensation of our 13th and 14th highest paid employees.
Assessment of Company Performance
In determining annual compensation for our NEOs, our Compensation Committee evaluates the individual performance of our NEOs as well as the Company’s overall operating performance. We believe that the alignment of (i) a company’s business plan, (ii) its stockholders' expectations and (iii) its employee compensation is essential to long-term business success in the interest of its stockholders and employees. We typically make three- to seven- year investments in privately held businesses. Our business plan involves taking on investment risk over an extended period of time,Paris, France and a premium is placed on our ability to maintain stabilityJ.D. from Rutgers School of net asset values and continuity of earnings to pass through to stockholders in the form of recurring dividends. Our strategy is to generate income and capital gains from our investments in the debt and equity securities of our portfolio companies. This income supports the payment of dividends to our stockholders. Therefore, a key element of our return to stockholders is current income through the payment of dividends. This recurring payout requires a methodical asset acquisition approach and active monitoring and management of our investment portfolio over time. A substantial part of our employee base is dedicated to the maintenance of asset values and generation of new investment opportunities to allow us to sustain and grow dividends.Law.
In reviewing and approving the compensation packages for our executive officers and other key employees, our Compensation Committee considers the relative achievement of the Company’s strategic and corporate objectives, executive performance factors and the individual performance of each of our NEOs. For 2017, some of the most significant company-specific performance factors considered by the Compensation Committee include:
total and net investment income;
realized and unrealized gains and losses;
overall credit performance of the investment portfolio;
liquidity;
operating efficiency performance;
growth and diversification of the overall investment portfolio;
dividends and distributions to stockholders; and
return on average stockholders’ equity.
Given the Company's overall weaker financial and investment portfolio performance in 2017, as compared to 2016, the Compensation Committee awarded materially lower levels of incentive compensation for 2017 to our NEOs as compared to 2016.
Elements of Triangle’s Executive Compensation
In 2017, our compensation program was comprised primarily of the following three elements: (i) base salary, (ii) annual cash bonus and (iii) long-term equity incentive compensation. At the time of our IPO, our initial compensation program consisted of only base salary and an annual cash bonus. Upon receipt in 2008 of exemptive relief from the SEC that permitted the company to grant restricted stock awards to our executive officers and employees, we began to include long-term equity incentive compensation as part of our compensation program. The company sought such exemptive relief because we believe that creating long-term value for our stockholders is achieved, in part, by retaining our executive officers in a competitive employment environment with a competitive compensation program. This allows us to align a component of our compensation program over a longer-term similar to our target investment period for our privately held business investments, and to more closely align the interests of our NEOs with those of our stockholders. The Compensation Committee does not allocate a fixed percentage of the NEO compensation packages to each of these elements. Instead, the Compensation Committee targets total compensation at levels comparable to other BDCs, private equity firms, mezzanine lenders, hedge funds, specialized commercial banks and other specialty finance companies. In designing our compensation
program, the Compensation Committee seeks to achieve an appropriate balance among these elements to create a compensation program that incentivizes our NEOs to focus on financial and operating results in the near term and the creation of stockholder value over the long-term.
Since our IPO, our Compensation Committee has determined to make annual changes in each element of our compensation program in order to account for cost of living changes, any changes in our asset and revenue growth and financial performance, and to retain our NEOs in a competitive environment for such executives. Our Compensation Committee considers our NEOs’ individual performance, each executive position’s responsibility for and ability to impact company performance, and individual expertise in connection with decisions under our compensation program each year. Because of the broad range of individual responsibilities of each of our NEOs, our Compensation Committee does not set specific or individualized performance metrics for any of our NEOs. The Compensation Committee instead considers the performance of each of our NEOs, and, based upon the evaluation and analysis of our Compensation Committee members, the performance of the Company relative to the general performance of other companies in the comparative group noted above.
Annual Base Salary
The annual base salary is designed to provide a minimum, fixed level of cash compensation to our NEOs in order to attract and retain experienced executive officers who can drive the achievement of our goals and objectives. The Compensation Committee annually reviews the base salary for each of our executive officers and determines whether to adjust it in its sole discretion. Increases to base salary are awarded to recognize levels of responsibilities and related individual performance, and to address changes in the external competitive market for a given position.
In establishing the 2017 base salaries of the NEOs, the Compensation Committee and management considered a number of factors including the seniority of the individual, the functional role of the position, the level of the individual’s responsibility, the ability to replace the individual and the base salary of the individual from the previous year. In addition, the Compensation Committee considered the base salaries paid to comparably situated executive officers in other internally-managed BDCs and other competitive market practices. Finally, the Compensation Committee used a compensation consultant in order to obtain an objective third-party expert’s insight into our NEOs’ base salaries.
Mr. Poole was paid an annual base salary of $445,000 as of December 31, 2017. Mr. Poole’s base salary recognizes his role as President and Chief Executive Officer, including his overall responsibility for our Company’s strategic direction and performance and his leadership which has enabled us to achieve our operational and financial objectives. Mr. Poole’s base salary also reflects his role as a member of our Investment Committee and Management Committee.
Mr. Lilly was paid an annual base salary of $340,000 as of December 31, 2017. Mr. Lilly’s base salary recognizes his lead role in managing all financial aspects of our Company, and his leadership in matters relating to our capital structure, the media and investor relations. Mr. Lilly’s base salary also reflected his service as our Company’s Chief Compliance Officer and Secretary, and as a member of our Investment Committee and Management Committee.
Mr. Dombcik was paid an annual base salary of $320,000 as of December 31, 2017. Mr. Dombcik's base salary recognizes his role as Chief Credit Officer, as a member of our Investment Committee and our Management Committee, and his lead role in managing all aspects of our investment portfolio.
Mr. Nordan was paid an annual base salary of $320,000 as of December 31, 2017. Mr. Nordan's base salary recognizes his role as Chief Origination Officer, as a member of our Investment Committee and our Management Committee, and his lead role managing our origination activities.
Mr. Vaughn was paid an annual base salary of $320,000 as of December 31, 2017. Mr. Vaughn's base salary recognizes his role as Chief Administrative Officer, as a member of our Investment Committee and our Management Committee, and his lead role in managing all administrative matters relating to the Company's operations.
Annual Cash Bonuses
We pay annual cash bonuses to reward corporate and individual achievements for the prior fiscal year. Annual cash bonuses are based on the Compensation Committee’s discretionary assessment of the Company’s and the NEO’s performance, with recommendations from the Chief Executive Officer for NEOs other than himself. While cash bonus awards are discretionary, the Compensation Committee will not award cash bonuses to our NEOs unless the Company achieves certain minimum operating thresholds during the year. The minimum operating threshold for the fiscal year ended December 31, 2017 set by the Compensation Committee in connection with the award of cash bonuses was approximately $28.1 million in net investment income before discretionary compensation. The Compensation Committee determined that the Company achieved this threshold for the fiscal year ended December 31, 2017.
On a quarterly basis, the Compensation Committee, together with input from our Chief Executive Officer, approves an accrual for the annual potential cash bonus pool. The determination of the accrual amount is based upon the Company’s current financial forecast and executive performance contributing to achieving our corporate objectives, and is subject to the sole discretion of the Compensation Committee.
The Company paid cash bonusesis externally managed by Barings LLC, which is registered with the SEC under the Investment Advisers Act of 1940, as amended. Barings also provides the administrative services necessary for us to NEOs in recognitionoperate. Barings, a wholly-owned subsidiary of both corporateMassMutual Life Insurance Company (“MassMutual”), is a leading global asset management firm, whose primary investment capabilities include fixed income, private credit, real estate, equity, and individual 2017 performance. In particular, for the year ended December 31, 2017, we reported the following financial results:
total investment income of $123.0 million, an increase from $113.7 million of total investment income in 2016;
net investment income of $72.2 million, an increase from $58.9 million of net investment income in 2016. (net investment income in 2016 was impacted by approximately $7.0 million of one-time expenses relatedalternative investments. Subject to the retirement of Mr. Tucker in 2016 and the resignation of our former Chief Investment Officer in 2016);
net investment income per share of $1.55, a decrease from $1.62 of net investment income per share in 2016 (net investment income per share in 2016 was impacted by approximately $0.19 per share related to the one-time expenses related to the retirement of Mr. Tucker and the resignation of our former Chief Investment Officer);
operating efficiency ratio of 17.5%; and
regular quarterly dividends during 2017 totaling $1.65 per share, a decrease from $1.89 in regular quarterly dividends during 2016. None of these dividends constituted a return of capital to stockholders.
Despite the Company achieving the minimum operating threshold in 2017 under our Omnibus Incentive Plan, given overall weaker financial and investment portfolio performance in 2017 versus 2016, the Compensation Committee reduced the total amount of annual 2017 cash bonus awards for all employees by 13% from 2016 levels. The reductions in annual cash bonuses for the Company's NEOs from 2016 to 2017 ranged from 20% to 25%, reductions that the Compensation Committee believes are aligned with the Company's 2017 results.
Mr. Poole was paid an annual cash bonus of $405,000 for 2017, a decrease of 24% from his 2016 annual cash bonus of $535,000. Mr. Poole’s cash bonus reflects an increase in responsibilities in 2017 in connection with his appointment as Chairman of the Board of Directors, his overall responsibility for the strategic direction of our Company and his leadership in 2017.
Mr. Lilly was paid an annual cash bonus of $375,000 for 2017, a decrease of 23% from his 2016 annual cash bonus of $485,000. Mr. Lilly’s cash bonus reflects his lead role in managing all financial aspects of our Company, including his leadership in matters relating to our capital structure, liquidity, the Company's relationships with its lenders and investor relations. Mr. Lilly’s cash bonus also reflected his service as our Chief Compliance Officer and Secretary during 2017.
Mr. Dombcik was paid an annual cash bonus of $330,000 for 2017, a decrease of 20% from his 2016 annual cash bonus of $415,000. Mr. Dombcik's cash bonus reflects his lead role in managing our investment portfolio, including our monitoring, valuation and restructuring activities.
Mr. Nordan was paid an annual cash bonus of $330,000 for 2017, a decrease of 25% from his 2016 annual cash bonus of $440,000. Mr. Nordan's cash bonus reflects his role as a senior investment originator as well as his lead role in managing our origination activities, including sourcing and underwriting.
Mr. Vaughn was paid an annual cash bonus of $330,000 for 2017, a decrease of 25% from his 2016 annual cash bonus of $440,000. Mr. Vaughn's cash bonus reflects his role as a senior investment originator as well as his lead role in managing all administrative responsibilities for the Company, including recruiting, training, staffing, performance evaluation and other human resources-related initiatives.
The Compensation Committee believes that these cash bonus awards are individually appropriate based on the Company’s 2017 performance and each individual’s contribution to the Company throughout 2017 as stated above. Such bonuses comprise a key component of the Company’s overall compensation program.
Long-Term Incentive Compensation
General
Our Board of Directors adopted the Omnibus Incentive Plan in order to provide stock-based awards as incentive compensation to our employees and non-employee directors. Since our IPO, our Board of Directors has chosen to utilize shares of our restricted stock, rather than stock options or other equity-based incentive compensation, as long-term incentive compensation.
We use restricted stock awards to (i) attract and retain key employees, (ii) motivate our employees by means of performance-related incentives to achieve long-range performance goals, (iii) enable our employees to participate in our long-term growth and (iv) link our employees’ compensation to the long-term interests of our stockholders. Each restricted stock award is for a fixed number of shares as set forth in an award agreement between the grantee and us. Award agreements set forth time and/or performance vesting schedules and other appropriate terms and/or restrictions with respect to awards, including rights to dividends and voting rights.
The Compensation Committee has been delegated responsibility by our Board of Directors to review the stock-based awards to employees. At the time of each award granted to each NEO, the Compensation Committee determines the terms of the award, including the performance period (or periods) and the performance objectives relating to the award. The Compensation Committee then recommends the approval of the award to the Board of Directors.
Restricted Stock Awards Awarded in 2017 for 2016 Performance
The Compensation Committee generally meets in February of each year to consider the amount of restricted stock that should be awarded to our executive officers with respect to the Company's performance for the prior year. Specific performance factors that the Compensation Committee considered in determining the granting of restricted stock in February 2017 were the Company's achievement of financial and operational goals in 2016 and individual employee performance during 2016 in such areas as work ethic, proficiency and overall contribution to the Company. On February 1, 2017, the Board of Directors, upon recommendation of the Compensation Committee, granted the following awards:
|
| | | |
Name | | Number of
Shares of
Restricted Stock(1)
|
E. Ashton Poole | | 53,500 |
|
Steven C. Lilly | | 45,000 |
|
Jeffrey A. Dombcik | | 39,000 |
|
Cary B. Nordan | | 42,000 |
|
Douglas A. Vaughn | | 39,000 |
|
| |
(1) | Consists of restricted stock which vests over four years from the date of grant. The shares of restricted stock granted to Messrs. Poole, Lilly, Dombcik, Nordan and Vaughn are expected to vest ratably in February of each year, beginning in February of 2018. |
Based on SEC rules requiring equity awards to be disclosed in the tables for the year during which they are granted, rather than earned, the executive compensation tables in this proxy statement include the restricted stock awards granted to our NEOs in February 2017, even though such awards relate to 2016 performance.
Restricted stock awards allow the Company to account for our compensation program based on the price of our common stock, fixed at the grant date of such award, resulting in a known maximum cost of such award under our compensation program at the time of grant. In determining annual restricted stock awards for each of our NEOs, our Compensation Committee considers the grant-date fair value of previously granted restricted stock awards, without assigning value to any appreciation or depreciation subsequent to the grant date of such prior awards.
Restricted Stock Awards Awarded in 2018 for 2017 Performance
In February 2018, our Compensation Committee considered employee performance during fiscal 2017, using similar factors above, in determining the amount of restricted stock awards to recommend for each executive officer. In addition, the Compensation Committee considers each NEO's total cash compensation in relation to the proposed stock award and the effect of dilution of net asset value per share and earnings per share prior to awarding the stock grants. Consistent with the compensation philosophy employed in determining annual cash bonus awards for 2017, in light of the Company's overall weaker financial and investment portfolio performance in 2017 versus 2016, the aggregate value of restricted share awards granted in February 2018 were 35% less than the aggregate value of the awards granted in February 2017, as of the respective grant dates.
On February 8, 2018, the Board of Directors, upon recommendation of the Compensation Committee, approved restricted stock awards for the NEOs, as detailed below.
Mr. Poole was awarded 63,000 shares of restricted stock in February 2018 for his performance during 2017. The aggregate grant date fair value of the February 2018 award was $672,840, a decrease of 35% from the grant date fair value of his 2016 award of $1,029,875. This award reflects an increase in Mr. Poole's responsibilities in 2017 in connection with his appointment as Chairman of the Board of Directors of the Company, his overall responsibility for the strategic direction of our Company, and his leadership in 2017.
Mr. Lilly was awarded 53,000 shares of restricted stock in February 2018 for his performance during 2017. The aggregate grant date fair value of the February 2018 award was $566,040, a decrease of 35% from the grant date fair value of his 2016 award of $866,250. This award reflects Mr. Lilly’s lead role in managing all financial
aspects of our Company, including his leadership in matters relating to our capital structure, liquidity, the Company's relationships with its lenders and investor relations. Mr. Lilly’s restricted stock award also reflected his service as our Chief Compliance Officer and Secretary during 2017.
Mr. Dombcik was awarded 46,000 shares of restricted stock in February 2018 for his performance during 2017. The aggregate grant date fair value of the February 2018 award was $491,280, a decrease of 35% from the grant date fair value of his 2016 award of $750,750. This award reflects Mr. Dombcik's lead role in managing our investment portfolio, including our monitoring, valuation and restructuring activities.
Mr. Nordan was awarded 46,000 shares of restricted stock in February 2018 for his performance during 2017. The aggregate grant date fair value of the February 2018 award was $491,280, a decrease of 39% from the grant date fair value of his 2016 award of $808,500. This award reflects Mr. Nordan's contributions as a senior investment originator as well as his lead role in our origination activities, from initial sourcing to the guidance of each investment through our internal investment process.
Mr. Vaughn was awarded 46,000 shares of restricted stock in February 2018 for his performance during 2017. The aggregate grant date fair value of the February 2018 award was $491,280, a decrease of 35% from the grant date fair value of his 2016 award of $750,750. This award reflects Mr. Vaughn's contributions as a senior investment originator and his lead role in managing all administrative aspects of the Company, including recruiting, training, staffing, performance evaluation and other human resources-related initiatives.
The amount of restricted stock awarded to each of our executive officers is unrelated to the number of shares we may sell below net asset value.
Options
Since our IPO, our Board of Directors has not utilized options to purchase our common stock as a form of compensation to our NEOs and other employees. As such, we did not grant any stock options to our employees in 2017.
Our Board of Directors may, however, grant our employees options to purchase our common stock (including incentive stock options and non-qualified stock options). We expect that, if granted, options will represent a fixed number of shares of our common stock, will have an exercise, or strike, price equal to the fair market value of our common stock on the date of such grant, and will be exercisable, or “vested,” at some later time after grant. Upon any stock option grant, its exercise price will not be changed absent specific SEC approval that we may do so. Some stock options granted by our Board of Directors may vest simply by the holder remaining with the Company for a period of time, and some may vest based on meeting certain performance goals. We anticipate that our options, if granted in the future, will be valued for financial reporting purposes using the Black Scholes valuation method, and charges to earnings will be taken over the relevant service period pursuant to FASB ASC Topic 718.
Other Compensation Matters
401(k) Plan
We maintain a 401(k) plan in which all full-time employees who are at least 21 years of age are eligible to participate and receive certain employer contributions. Eligible employees have the opportunity to contribute their compensation on a pretax salary basis into the 401(k) plan up to $18,000 for the 2017 plan year, and to direct the investment of these contributions. Plan participants who reach the age of 50 prior to or during the plan year are eligible to defer up to an additional $6,000 for the 2017 plan year.
Deferred Compensation Plan
The Compensation Committee has adopted a nonqualified deferred compensation plan covering the Company’s executive officers and key employees. Any compensation deferred and the Company’s additional contributions, if any, will earn a return based on the returns on certain investments designated by the Compensation Committee. Participants will be 100% vested in any elective deferrals, and will vest in any Company contributions ratably over four years from the date of the relevant contribution.
Executive Retention Agreements
As part of the Strategic Review discussed above under "Director Fees,” our Board of Directors recognized that, in the event negotiations are commenced to bring about a strategic transaction, uncertainty and questions could arise that could result in the distraction or departure of our NEOs to our detriment and the detriment of our stockholders. As a result, in November 2017, we entered into Executive Retention Agreements (each, a “Retention Agreement,” and collectively, the “Retention Agreements”) with each of the NEOs to reinforce and encourage the continued attention and dedication of the NEOs to their assigned duties without regard to the potential outcomes of any strategic transaction which would be in the best interests of our stockholders.
Under the Retention Agreements, each NEO (or his designated beneficiary or estate) will be entitled to the following benefits if, (i) during the twenty-four month period following a "change in control" of the Company, as defined in the Retention Agreements, the NEO’s employment is terminated (A) by the Company (other than for death, disability or cause); or (B) by the NEO for Good Reason (as defined in the Retention Agreements), or (ii) the NEO terminates employment for any reason during the thirty-day period immediately following the first anniversary of the change in control; and provided the NEO releases the Company from any liabilities, known or unknown:
the NEO's full base salary through the date of termination, plus an amount equal to any accrued but unused vacation;
the amount of any Executive Incentive Compensation, as such term is used in the Retention Agreements (consisting of annual cash bonuses and the grant date fair market value of restricted stock and deferred compensation awards), (i) for any past completed fiscal year which has not yet been paid, and (ii) for any partially completed period, on a pro rata basis. If the prior year’s Executive Incentive Compensation has not been set, and in any case for the pro-rata calculation, the Executive Incentive Compensation will be calculated at the greater of: (A) the target level of the Executive Incentive Compensation Opportunity, as such term is used in the Retention Agreements, which may include annual cash incentives, as well as annual awards of equity interests, deferred compensation and other incentive pay (without application of any denial provisions based on unsatisfactory personal performance), and (B) the highest Executive Incentive Compensation amount paid to the NEO for the three full fiscal years which ended coincident with or immediately prior to the change in control;
an aggregate lump sum severance payment, paid within sixty days of the date of termination, equal to the product of a multiple (1.25 for each NEO) times the sum of: (i) the NEO’s annual salary calculated at the highest rate of salary in effect during the prior three fiscal years ; (ii) the highest regular annual cash bonus paid to the NEO as part of the Executive Incentive Compensation (excluding any associated restricted stock or deferred compensation awards) for the three full fiscal years which ended coincident with or immediately prior to the change in control; and (iii) an amount equal to the highest contribution paid by the Company to its 401(k) plan on behalf of the NEO for the three full fiscal years which ended coincident with or immediately prior to the change in control;
premiums for the NEO and the NEO's spouse and/or dependents related to Company-sponsored medical and dental benefits for eighteen months following the date of termination or such shorter period for which the NEO is legally eligible to receive such benefits;
for twenty-four months following the date of termination, premiums that may come due on the term life insurance policies on the NEO’s life, consistent with the Company’s practice as of the date of the Retention Agreement;
$25,000, within sixty days of the date of termination, for outplacement services, regardless of whether the NEO elects to use any outplacement services; and
full vesting of the NEO's account in the Company’s Executive Deferred Compensation Plan and in any plan of deferred compensation maintained by the Company or its successor.
In addition, under the Retention Agreements, upon the consummation of a change in control, the NEOs will be fully vested in their outstanding awards under the Company’s Omnibus Incentive Plan and under any equity incentive plan maintained by the Company or its successor, as of the date of the change in control.
The Retention Agreements have an indefinite term; however, the Company may terminate a Retention Agreement at any time by giving the NEO written notice thereof at least twenty-four months in advance of such termination date.
Tax and Accounting Considerations
The Compensation Committee annually reviews and considers the deductibility of the compensation paid to our executive officers, which includes each of the NEOs, under Section 162(m) of the Internal Revenue Code of 1986, or the Code. Pursuant to Section 162(m) of the Code, compensation paid to certain executive officers in excess of $1,000,000 generally is not deductible. However, before the effective date of the 2017 tax reform legislation, amounts in excess of $1,000,000 were deductible if they qualify as “performance-based compensation.” With respect to awards made before the 2017 tax reform legislation, the Compensation Committee endeavored to structure the executive compensation program so that each executive’s compensation will generally be fully deductible. However, to maintain flexibility in compensating our executive officers in a manner designed to promote our objectives, the Compensation Committee has not adopted a policy that requires all compensation to be deductible and has retained the right to approve compensation that is not fully deductible under Section 162(m). The compensation paid pursuant to our cash-based annual and long-term incentive programs was intended to qualify as “performance-based compensation” for purposes of Section 162(m) for all years in which the “performance-based compensation” exception was in effect, including 2017. Base salaries did not qualify as “performance-based compensation” pursuant to the requirements of Section 162(m).
The 2017 tax reform legislation removed the “performance-based compensation” exception from Section 162(m). Accordingly, awards made after November 2, 2017, generally are not eligible for the “performance-based compensation” exception and will not be deductible to the extent that they cause the compensation of the affected executive officers to exceed $1,000,000 in any year. Awards that were made and subject to binding written contracts in effect on November 2, 2017, are “grandfathered” under prior law and can still qualify as deductible “performance-based compensation,” even if paid in future years. The Compensation Committee will continue to monitor these awards and Internal Revenue Service guidance to determine if they are deductible if and when paid. In addition, the Compensation Committee will review the 2017 tax reform legislation and its impact on the Company’s executive compensation program; however, no assurance can be given that compensation intended to satisfy the requirements for exemption from Section 162(m) will do so.
In 2017, all compensation paid to our executive officers was deductible for U.S. federal income tax purposes.
In awarding restricted stock awards for performance in 2017, we accounted for share-based awards under the provisions of FASB ASC Topic 718. FASB ASC Topic 718 establishes accounting for stock-based awards exchanged for goods or services. Accordingly, stock-based compensation cost is measured at grant date, based on the fair value of the awards, and is recognized as an expense ratably over the requisite service period. Accounting rules also require us to record cash compensation as an expense at the time the obligation is incurred.
Conclusion
We believe that our compensation policies are designed to fairly compensate, retain and motivate our NEOs. The retention and motivation of our NEOs should enable us to grow strategically and position ourselves competitively in the market in which we operate.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
All members of our Compensation Committee (Messrs. Dunwoody, Goldstein and Mulhern) are independent directors, and none of the members are present or past employees of the Company. No member of the Compensation Committee has had any relationship with the Company requiring disclosure under Item 404 of Regulation S-K under the Exchange Act. In addition, no interlocking relationship, as defined by the rules adopted by the SEC, existed during the year ended December 31, 2017 between any membersupervision of our Board, a majority of Directors or the Compensation Committee and an executive officerwhich is made up of the Company.
COMPENSATION COMMITTEE REPORT
The Compensation Committee determines the compensation for our executive officers and the amount of salary and bonus to be included in the compensation package for each of our executive officers. The Compensation Committee currently consists of Messrs. Dunwoody, Goldstein and Mulhern, all of whom are considered independent in accordance with NYSE listing standards, SEC rules and our Corporate Governance Guidelines, anddirectors that are not “interested persons” of the Company,persons,” as defined in Section 2(a)(19) of the 1940 Act.Act, of the Company or Barings, Barings’ Global Private Finance Group (“Barings GPFG”) manages our day-to-day operations, and provides investment advisory and management services to us. Barings GPFG is part of Barings' $300 billion (as of December 31, 2022) Global Fixed Income Platform that invests in liquid, private and structured credit. Barings GPFG manages private funds and separately managed accounts, along with multiple public vehicles.
Included in Barings GPFG is Barings North American Private Finance Team (the “U.S. Investment Team”), which consists of 51 investment professionals (as of December 31, 2022) located in four offices in the U.S. The U.S. Investment Team provides a full set of solutions to the North American middle market, including revolvers, first and second lien senior secured loans, unitranche structures, mezzanine debt and equity co-investments. The U.S. Investment Team averages over 20 years of industry experience at the Managing Director and Director level.
The CompensationBarings North American Private Finance investment committee (the “Investment Committee”), which is responsible for our investment origination and portfolio monitoring activities for middle-market companies in North America, consists of six members: Salman Mukhtar, Managing Director; Terry Harris, Managing Director and Head of Global Private Finance Portfolio Management; Ian Fowler, Managing Director, Fund Portfolio Manager and Co-Head of Global Private Finance; Adam Wheeler, Managing Director, Co-Head of Global Private Finance; Mark Flessner, Managing Director and Fund Portfolio Manager; and Brian Baldwin, Managing Director. Collectively, the Investment Committee has over 160 years of industry experience, and each member averages approximately 27 years of industry experience. A majority of the votes cast at a meeting at which a majority of the members of the Investment Committee is present is required to approve all investments in new middle-market companies.
Terry Harris, Ian Fowler and Adam Wheeler also sit on the European and Asia Pacific Investment Committees, which is responsible for our Boardinvestment origination and portfolio monitoring activities for middle-market companies in European and Asia-Pacific geographies, affording them a unique relative value perspective across all of Directors has reviewedBarings' investment geographies. Ian Fowler, Mark Flessner and discussed with management the information contained in the Compensation DiscussionBrian Baldwin have all worked together at prior firms including GE Capital, Freeport Financial and Analysis section of this proxy statement and, based on its review and discussion, has recommended to our Board of DirectorsHarbour Group. Barings believes that the Compensation Discussionindividual and Analysis be included in this proxy statement to be filed with the SEC.
The Compensation Committee:
Mark F. Mulhern, Chair
W. McComb Dunwoody
Benjamin S. Goldstein
The information contained in the report above shall not be deemed to be “soliciting material” or to be “filed” with the SEC, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933, as amended, or the Securities Act, or the Exchange Act, except to the extent specifically incorporated by reference therein.
EXECUTIVE OFFICER COMPENSATION
2017 Summary Compensation
The following table sets forth certain summary information for the years 2017, 2016 and 2015 with respect to the compensation awarded to and earned by our NEOs.
Summary Compensation Table for 2017
|
| | | | | | | | | | | | | | | | | | | | | | |
| Name | Principal Position | Year | | Base Salary | | Bonus | | Restricted Stock Awards(1) | | All Other Compensation(2) | | Total |
| E. Ashton Poole | CEO | 2017 | | $ | 443,750 |
| | $ | 405,000 |
| | $ | 1,029,875 |
| | $ | 130,635 |
| | $ | 2,009,260 |
|
| | | 2016 | | $ | 432,500 |
| | $ | 535,000 |
| | $ | 745,025 |
| | $ | 115,829 |
| | $ | 1,828,354 |
|
| | | 2015 | | $ | 407,500 |
| | $ | 647,500 |
| | $ | 980,100 |
| | $ | 97,546 |
| | $ | 2,132,646 |
|
| Steven C. Lilly | CFO | 2017 | | $ | 338,750 |
| | $ | 375,000 |
| | $ | 866,250 |
| | $ | 153,429 |
| | $ | 1,733,429 |
|
| | | 2016 | | $ | 333,750 |
| | $ | 485,000 |
| | $ | 648,610 |
| | $ | 117,084 |
| | $ | 1,584,444 |
|
| | | 2015 | | $ | 325,000 |
| | $ | 580,000 |
| | $ | 871,200 |
| | $ | 84,427 |
| | $ | 1,860,627 |
|
| Jeffrey A. Dombcik | CCO(3) | 2017 | | $ | 313,750 |
| | $ | 330,000 |
| | $ | 750,750 |
| | $ | 138,922 |
| | $ | 1,533,422 |
|
| | | 2016 | | $ | 294,375 |
| | $ | 415,000 |
| | $ | 508,370 |
| | $ | 107,180 |
| | $ | 1,324,925 |
|
| | | 2015 | | $ | 290,000 |
| | $ | 512,000 |
| | $ | 653,400 |
| | $ | 78,890 |
| | $ | 1,534,290 |
|
| Cary B. Nordan | COO(4) | 2017 | | $ | 313,750 |
| | $ | 330,000 |
| | $ | 808,500 |
| | $ | 140,215 |
| | $ | 1,592,465 |
|
| | | 2016 | | $ | 294,375 |
| | $ | 440,000 |
| | $ | 604,785 |
| | $ | 108,100 |
| | $ | 1,447,260 |
|
| | | 2015 | | $ | 290,000 |
| | $ | 555,000 |
| | $ | 696,960 |
| | $ | 78,992 |
| | $ | 1,620,952 |
|
| Douglas A. Vaughn | CAO(5) | 2017 | | $ | 313,750 |
| | $ | 330,000 |
| | $ | 750,750 |
| | $ | 139,316 |
| | $ | 1,533,816 |
|
| | | 2016 | | $ | 294,375 |
| | $ | 440,000 |
| | $ | 473,310 |
| | $ | 107,367 |
| | $ | 1,315,052 |
|
| | | 2015 | | $ | 290,000 |
| | $ | 457,500 |
| | $ | 609,840 |
| | $ | 78,771 |
| | $ | 1,436,111 |
|
| |
(1) | The amounts listed in this column reflect the grant date fair value of the restricted stock granted, in accordance with FASB ASC Topic 718, Compensation — Stock Compensation, based on the closing price of our common stock on February 1, 2017, the grant date. Pursuant to SEC rules, the amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions. These amounts do not correspond to the actual value that will be recognized by our NEOs upon the vesting of such grants. Additionally, pursuant to SEC rules requiring equity awards to be disclosed in the summary compensation table for the year during which they are granted, rather than earned, the amounts in this column include the grant-date fair value of restricted stock awards granted to our NEOs in February 2017, even though such awards relate to 2016 performance. Assumptions used in the calculation of these amounts are set forth in Note 6 — “Equity-Based and Other Compensation Plans” to our consolidated audited financial statements for the fiscal year ended December 31, 2017 which are included in our Annual Report on Form 10-K which was filed with the SEC on February 28, 2018. These amounts do not represent the actual value that may be realized by the NEOs. |
| |
(2) | All Other Compensation includes the value of benefits in the form of 401(k) contributions, deferred compensation plan contributions made by the Company, earnings on deferred compensation plan balances and life insurance premiums paid by the Company for the year. See chart below for disclosure of the amounts of each of these items. |
| |
(3) | “CCO” stands for Chief Credit Officer. |
| |
(4) | “COO” stands for Chief Origination Officer. |
| |
(5) | “CAO” stands for Chief Administrative Officer. |
All Other Compensation in the Summary Compensation Table for 2017 above consists of the following:
|
| | | | | | | | | | | | | | | | |
| Name | Year | Company 401(k) Contribution | Company Deferred Comp. Plan Contribution | Deferred Compensation Plan Earnings | Company Paid Life Insurance Premiums | Total All Other Compensation |
| E. Ashton Poole | 2017 | $ | 36,000 |
| $ | 50,000 |
| $ | 43,270 |
| $ | 1,365 |
| $ | 130,635 |
|
| | 2016 | $ | 35,000 |
| $ | 60,000 |
| $ | 19,464 |
| $ | 1,365 |
| $ | 115,829 |
|
| | 2015 | $ | 35,000 |
| $ | 60,000 |
| $ | 1,181 |
| $ | 1,365 |
| $ | 97,546 |
|
| Steven C. Lilly | 2017 | $ | 36,000 |
| $ | 40,000 |
| $ | 76,491 |
| $ | 938 |
| $ | 153,429 |
|
| | 2016 | $ | 35,000 |
| $ | 45,000 |
| $ | 36,146 |
| $ | 938 |
| $ | 117,084 |
|
| | 2015 | $ | 35,000 |
| $ | 45,000 |
| $ | 3,489 |
| $ | 938 |
| $ | 84,427 |
|
| Jeffrey A. Dombcik | 2017 | $ | 36,000 |
| $ | 35,000 |
| $ | 66,286 |
| $ | 1,636 |
| $ | 138,922 |
|
| | 2016 | $ | 35,000 |
| $ | 40,000 |
| $ | 31,295 |
| $ | 885 |
| $ | 107,180 |
|
| | 2015 | $ | 35,000 |
| $ | 40,000 |
| $ | 3,005 |
| $ | 885 |
| $ | 78,890 |
|
| Cary B. Nordan | 2017 | $ | 36,000 |
| $ | 35,000 |
| $ | 68,177 |
| $ | 1,038 |
| $ | 140,215 |
|
| | 2016 | $ | 35,000 |
| $ | 40,000 |
| $ | 32,220 |
| $ | 880 |
| $ | 108,100 |
|
| | 2015 | $ | 35,000 |
| $ | 40,000 |
| $ | 3,112 |
| $ | 880 |
| $ | 78,992 |
|
| Douglas A. Vaughn | 2017 | $ | 36,000 |
| $ | 35,000 |
| $ | 66,992 |
| $ | 1,324 |
| $ | 139,316 |
|
| | 2016 | $ | 35,000 |
| $ | 40,000 |
| $ | 31,641 |
| $ | 726 |
| $ | 107,367 |
|
| | 2015 | $ | 35,000 |
| $ | 40,000 |
| $ | 3,045 |
| $ | 726 |
| $ | 78,771 |
|
2017 Grants of Plan-Based Awards
The following table summarizes grants of plan-based awards made to our NEOs in 2017 for their performance in 2016.
Grants of Plan-Based Awards in 2017
|
| | | | | | | | | |
| Name | | Grant Date | | Stock Awards Number of Shares of Stock | | Grant Date Fair Value of Stock |
| E. Ashton Poole(1) | | February 1, 2017 | | 53,500 |
| | $ | 1,029,875 |
|
| Steven C. Lilly(1) | | February 1, 2017 | | 45,000 |
| | $ | 866,250 |
|
| Jeffrey A. Dombcik(1) | | February 1, 2017 | | 39,000 |
| | $ | 750,750 |
|
| Cary B. Nordan(1) | | February 1, 2017 | | 42,000 |
| | $ | 808,500 |
|
| Douglas A. Vaughn(1) | | February 1, 2017 | | 39,000 |
| | $ | 750,750 |
|
| |
(1) | Consists of restricted stock which vests over four years from the date of grant. The shares of restricted stock are expected to vest ratably in February of each year, beginning in February of 2018. |
Compensation Mix
As discussed in more detail in the section of this Proxy Statement entitled “Compensation Discussion and Analysis” above, in 2017, the Company’s compensation program was comprised primarily of the following three elements: (i) base salary, (ii) annual cash bonus and (iii) long-term equity compensation. Although it does not allocate a fixed percentage of the NEO compensation packages to eachshared experiences of these elements,senior team members provides the CompensationInvestment Committee does seek to achievewith an appropriate balance among these elements to incentivize our NEOs to focus on financialof shared investment philosophy and operating results in the near termdifference of background and the creation of stockholder value over the long-term.opinion.
In 2017, salaries comprised 22.1%, 19.5%, 20.5%, 19.7% and 20.5% of total compensation for Messrs. Poole, Lilly, Dombcik, Nordan and Vaughn, respectively. The annual base salary of each NEO is to be determined annually at the discretion of the Compensation Committee. Moreover, in 2017, annual cash bonuses comprised 20.2%, 21.6%, 21.5%, 20.7% and 21.5% of total compensation for Messrs. Poole, Lilly, Dombcik, Nordan and Vaughn, respectively.
Omnibus Incentive Plan
The restricted stock awards granted to our NEOs during 2017 that appear in the tables above and below were granted pursuant to the Omnibus Incentive Plan (formerly, the Equity Incentive Plan as discussed above under "Director Compensation - Non-Employee Director Equity Compensation" above). On March 18, 2008, we received an exemptive order from the SEC authorizing such issuance of restricted stock to our employees and non-employee directors pursuant to the terms of the Equity Incentive Plan, the terms of which are now included in the Omnibus Incentive Plan, and as otherwise set forth in the exemptive order. The Equity Incentive Plan originally reserved up to 900,000 shares for issuance and in 2012, our Board of Directors and stockholders voted to approve an increase in shares of common stock available for issuance under the Equity Incentive Plan by 1,500,000 shares. In addition, in 2017, in conjunction with the approval of the Omnibus Incentive Plan, our Board of Directors and stockholders voted to approve an increase in shares of common stock available for issuance under the Omnibus Incentive Plan by 1,600,000 shares. Thus, the Omnibus Incentive Plan currently reserves up to 4,000,000 shares of our common stock for issuance. As of December 31, 2017, there were 2,269,467 shares available for issuance under the Omnibus Incentive Plan.
Participants in the Omnibus Incentive Plan who are employees may receive awards of options to purchase shares of common stock or grants of restricted stock, as determined by the Board of Directors. The basis of such participation is to provide incentives to our employees in order to attract and retain the services of qualified professionals.
The Omnibus Incentive Plan includes provisions allowing the issuance of restricted stock to all key employees consistent with such terms and conditions as the Board of Directors shall deem appropriate, subject to the limitations
set forth in the plan. Restricted stock refers to an award of stock that is subject to forfeiture restrictions and may not be transferred until such restrictions have lapsed. With respect to awards issued to our employees, the Board of Directors will determine the time or times at which such shares of restricted stock will vest or the terms on which such shares will vest. Shares granted pursuant to a restricted stock award will not be transferable until such shares have vested in accordance with the terms of the award agreement, unless the transfer is by will or by the laws of descent and distribution. The Omnibus Incentive Plan also allows us to issue options to our key employees in the future should our Board of Directors choose to do so.
Our Board of Directors has delegated administration of the Omnibus Incentive Plan to our Compensation Committee, currently comprised solely of three (3) independent directors who are independent pursuant to the listing requirements of the NYSE. Our Board of Directors may abolish the Compensation Committee at any time and revest in our Board of Directors the administration of the Omnibus Incentive Plan. Our Board of Directors administers the Omnibus Incentive Plan in a manner that is consistent with the applicable requirements of the NYSE and the exemptive order.
On February 1, 2017, the Board of Directors, upon recommendation of our Compensation Committee, approved grants of restricted stock awards to Messrs. Poole, Lilly, Dombcik, Nordan and Vaughn as set forth above. All of these restricted shares of stock were valued at $19.25, the closing price of our common stock on the NYSE on February 1, 2017, the grant date. The restricted share awards granted to Messrs. Poole, Lilly, Dombcik, Nordan and Vaughn vest ratably over four years from the grant date.
None of these shares of restricted stock may be sold, assigned, transferred, pledged, hypothecated or otherwise encumbered or disposed of prior to the their vesting date, and, except as otherwise determined by our Board of Directors at or after the grant of each executive officer’s award of restricted stock, any of the shares which have not fully vested will be forfeited, and all rights of the executive officer to such shares shall terminate, without further obligation on the part of the Company, unless the executive officer remains employed with us for the entire vesting period relating to the restricted stock.
2017 Outstanding Equity Awards at Fiscal Year End
The following table summarizes the number of outstanding equity awards held by each of our NEOs as of December 31, 2017.
2017 Outstanding Equity Awards at Fiscal Year End
|
| | | | | | | |
| | | | | |
| Name | | Number of Shares of Stock That Have Not Vested(1) | | Market Value of Shares of Stock That Have Not Vested(2) |
| E. Ashton Poole | | 123,579 |
| (3) | $ | 1,172,765 |
|
| Steven C. Lilly | | 101,000 |
| (4) | $ | 958,490 |
|
| Jeffrey A. Dombcik | | 83,000 |
| (5) | $ | 787,670 |
|
| Cary B. Nordan | | 91,625 |
| (6) | $ | 869,521 |
|
| Douglas A. Vaughn | | 80,750 |
| (7) | $ | 766,318 |
|
22
| |
(1) | No restricted stock awards reflected in this column have been transferred. |
| |
(2) | The values of the unvested common stock listed are based on a $9.49 closing price of our common stock as reported on the NYSE on December 29, 2017. |
| |
(3) | 5,500 of the shares will vest on February 4, 2018, 22,500 of the shares will vest ratably on February 4 of each year until February 4, 2019, 31,875 of the shares will vest ratably on February 4 of each year until February 4, 2020, 53,500 of the shares will vest ratably on February 4 of each year until February 4, 2021 and 10,204 of the shares will vest on August 29, 2018, at which respective times such shares will be fully vested, subject to the executive officer still being employed with us at such vesting dates. |
| |
(4) | 8,250 of the shares will vest on February 4, 2018, 20,000 of the shares will vest ratably on February 4 of each year until February 4, 2019, 27,750 of the shares will vest ratably on February 4 of each year until February 4, 2020 and 45,000 of the shares will vest ratably on February 4 of each year until February 4, 2021, at which respective times such shares will be fully vested, subject to the executive officer still being employed with us at such vesting dates. |
| |
(5) | 7,250 of the shares will vest on February 4, 2018, 15,000 of the shares will vest ratably on February 4 of each year until February 4, 2019, 21,750 of the shares will vest ratably on February 4 of each year until February 4, 2020 and 39,000 of the shares will vest ratably on February 4 of each year until February 4, 2021, at which respective times such shares will be fully vested, subject to the executive officer still being employed with us at such vesting dates. |
| |
(6) | 7,750 of the shares will vest on February 4, 2018, 16,000 of the shares will vest ratably on February 4 of each year until February 4, 2019, 25,875 of the shares will vest ratably on February 4 of each year until February 4, 2020 and 42,000 of the shares will vest ratably on February 4 of each year until February 4, 2021, at which respective times such shares will be fully vested, subject to the executive officer still being employed with us at such vesting dates. |
| |
(7) | 7,500 of the shares will vest on February 4, 2018, 14,000 of the shares will vest ratably on February 4 of each year until February 4, 2019, 20,250 of the shares will vest ratably on February 4 of each year until February 4, 2020 and 39,000 of the shares will vest ratably on February 4 of each year until February 4, 2021, at which respective times such shares will be fully vested, subject to the executive officer still being employed with us at such vesting dates. |
2017 Option Exercises and Stock Vested
The following table summarizes the number of shares of common stock and the value of those shares that vested in 2017 that were awarded to our NEOs.
2017 Option Exercises and Stock Vested
|
| | | | | | | | |
| Name | | Number of Shares Acquired on Vesting(1) | | Value Realized on Vesting | |
| E. Ashton Poole | | 37,579 |
| (2) | $ | 678,975 |
| (3) |
| Steven C. Lilly | | 36,070 |
| | $ | 709,497 |
| (4) |
| Jeffrey A. Dombcik | | 29,313 |
| | $ | 576,587 |
| (4) |
| Cary B. Nordan | | 31,688 |
| | $ | 623,303 |
| (4) |
| Douglas A. Vaughn | | 28,563 |
| | $ | 561,834 |
| (4) |
| |
(1) | Number of Shares Acquired upon Vesting is calculated prior to the withholding of vesting shares by the Company to satisfy tax withholding obligations. Each of our NEOs elected to satisfy his tax withholding obligations by having the Company withhold a portion of his vesting shares. |
| |
(2) | 27,375 of these shares vested on February 4, 2017, and 10,204 of these shares vested on August 29, 2017. |
| |
(3) | Values realized are based on the closing market price of our common stock of $19.67, as reported on the NYSE on February 6, 2017 and on the closing market price of our common stock of $13.77, as reported on the NYSE on August 29, 2017. |
| |
(4) | Based on the closing market price of our common stock of $19.67, as reported on the NYSE on February 6, 2017. |
Nonqualified Deferred Compensation for 2017
The following table sets forth information concerning compensation earned by our NEOs for 2017 under the Company’s Executive Deferred Compensation Plan.
|
| | | | | | | | | | | | | | | | | | | | |
| Name | | Executive Contributions in 2017 ($) | | Registrant Contributions in 2017 ($)(1) | | Aggregate Earnings in 2017 ($)(2) | | Aggregate Withdrawals/ Distributions in 2017 ($) | | Aggregate Balance at 12/31/2017 ($)(3) |
| E. Ashton Poole | | $ | — |
| | $ | 60,000 |
| | $ | 43,270 |
| | $ | — |
| | $ | 247,875 |
|
| Steven C. Lilly | | $ | — |
| | $ | 45,000 |
| | $ | 76,491 |
| | $ | — |
| | $ | 431,703 |
|
| Jeffrey A. Dombcik | | $ | — |
| | $ | 40,000 |
| | $ | 66,286 |
| | $ | — |
| | $ | 374,217 |
|
| Cary B. Nordan | | $ | — |
| | $ | 40,000 |
| | $ | 68,177 |
| | $ | — |
| | $ | 384,770 |
|
| Douglas A. Vaughn | | $ | — |
| | $ | 40,000 |
| | $ | 66,992 |
| | $ | — |
| | $ | 378,157 |
|
| |
(1) | Represents amounts earned for 2016 and contributed to the Executive Deferred Compensation Plan in 2017. All of the amounts shown in this column are also reported in the 2016 line in the “All Other Compensation” column of the Summary Compensation Table. |
| |
(2) | Represents earnings on Executive Deferred Compensation Plan balances during 2017. All of the amounts shown in this column are also reported in the “All Other Compensation” column of the Summary Compensation Table for 2017.
|
| |
(3) | All amounts were included in amounts reported in the “All Other Compensation” column of the Summary Compensation Table in 2017 or a prior year. |
During the first quarter of 2012, the Compensation Committee of the Board of Directors approved the Company’s adoption of a non-qualified deferred compensation plan for certain senior executive officers and key employees, including the NEOs (the “Executive Deferred Compensation Plan”). The Executive Deferred Compensation Plan is an unfunded plan maintained for the purpose of providing participating executives with additional deferred compensation. Pursuant to the Executive Deferred Compensation Plan, the Company will contribute certain amounts for the benefit of the participating executives from time to time. In the future, the Company may allow participating executives to elect to contribute on a pre-tax basis up to 50% of their base salary and up to 100% of their cash bonus. The Company may elect to match a portion of such contributions. Contributions to the Executive Deferred Compensation Plan will earn a fixed rate of return. This rate of return is currently determined to equal the rate of return of a hypothetical investment in a mutual fund providing a return equal to the S&P Total Return Index. Participants will be 100% vested in any elective deferrals, and will vest in any Company contributions ratably over four years from the date of the relevant contribution. Distributions to participants are generally payable upon termination of employment.
Potential Payments upon Termination or Change in Control
This section describes and quantifies the estimated compensation payments and other benefits to which our NEOs would be entitled upon the occurrence of each of the following triggering events:
occurrence of a Change in Control (as defined in the Retention Agreements ); or
termination upon death or disability, or occurrence of a Change of Control (as defined in the Omnibus Incentive Plan).
Our NEOs are “at will” employees and, except as otherwise described herein, are only entitled to payment of accrued salary and vacation time, on the same terms as provided to our other employees, upon any resignation, retirement or termination of employment, with or without cause. Except as otherwise noted below, the calculations below do not include any estimated payments for those benefits that we generally make available on the same terms to our full-time, non-executive employees.
Executive Retention Agreements
The estimated severance payments and other benefits presented below are calculated based on compensation arrangements in effect as of December 31, 2017, including the Retention Agreements, and assume that the triggering event occurred on such date. Our estimates of potential benefits are further based on the additional assumptions specifically set forth in the table below, if any. Although these calculations are intended to provide reasonable estimates of potential compensation benefits, the estimated benefit amounts may differ from the actual amount that any individual would receive upon termination or the costs to Triangle associated with continuing certain benefits following termination of employment.
Change of Control Payments and Benefits under Executive Retention Agreements
|
| | | | | | | | | | | | | | | |
| Name | Severance Payment | Deferred Compensation Plan Vesting(1) | Vesting of Stock Awards(2) | All Other Benefits(3) | Total |
| E. Ashton Poole | $ | 1,410,625 |
| $ | 117,518 |
| $ | 1,172,765 |
| $ | 59,806 |
| $ | 2,760,714 |
|
| Steven C. Lilly | $ | 1,195,000 |
| $ | 96,599 |
| $ | 958,490 |
| $ | 58,952 |
| $ | 2,309,041 |
|
| Jeffrey A. Dombcik | $ | 1,085,000 |
| $ | 85,866 |
| $ | 787,670 |
| $ | 60,348 |
| $ | 2,018,884 |
|
| Cary B. Nordan | $ | 1,138,750 |
| $ | 85,866 |
| $ | 869,521 |
| $ | 59,152 |
| $ | 2,153,289 |
|
| Douglas A. Vaughn | $ | 1,016,875 |
| $ | 85,866 |
| $ | 766,318 |
| $ | 59,724 |
| $ | 1,928,783 |
|
| |
(1) | Represents the amount of unvested deferred compensation expense related to outstanding grants to each NEO as of December 31, 2017. |
(2)Represents the fair market value of each NEO's unvested restricted share awards as of December 31, 2017, based on a $9.49 closing price of our common stock as reported on the NYSE on December 29, 2017, as follows: |
| | | | | | |
| Name | Number of Shares Acquired on Vesting (#) | | Value Realized on Vesting ($) |
| E. Ashton Poole | 123,579 |
| | $ | 1,172,765 |
|
| Steven C. Lilly | 101,000 |
| | $ | 958,490 |
|
| Jeffrey A. Dombcik | 83,000 |
| | $ | 787,670 |
|
| Cary B. Nordan | 91,625 |
| | $ | 869,521 |
|
| Douglas A. Vaughn | 80,750 |
| | $ | 766,318 |
|
(3)All Other Benefits includes the value of medical and dental insurance premiums, term life insurance premiums and an allowance for outplacement services. See chart below for disclosure of the amounts of each of these items. |
| | | | | | | | | | | | |
| Name | Medical and Dental Premiums | Term Life Insurance Premiums | Outplacement Services Allowance | Total All Other Benefits |
| E. Ashton Poole | $ | 32,076 |
| $ | 2,730 |
| $ | 25,000 |
| $ | 59,806 |
|
| Steven C. Lilly | $ | 32,076 |
| $ | 1,876 |
| $ | 25,000 |
| $ | 58,952 |
|
| Jeffrey A. Dombcik | $ | 32,076 |
| $ | 3,272 |
| $ | 25,000 |
| $ | 60,348 |
|
| Cary B. Nordan | $ | 32,076 |
| $ | 2,076 |
| $ | 25,000 |
| $ | 59,152 |
|
| Douglas A. Vaughn | $ | 32,076 |
| $ | 2,648 |
| $ | 25,000 |
| $ | 59,724 |
|
Death, Disability, and Change of Control Benefits under the Omnibus Incentive Plan
In addition, under the Company's Omnibus Incentive Plan, and the award agreements thereunder, if termination of the NEO's employment with the Company is the result of death or Disability (as defined in the Omnibus Incentive Plan), or if a Change of Control (as defined in the Omnibus Incentive Plan) occurs, the NEO shall become fully vested in any outstanding awards under the Omnibus Incentive Plan. The estimated compensation benefits presented below are calculated based on compensation arrangements in effect as of December 31, 2017 and assume that the triggering event occurred on such date. The estimated benefit amounts related to the Company's common stock are based on a common stock price of $9.49, which was the closing price per share of our common stock on the NYSE on December 29, 2017. Our estimates of potential benefits are further based on the additional assumptions specifically set forth in the table below, if any. Although these calculations are intended to provide reasonable estimates of potential compensation benefits, the estimated benefit amounts may differ from the actual amount that any individual would receive upon termination or the costs to the Company associated with continuing certain benefits following termination of employment.
|
| | | | | | | | | | | | | |
| | Termination for Cause | | Termination from Death, from Disability or Occurrence of Change in Control |
| Name | Number of Shares Acquired on Vesting (#) | | Value Realized on Vesting ($) | | Number of Shares Acquired on Vesting (#) | | Value Realized on Vesting ($) |
| E. Ashton Poole | — |
| | $ | — |
| | 123,579 |
| | $ | 1,172,765 |
|
| Steven C. Lilly | — |
| | $ | — |
| | 101,000 |
| | $ | 958,490 |
|
| Jeffrey A. Dombcik | — |
| | $ | — |
| | 83,000 |
| | $ | 787,670 |
|
| Cary B. Nordan | — |
| | $ | — |
| | 91,625 |
| | $ | 869,521 |
|
| Douglas A. Vaughn | — |
| | $ | — |
| | 80,750 |
| | $ | 766,318 |
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information with respect to the beneficial ownership of ourthe Company's common stock as of February 22, 2018,March 6, 2023, the record date, by each of our executive officers and independent directors and all of ourthe Company's directors and executive officers, both individually and as a group. Asgroup, and by each person known to the Company to beneficially own 5% or more of February 22, 2018, wethe outstanding shares of the Company’s common stock. With respect to persons known to the Company to beneficially own 5% or more of the outstanding shares of the Company’s common stock, the Company bases such knowledge on beneficial ownership filings made by the holders with the SEC and other information known to the Company. Other than as set forth in the table below, none of the Company's directors or executive officers are not awaredeemed to beneficially own shares of any 5% beneficial owners of ourthe Company's common stock.
Beneficial ownership is determined in accordance with the rules of the SEC and includes voting or investment power with respect to the securities. There is no common stock subject to options or warrants that isare currently exercisable or exercisable within 60 days of February 22, 2018.March 6, 2023. Percentage of beneficial ownership is based on 48,024,614107,916,166 shares of common stock outstanding as of February 22, 2018. TheMarch 6, 2023. Unless otherwise indicated by footnote, the business address of each person listed below is 3700 Glenwood Avenue,300 South Tryon Street, Suite 530, Raleigh,2500, Charlotte, North Carolina 27612.28202.
|
| | | | | | | | | | |
| Name of Beneficial Owner | | Number of Shares Beneficially Owned(1) | | | | Percentage of Class(2) | | Dollar Range of Equity Securities Beneficially Owned(3)(4) |
| Executive Officers and Interested Directors | | | | | | | | |
| E. Ashton Poole | | 251,105 |
| | (5) | | * |
| | over $100,000 |
| Steven C. Lilly | | 308,622 |
| | (6) | | * |
| | over $100,000 |
| Jeffrey A. Dombcik | | 190,426 |
| | (7) | | * |
| | over $100,000 |
| Cary B. Nordan | | 215,559 |
| | (8) | | * |
| | over $100,000 |
| Douglas A. Vaughn | | 216,834 |
| | (9) | | * |
| | over $100,000 |
| Garland S. Tucker, III | | 210,917 |
| | (10) | | * |
| | over $100,000 |
| Independent Directors | | | | | | | | |
| W. McComb Dunwoody | | 108,972 |
| | (11) | | * |
| | over $100,000 |
| Mark M. Gambill | | 29,950 |
| | (11) | | * |
| | over $100,000 |
| Benjamin S. Goldstein | | 61,522 |
| | (11) | | * |
| | over $100,000 |
| Mark F. Mulhern | | 5,440 |
| | (11) | | * |
| | $50,000 - $100,000 |
| Simon B. Rich, Jr. | | 96,515 |
| | (12) | | * |
| | over $100,000 |
| All directors and executive officers as a group | | 1,695,862 |
| | | | 3.5 | % | | over $100,000 |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Name of Beneficial Owner | | Number of Shares
Beneficially
Owned(1) | | | | Percentage
of Class(2) | | Dollar Range of Equity
Securities Beneficially
Owned(3) |
| Directors and Executive Officers: | | | | | | | | |
| Interested Directors | | | | | | | | |
| Eric Lloyd | | 33,437 | | | | | * | | over $100,000 |
| David Mihalick | | 20,000 | | | | | * | | over $100,000 |
Dr. Bernard Harris, Jr.(4) | | — | | | | | * | | None |
| Non-Interested Directors | | | | | | | | |
| Mark F. Mulhern | | 14,855 | | | | | * | | over $100,000 |
| Thomas W. Okel | | 10,037 | | | | | * | | $50,001 - $100,000 |
| Jill Olmstead | | 4,000 | | | | | * | | $10,001 - $50,000 |
| John A. Switzer | | 6,000 | | | | | * | | $50,001 - $100,000 |
| Robert Knapp | | 361,034 | | | | | * | | over $100,000 |
| Steve Byers | | 20,019 | | | | | * | | over $100,000 |
| Valerie Lancaster-Beal | | — | | | | | * | | None |
| Executive Officers Who Are Not Directors | | | | | | | | |
| Ian Fowler | | — | | | | | * | | None |
| Jonathan Landsberg | | 8,423 | | | | | * | | $50,001 - $100,000 |
| Elizabeth Murray | | 12,982 | | | | | * | | over $100,000 |
| Ashlee Steinnerd | | — | | | | | * | | None |
| All directors and executive officers as a group (14 persons) | | 490,787 | | | | | * | | over $100,000 |
| Five-Percent Stockholders: | | | | | | | | |
| Barings LLC | | 13,639,681 | | | | | 12.6 | % | | over $100,000 |
* Less than 1.0%
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(1) | (1)Beneficial ownership in this column has been determined in accordance with Rule 13d-3 of the Exchange Act. |
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(2) | Based on a total of 48,024,614 shares issued and outstanding as of February 22, 2018. |
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(3) | Beneficial ownership has been determined in accordance with Rule 16a-1(a)(2) of the Exchange Act. |
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(4) | The dollar range of equity securities beneficially owned is based on a stock price of $11.03 per share as of February 22, 2018. |
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(5) | Includes 145,829 shares of unvested restricted stock and 4,022 shares held by Mr. Poole's wife. |
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(6) | Includes 115,250 shares of unvested restricted stock. |
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(7) | Includes 97,250 shares of unvested restricted stock. |
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(8) | Includes 102,750 shares of unvested restricted stock. |
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(9) | Includes 95,750 shares of unvested restricted stock and 28,965 shares held by Mr. Vaughn's wife. |
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(10) | Includes 69,237 shares held by Mr. Tucker’s wife. |
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(11) | Includes 2,694 shares of unvested restricted stock. |
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(12) | Includes 2,694 shares of unvested restricted stock and 5,590 shares held by Mr. Rich’s wife. |
In addition, our Board of Directors maintains requirements with respect to equity ownership by our Chief Executive Officer, our named executive officers, and our independent directors. As a result, our Chief Executive Officer must own fully vested sharesthe Exchange Act. Except as otherwise noted, each beneficial owner of ourmore than five percent of the Company's common stock equaland each director and executive officer has sole voting and/or investment power over the shares reported.
(2)Based on a total of 107,916,166 shares issued and outstanding as of March 6, 2023.
(3)Beneficial ownership in this column has been determined in accordance with Rule 16a-1(a)(2) of the Exchange Act. The dollar range of equity securities beneficially owned is based on a stock price of $8.71 per share as of March 6, 2023. Dollar ranges are as follows: None, $1 — $10,000, $10,001 — $50,000, $50,001 — $100,000, or over $100,000.
(4)Dr. Harris will not stand for re-election to a minimum of five times the amountBoard at the end of his annual base salary, our named executive officers must own fully vested shares of our common stock equal to a minimum of four timescurrent term at the amount of their annual base salaries and our independent directors must own fully vested shares of our common stock equal to a minimum of two times their annual retainer fees (including both cash and equity components). Our Chief Executive Officer, our named executive officers, and our independent directors are required to achieve these share ownership requirements after five years of service.Annual Meeting.
DELINQUENT SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCEREPORTS
Section 16(a) of the Exchange Act andrequires the disclosure requirements of Item 405 of SEC Regulation S-K require that ourCompany’s officers and directors, and executive officers, and any persons holdingwho own more than 10% of any classour common stock, to file reports of our equity securities report their ownership of such equity securities and any subsequent changes in thatsuch ownership towith the SEC, the NYSE and to us. Based solely on a review of the written statements and copies of such reports furnished to us by our executive officers,SEC. Officers, directors, and greater than 10% beneficial owners, we believestockholders also are required by SEC rules to furnish the Company with copies of all Section 16(a) forms they file.
Based solely on the Company’s review of Forms 3, 4 and 5 filed by such persons and information provided by the Company’s directors and officers, the Company believes that during fiscalthe year 2017,ended December 31, 2022, all Section 16(a) filing requirements applicable to the executive officers, directors and stockholderssuch persons were met in a timely satisfied,manner, with the following inadvertent exceptions: Messrs. Dunwoody, Gambill, Goldstein, Mulhern and Rich each filed lateexception: Steve Byers, one of the Company's directors, failed to timely file a Form 4 with respect to one transaction each.in shares of our common stock during the reporting period.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Related Party Transactions Policy and Procedure
The Company has procedures in place for the review, approval and monitoring of transactions involving the Company and certain persons related personsto it. For example, the Company has a code of conduct that generally prohibits any employee, officer or director of the Company whereby our executive officers screen eachfrom engaging in any transaction where there is a conflict between such individual's personal interest and the interests of our transactions for any possible affiliations, close or remote, between the proposed portfolio investment, us, companies controlled by us and our employees and directors. We will not enter into any agreements unless and until we are satisfied that no affiliations prohibited byCompany. Waivers to the 1940 Act exist or, if such affiliations exist, we have taken appropriate actions to seek board review and approval or, when required, exemptive relief for such transaction. Ourcode of conduct can generally only be obtained from the Chief Compliance Officer, a majority of the Board of Directors reviews these proceduresor the chairperson of the Audit Committee and are publicly disclosed as required by applicable law and regulations. In addition, the members of the Audit Committee oversee, on an annual basis. Our Audit Committee reviewsongoing basis, and approves anyconduct a prior review of all transactions withbetween the Company and related partiespersons (as such term is defined in Item 404 of Regulation S-K). that are required to be disclosed in the Company's proxy statement.
In addition,As a BDC, the Company’s codeCompany is also subject to certain regulatory requirements that restrict the Company's ability to engage in certain related-party transactions. The Company has separate policies and procedures that have been adopted to ensure that it does not enter into any such prohibited transactions without seeking necessary approvals, including prohibited transactions under the 1940 Act.
BDCs generally are prohibited under the 1940 Act from knowingly participating in certain transactions with their affiliates without the prior approval of business conducttheir independent directors and, ethics,in some cases, of the U.S. Securities and Exchange Commission (the “SEC”). Those transactions include purchases and sales, and so-called “joint” transactions, in which has been approveda BDC and one or more of its affiliates engage in certain types of profit-making activities. Any person that owns, directly or indirectly, 5.0% or more of a BDC’s outstanding voting securities will be considered an affiliate of the BDC for purposes of the 1940 Act, and a BDC generally is prohibited from engaging in purchases or sales of assets or joint transactions with such affiliates, absent the prior approval of the BDC’s independent directors. Additionally, without the approval of the SEC, a BDC is prohibited from engaging in purchases or sales of assets or joint transactions with the BDC’s officers and directors, and investment adviser, including funds managed by the Boardinvestment adviser and its affiliates.
BDCs may, however, invest alongside certain related parties or their respective other clients in certain circumstances where doing so is consistent with current law and SEC staff interpretations. For example, a BDC may invest alongside such accounts consistent with guidance promulgated by the SEC staff permitting the BDC and such other accounts to purchase interests in a single class of Directorsprivately placed securities so long as certain conditions are met, including that the BDC’s investment adviser, acting on the BDC’s behalf and acknowledgedon behalf of other clients, negotiates no term other than price. Co-investment with such other accounts is not permitted or appropriate under this guidance when there is an opportunity to invest in writing by all employees, requires that all employees and directors avoid any conflict,different securities of the same issuer or where the appearance ofdifferent investments could be expected to result in a conflict between an individual’s personalthe BDC’s interests and those of other accounts.
The 1940 Act generally prohibits BDCs from making certain negotiated co-investments with certain affiliates absent an order from the SEC permitting the BDC to do so. Pursuant to Barings’ existing SEC co-investment exemptive relief under the 1940 Act (the "Exemptive Relief"), the Company is generally permitted to co-invest with funds affiliated with Barings if a "required majority" (as defined in Section 57(o) of the 1940 Act) of the Company's independent directors make certain conclusions in connection with a co-investment transaction, including that (1) the terms of the transaction, including the consideration to be paid, are reasonable and fair to the Company and its stockholders and do not involve overreaching in respect of the Company or its stockholders on the part of any person concerned and (2) the transaction is consistent with the interests of the Company's stockholders and is consistent with the Company's investment objective and strategies. Co-investments made under the Exemptive Relief are subject to compliance with the conditions and other requirements contained in the Exemptive Relief, which could limit the Company’s ability to participate in a co-investment transaction.
The Company’s executive officers and the members of Barings’ Investment Committee, as well as the other principals of Barings, manage other funds affiliated with Barings, including BCIC and BPCC and other closed-end investment companies. In addition, Barings' investment team has responsibilities for managing U.S. and global middle-market debt investments for certain other investment funds and accounts. Accordingly, they have obligations
to investors in those entities, the fulfillment of which may not be in the best interests of, or may be adverse to the interests of, the Company or its stockholders. In addition, certain of the other funds and accounts managed by Barings may provide for higher management or incentive fees, greater expense reimbursements or overhead allocations, or permit Barings and its affiliates to receive higher origination and other transaction fees, all of which may contribute to this conflict of interest and create an incentive for Barings to favor such other funds or accounts. Although the professional staff of Barings will devote as much time to the Company’s management as appropriate to enable Barings to perform its duties in accordance with the Advisory Agreement, the investment professionals of Barings may have conflicts in allocating their time and services among the Company, on the one hand, and the other investment vehicles managed by Barings or one or more of its affiliates on the other hand.
Barings may face conflicts in allocating investment opportunities between the Company and affiliated investment vehicles that have overlapping investment objectives with ours, including BCIC and BPCC. In addition, the Company may not be made aware of and/or be given the opportunity to participate in certain investments made by investment funds which are managed by advisers affiliated with Barings and do not participate in the co-investment program described in the Exemptive Relief. In situations where co-investment with other affiliated funds or accounts is not permitted or appropriate, Barings will need to decide which account will proceed with the investment in accordance with its allocation policies and procedures. Although Barings will endeavor to allocate investment opportunities in a fair and equitable manner in accordance with its allocation policies and procedures, it is possible that, in the future, the Company may not be given the opportunity to participate in investments made by investment funds managed by Barings or an investment manager affiliated with Barings if such investment is prohibited by the Exemptive Relief or the 1940 Act. These restrictions, and similar restrictions that limit the Company's ability to transact business with its officers or directors or their affiliates, including funds managed by Barings, may limit the scope of investment opportunities that would otherwise be available to the Company.
Advisory Agreement
The Company is party to the Advisory Agreement with Barings, in which certain directors and officers of the Company and members of the Investment Committee may have indirect ownership and pecuniary interests. For the year ended December 31, 2022, the base management fee determined in accordance with the terms of the Advisory Agreement was approximately $29.5 million. For the year ended December 31, 2022, the income-based fee determined in accordance with the terms of the Advisory Agreement was approximately $6.6 million.
Administration Agreement
Pursuant to the codeterms of businessthe Administration Agreement between Barings and the Company, Barings provides the Company with certain administrative and other services necessary to conduct the Company's day-to-day operations. The Company reimburses Barings, in its capacity as administrator, for the costs and ethics, each employeeexpenses incurred and director must disclose any conflicts of interest,billed to the Company by Barings in performing its obligations and providing personnel and facilities under the Administration Agreement, or actions or relationships that might give risesuch lesser amount as may be agreed to by the Company and Barings from time to time. If the Company and Barings agree to a conflict, to our Chief Compliance Officer.
The Nominating and Corporate Governance Committee is charged with monitoring and making recommendations to the Board of Directors regarding policies and practices relating to corporate governance. Certain actions or relationships that might give rise to a conflict of interest are reviewed and approved by the Board of Directors.
Certain Transactions With or Involving Related Persons
Other than as described below, during 2017, we did not enter intoreimbursement amount for any transactions with related persons that would be required to be disclosed under this caption pursuant to Item 404(a) of Regulation S-K. For additional information regarding the amount of common stock owned by members of management, see “Security Ownership of Certain Beneficial Owners and Management.”
Garland S. Tucker, III, an interested director of the Company, is the father-in-law of Douglas A. Vaughn, a Senior Managing Director and the Chief Administrative Officer of the Company. Information with respect to Mr. Vaughn's compensation is detailed under "Executive Officer Compensation" in this proxy statement.
AUDIT COMMITTEE REPORT
The Audit Committee of our Board of Directors operates under a written charter adopted by the Board of Directors,period which is available on our website at http://ir.tcap.com/corporate-governance. The Audit Committee is currently comprised of Messrs. Goldstein, Mulhern and Rich.
The Audit Committee assistsless than the Board of Directors in its oversight of the Company’s financial reporting process and implementation and maintenance of effective controls to prevent, deter and detect fraud by management. In addition, the Audit Committee is directly responsible for the appointment, compensation and oversight of the Company’s independent registered public accounting firm. Each of the members of the Audit Committee qualifies as an “independent” director in accordance with NYSE listing standards, SEC rules and our Corporate Governance Guidelines.
In overseeing the preparation of the Company’s financial statements, the Audit Committee met with both management and Ernst & Young LLP, the Company’s independent registered public accounting firm, to review and discuss the financial statements prior to their issuance and to discuss significant accounting issues. Management advised the Audit Committee that all financial statements were prepared in accordance with generally accepted accounting principles, and the Audit Committee discussed the statements with both management and Ernst & Young LLP.
The Audit Committee also is responsible for assisting the Board of Directors in the oversight of the qualification, independence and performance of the Company’s independent auditor. The Audit Committee regularly meets in separate, private executive sessions with certain members of senior management and Ernst & Young LLP. The Audit Committee has discussed with Ernst & Young LLP the matters an independent auditor is required to discuss with the Audit Committeefull amount otherwise permitted under the rules adopted by the Public Company Accounting Oversight Board,Administration Agreement, then Barings will not be entitled to recoup any difference thereof in any subsequent period or PCAOB. The Audit Committee has received from Ernst & Young LLP the written disclosures and the letter required by applicable requirements of the PCAOB regarding Ernst & Young LLP’s communications with the Audit Committee concerning independence and has discussed with Ernst & Young LLP its independence. In addition, the Audit Committee has considered whether the provision of non-audit services, and the fees chargedotherwise. See "Compensation Discussion" above for such services, by Ernst & Young LLP are compatible with Ernst & Young LLP maintaining its independence from the Company.
Based upon the review and discussions referred to above, the Audit Committee recommended to the Company’s Board of Directors that the Company’s audited financial statements be included in the Company’s Annual Report on Form 10-K formore information. For the fiscal year ended December 31, 2017. The Audit Committee has selected,2022, the Company incurred and was invoiced by Barings for expenses of approximately $3.4 million under the Boardterms of Directors has approved, the appointment of Ernst & Young LLP asAdministration Agreement.
Barings Credit Support Agreements
In connection with the Company’s independent auditormerger with MVC Capital, Inc., the Company entered into a Credit Support Agreement (the “MVC Capital Credit Support Agreement”) with Barings, pursuant to which Barings has agreed to provide credit support to the Company in the amount of up to $23.0 million relating to the net cumulative realized and unrealized losses on the acquired MVC Capital, Inc. investment portfolio over a 10-year period. The MVC Capital Credit Support Agreement is intended to give stockholders of the combined company following the merger of the Company and MVC Capital, Inc. downside protection from net cumulative realized and unrealized losses on the acquired MVC Capital, Inc. portfolio and insulate the combined company’s stockholders from potential value volatility and losses in MVC Capital, Inc.’s portfolio following the closing of the merger. There is no fee or other
payment by the Company to Barings or any of its affiliates in connection with the MVC Capital Credit Support Agreement. Any cash payment from Barings to the Company under the MVC Capital Credit Support Agreement will be excluded from the incentive fee calculations under the Advisory Agreement.
In connection with the Company’s merger with Sierra Income Corporation, the Company entered into a Credit Support Agreement (the “SIC Credit Support Agreement”) with Barings, pursuant to which Barings has agreed to provide credit support to the Company in the amount of up to $100.0 million relating to the net cumulative realized and unrealized losses on the acquired Sierra Income Corporation investment portfolio over a 10-year period. The SIC Credit Support Agreement is intended to give stockholders of the combined company following the merger of the Company and Sierra Income Corporation downside protection from net cumulative realized and unrealized losses on the acquired Sierra Income Corporation portfolio and insulate the combined company’s stockholders from potential value volatility and losses in Sierra Income Corporation’s portfolio following the closing of the merger. There is no fee or other payment by the Company to Barings or any of its affiliates in connection with the SIC Credit Support Agreement. Any cash payment from Barings to the Company under the SIC Credit Support Agreement will be excluded from the incentive fee calculations under the Advisory Agreement.
August 2020 Note Purchase Agreement
On August 3, 2020, the Company entered into a Note Purchase Agreement (the “August 2020 NPA”) with Massachusetts Mutual Life Insurance Company, which wholly-owns Barings, governing the issuance of (1) $50.0 million in aggregate principal amount of Series A senior unsecured notes due August 2025 (the “Series A Notes due 2025”) with a fixed interest rate of 4.66% per year, and (2) up to $50.0 million in aggregate principal amount of additional senior unsecured notes due August 2025 with a fixed interest rate per year to be determined (the “Additional Notes” and, collectively with the Series A Notes due 2025, the “August 2025 Notes”), in each case, to qualified institutional investors in a private placement. The Company issued an aggregate principal amount of $25.0 million of the Series A Notes due 2025 on September 24, 2020 and an aggregate principal amount of $25.0 million of the Series A Notes due 2025 on September 29, 2020, both of which will mature on August 4, 2025 unless redeemed, purchased or prepaid prior to such date in accordance with their terms. Interest on the August 2025 Notes is due semiannually in March and September of each year, beginning in March 2021. The August 2025 Notes are guaranteed by certain of the Company’s subsidiaries and are the Company’s general unsecured obligations that rank pari passu with all outstanding and future unsecured unsubordinated indebtedness issued by the Company. Upon the occurrence of an event of default, the holders of at least 66-2/3% in principal amount of the August 2025 Notes at the time outstanding may declare all August 2025 Notes then outstanding to be immediately due and payable.
On November 4, 2020, the Company amended the August 2020 NPA to reduce the aggregate principal amount of unissued Additional Notes from $50.0 million to $25.0 million. The Company's permitted issuance period for the year ending December 31, 2018.
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The Audit Committee |
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Benjamin S. Goldstein, Chair |
Mark F. Mulhern |
Simon B. Rich, Jr. |
The foregoing report shall not be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filingAdditional Notes under the Securities Act orAugust 2020 NPA expired on February 3, 2022, prior to which date the Exchange Act, exceptCompany had issued no Additional Notes.
November 2020 Note Purchase Agreement
On November 4, 2020, the Company entered into a Note Purchase Agreement (the “November 2020 NPA”) governing the issuance of (1) $62.5 million in aggregate principal amount of Series B senior unsecured notes due November 2025 (the “Series B Notes”) with a fixed interest rate of 4.25% per year and (2) $112.5 million in aggregate principal amount of Series C senior unsecured notes due November 2027 (the “Series C Notes” and, collectively with the Series B Notes, the “November Notes”) with a fixed interest rate of 4.75% per year, in each case, to qualified institutional investors in a private placement. Each stated interest rate is subject to a step up of (x) 0.75% per year, to the extent that we specifically incorporate this information by reference, and shallthe applicable November Notes do not otherwise be deemed filed under such Securities Actsatisfy certain investment grade conditions and/or Exchange Act.
(y) 1.50% per year, to the extent the ratio of the Company’s secured debt to total assets exceeds specified thresholds, measured as of each fiscal quarter end. The November Notes were delivered and paid for on November 5, 2020.
PROPOSAL NO. 2The Series B Notes will mature on November 4, 2025, and the Series C Notes will mature on November 4, 2027 unless redeemed, purchased or prepaid prior to such date by the Company in accordance with their terms. Interest on the November Notes is due semiannually in May and November, beginning in May 2021. The November Notes are
RATIFICATION OF APPOINTMENT OF
guaranteed by certain of the Company’s subsidiaries, and are the Company's general unsecured obligations that rank pari passu with all outstanding and future unsecured unsubordinated indebtedness issued by the Company.
Barings’ parent company, Massachusetts Mutual Life Insurance Company, holds $25.0 million in aggregate principal amount of the Series B Notes.
February 2021 Note Purchase Agreement
On February 25, 2021, the Company entered into a Note Purchase Agreement (the “February 2021 NPA”) governing the issuance of (1) $80.0 million in aggregate principal amount of Series D senior unsecured notes due February 26, 2026 (the “Series D Notes”) with a fixed interest rate of 3.41% per year and (2) $70.0 million in aggregate principal amount of Series E senior unsecured notes due February 26, 2028 (the “Series E Notes” and, collectively with the Series D Notes, the “February Notes”) with a fixed interest rate of 4.06% per year, in each case, to qualified institutional investors in a private placement. Each stated interest rate is subject to a step up of (x) 0.75% per year, to the extent the applicable February Notes do not satisfy certain investment grade rating conditions and/or (y) 1.50% per year, to the extent the ratio of the Company’s secured debt to total assets exceeds specified thresholds, measured as of each fiscal quarter end. The February Notes were delivered and paid for on February 26, 2021.
The Series D Notes will mature on February 26, 2026, and the Series E Notes will mature on February 26, 2028 unless redeemed, purchased or prepaid prior to such date by the Company in accordance with the terms of the February 2021 NPA. Interest on the February Notes is due semiannually in February and August of each year, beginning in August 2021. The February Notes are guaranteed by certain of the Company’s subsidiaries, and are the Company's general unsecured obligations that rank pari passu with all outstanding and future unsecured unsubordinated indebtedness issued by the Company.
Barings’ parent company, Massachusetts Mutual Life Insurance Company, holds $25.0 million in aggregate principal amount of the Series D Notes.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee and Board of Directors, hasincluding a majority of the independent directors, have selected Ernst & YoungKPMG LLP as ourthe Company's independent registered public accounting firm for the fiscal year ending December 31, 2018, and the Board of Directors has further directed that management should submit the appointment of the independent registered public accounting firm for ratification by the stockholders at the Annual Meeting. Ernst & Young2023. KPMG LLP also will also serve as the independent registered public accounting firmauditors for all of ourthe Company’s wholly-owned subsidiaries. Ernst & Young LLP has served as the Company's independent registered public accounting firm since 2006.subsidiaries and its joint ventures, Jocassee Partners LLC, Thompson Rivers LLC, Waccamaw River LLC, and Sierra Senior Loan Strategy JV I LLC.
Ernst & Young LLP has advised us that neither the firm nor any present member or associateWe expect representatives of it has any material financial interest, direct or indirect, in us or our wholly-owned subsidiaries. It is expected that a representative of Ernst & YoungKPMG LLP will be present at the Annual Meeting and will have an opportunity to make a statement if he or she choosesthey desire to do so and will be available to answerrespond to appropriate questions.
The Board of Directors is submitting the appointment of Ernst & Young LLP to the stockholders for ratification as a matter of good corporate governance; however, our Audit Committee and Board of Directors are not bound by a vote either for or against the proposal. The Audit Committee and Board of Directors will consider a vote against the firm by the stockholders in selecting our independent registered public accounting firm in the future. Even if the stockholders do ratify the appointment, the Audit Committee in its discretion may direct the appointment of a different independent registered public accounting firm at any time if it believes that such a change would be in the best interest of the Company and our stockholders.
Required Vote. The affirmative vote of a majority of all votes cast at the Annual Meeting, in person or by proxy, is required to ratify the appointment of Ernst & Young LLP to serve as our independent registered public accounting firm for the year ending December 31, 2018. Abstentions and broker non-votes, if any, will not be included in determining the number of votes cast and, as a result, will not have any effect on the result of the vote.
The Board of Directors recommends a vote “FOR” the ratification of the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2018.
Independent Registered Public Accounting Firm’sFirm's Fees
We have paid or expectFees Paid to payIndependent Registered Public Accounting Firm
The following table provides information regarding the following fees to Ernst & Youngbilled by KPMG LLP for work performed in 2016for the fiscal years ended December 31, 2022 and 20172021, or attributable to the audit of our 2016the Company's 2022 or 2021 financial statements, including out-of-pocket expenses:
| | | | | | | | | | | | | | | | | |
| | Fiscal Year Ended
December 31, 2022 | | Fiscal Year Ended
December 31, 2021 | |
| Audit Fees | | $ | 1,292,758 | | | $ | 891,400 | | |
| Audit Related Fees | | 1,210,652 | | (3) | 42,024 | | (1) |
| Tax Fees | | 138,950 | | | 94,013 | | (2) |
| Other Fees | | — | | | — | | |
| TOTAL FEES | | $ | 2,642,360 | | | $ | 1,027,437 | | |
(1)Includes fees of $7,950 related to accounting and 2017 financial statements:auditing matters associated with the Sierra Income Corporation merger.
(2)Includes fees of $14,013 related to tax fees associated with the MVC Capital, Inc. merger.
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| | | | | | | | | | | | |
| | | Fiscal Year Ended December 31, 2016 | | | | Fiscal Year Ended December 31, 2017 | | |
| Audit Fees | | $ | 720,869 |
| | (1) | | $ | 806,868 |
| | (2) |
| Audit Related Fees | | — |
| | | | — |
| | |
| Tax Fees | | 93,000 |
| | | | 95,000 |
| | |
| Other Fees | | — |
| | | | — |
| | |
| TOTAL FEES | | $ | 813,869 |
| | | | $ | 901,868 |
| | |
During the fiscal years ended December 31, 2022 and 2021, KPMG LLP billed aggregate non-audit fees of $182,337 (comprised of $43,387 related to Barings LLC and $138,950 related to Barings BDC, Inc.) and $135,966 (comprised of $41,953 related to Barings LLC and $94,013 related to Barings BDC, Inc.), respectively, for services rendered to the Company and for services rendered to Barings LLC.
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(1) | Includes fees of $80,869 related to our public offering of common stock which closed in 2016. |
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(2) | Includes fees of $69,400 related to our public offering of common stock which closed in 2017 and fees of $47,468 related to the filing of our shelf registration statement on Form N-2 and amendments thereto during 2017. |
Audit Fees. Fees. Audit fees include fees for services that normally would be provided by the accountant in connection with statutory and regulatory filings or engagements and that generally only the independent accountant can provide. In addition to fees for the audit of ourthe Company's annual financial statements, the audit of the effectiveness of our
the Company's internal control over financial reporting and the review of ourthe Company's quarterly financial statements in accordance with generally accepted auditing standards, this category contains fees for comfort letters, statutory audits, consents, and assistance with and review of documents filed with the SEC.
Audit Related Fees. Fees. Audit related fees are assurance related services that traditionally are performed by the independent accountant, such as attest services that are not required by statute or regulation.
Tax Fees.Tax fees include corporate and subsidiary compliance and consulting.
All Other Fees. Fees. Fees for other services would include fees for products and services other than the services reported above, including any non-audit fees.
Pre-Approval Policies and Procedures
The Audit Committee has established, and ourthe Board of Directors has approved, a pre-approval policy that describes the permitted audit, audit-related, tax and other services to be provided by Ernst & Young LLP, the Company’s independent registered accounting firm. The policy requires that the Audit Committee pre-approve the audit and non-audit services
performed by the independent registered accounting firm in order to assure that the provision of such service does not impair the firm’s independence.
Any requests for audit, audit-related, tax and other services that have not received general pre-approval must be submitted to the Audit Committee for specific pre-approval, irrespective of the amount, and cannot commence until such approval has been granted. Normally, pre-approval is provided at regularly scheduled meetings of the Audit Committee. However, the Audit Committee may delegate pre-approval authority to one or more of its members. The member or members to whom such authority is delegated shall report any pre-approval decisions to the Audit Committee at its next scheduleda subsequent meeting. The Audit Committee does not delegate its responsibilities to pre-approve services performed by the independent registered accounting firm to management. During 20162022 and 2017,2021, 100% of ourthe Company’s audit fees, audit-related fees, tax fees and fees for other services provided by ourthe Company's independent registered public accounting firm were pre-approved by ourthe Audit Committee.
AUDIT COMMITTEE REPORT
The Audit Committee assists the Board of Directors in its oversight of the Company’s financial reporting process and implementation and maintenance of effective controls to prevent, deter and detect fraud by management. In addition, the Audit Committee is directly responsible for the appointment, compensation and oversight of the Company’s independent registered public accounting firm. Each of the members of the Audit Committee qualifies as an “independent” director in accordance with NYSE listing standards, SEC rules and the Company’s corporate governance guidelines.
In overseeing the preparation of the Company’s financial statements, the Audit Committee met with both management and KPMG LLP, the Company’s independent registered public accounting firm for the fiscal year ended December 31, 2022, to review and discuss the audited financial statements prior to their issuance and to discuss significant accounting issues. Management advised the Audit Committee that all financial statements were prepared in accordance with generally accepted accounting principles, and the Audit Committee discussed the financial statements with both management and KPMG LLP.
The Audit Committee also is responsible for assisting the Board of Directors in the oversight of the qualification, independence and performance of the Company’s independent auditor. In connection with the audit of the Company’s financial statements for the fiscal year ended December 31, 2022, the Audit Committee regularly met in separate, executive sessions with certain members of senior management and KPMG LLP. The Audit Committee has discussed with KPMG LLP the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board, or PCAOB, and the SEC. The Audit Committee has received from KPMG LLP the written disclosures and the letter required by applicable requirements of the PCAOB regarding KPMG LLP’s communications with the Audit Committee concerning independence and has discussed with KPMG LLP its independence. In addition, the Audit Committee has considered whether the provision of non-audit services, and the fees charged for such services, by KPMG LLP are compatible with KPMG LLP maintaining its independence from the Company.
Based upon the review and discussions referred to above, the Audit Committee recommended to the Company’s Board of Directors that the Company’s audited consolidated financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022. In addition, the Audit Committee has selected, and recommended to the Board of Directors that it approve the appointment of KPMG LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2023.
| | |
| THE AUDIT COMMITTEE1 |
| Mark F. Mulhern, Chair |
| Thomas W. Okel |
| Robert Knapp |
| Jill Olmstead |
| John A. Switzer |
| Steve Byers |
| Valerie Lancaster-Beal |
The foregoing report shall not be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except to the extent that the Company specifically incorporates this Audit Committee report by reference, and shall not otherwise be deemed filed under such Securities Act and/or Exchange Act.
1Reflects the membership of the Audit Committee as of the date of the Audit Committee's recommendations and approval referenced in this Audit Committee report.
PROPOSAL NO. 32
ADVISORY VOTE ON EXECUTIVE COMPENSATIONAPPROVAL TO SELL SHARES OF COMMON STOCK BELOW NET ASSET VALUE (BOOK VALUE)
The Dodd-Frank Wall Street ReformCompany is a closed-end investment company that has elected to be treated as a BDC under the 1940 Act. The 1940 Act generally prohibits the Company, as a BDC, from issuing and Consumer Protection Actselling shares of 2010,its common stock at a price below the then-current net asset value (i.e., book value) per share of such stock, with certain exceptions. One such exception would permit the Company to issue and sell shares of its common stock at a price below net asset value per share at the time of sale if the Company’s stockholders have approved a sale below net asset value per share within the one-year period immediately prior to any such sale, provided that the Board of Directors also makes certain determinations prior to any such sale.
Pursuant to this provision, the Company is seeking the approval of its stockholders so that it may, in one or more public or private offerings of its common stock, issue and sell shares of its common stock at a price below its then-current net asset value per share in one or more offerings, subject to certain conditions discussed below. It should be noted that the Dodd-Frank Act, enables ourmaximum number of shares that the Company could issue and sell at a per share price below net asset value per share pursuant to this authority would be limited to 30% of its then-outstanding common stock. If approved, the authorization would be effective for a period expiring on the first anniversary of the date of the stockholders’ approval of this proposal and would permit the Company to engage in such transactions at various times within that period, subject to further approval from the Board of Directors.
Generally, equity securities sold in public securities offerings are priced based on public market prices quoted on exchanges such as NYSE, rather than net asset value, or book value, per share. Since the Company’s IPO, the Company’s common stock has traded both above and below its net asset value per share. At each of the Company’s Annual Meetings of Stockholders from 2008 to 2017, and at its 2020, 2021, and 2022 Annual Meetings of Stockholders, the Company requested and received approval from its stockholders to votesell its stock at a price per share below net asset value under certain circumstances. As in such prior years, the Company is seeking the approval of a majority of its stockholders of record to offer and sell shares of its common stock at prices that, net of underwriting discount or commissions, may be less than net asset value per share in one or more offerings. This stockholder approval would permit the Company to issue and sell shares of its common stock in accordance with pricing standards that market conditions generally require, and would also assure stockholders that the number of shares issued and sold pursuant to such authority does not exceed 30% of the Company’s then-outstanding common stock immediately prior to each such offering. If stockholders approve this proposal, the Company should have greater flexibility in taking advantage of changing market and financial conditions in connection with an equity offering. Of the Company’s ten underwritten follow-on equity offerings completed since its IPO, only two were priced below the then-current net asset value per share (both during 2009).
Reasons to Offer Common Stock Below Net Asset Value
Market Conditions Have Created, and May in the Future Create, Attractive Investment and Acquisition Opportunities
From time to time, capital markets may experience periods of disruption and instability. For example, between 2008 and 2009, the global capital markets were unstable as evidenced by periodic disruptions in liquidity in the debt capital markets, significant write-offs in the financial services sector, the re-pricing of credit risk in the broadly syndicated credit market and the failure of major financial institutions. Despite actions of the U.S. federal government and foreign governments, these events contributed to worsening general economic conditions that materially and adversely impacted the broader financial and credit markets and reduced the availability of debt and equity capital for the market as a whole and financial services firms in particular. As a result of the disruption and volatility in the credit markets during this time, the Company saw some measure of reduction in capital available to certain specialty finance companies and other capital providers, causing a reduction in competition. These conditions also generally coincided with lower stock prices for BDCs, with BDCs trading below net asset value. The Company believes that favorable investment opportunities to invest at attractive risk-adjusted returns, including opportunities to make acquisitions of other companies or investment portfolios at attractive values, may be created during these periods of disruption and volatility.
While market conditions have largely recovered from the events of 2008 and 2009, there have been continuing periods of volatility, some lasting longer than others, including recently as a result of the ongoing effects of the global COVID-19 pandemic starting in 2020. Since the Company’s IPO in 2007, the Company’s common stock has traded both at a premium and at a discount in relation to its net asset value, which is the equivalent of “book value,” rather than market or publicly traded value. As of the record date of March 6, 2023, the Company's common stock traded at a discount to net asset value per share. The possibility that shares of the Company’s common stock will continue to trade at a discount from net asset value or trade at premiums that are unsustainable over the long-term are separate and distinct from the risk that the Company’s net asset value will decrease. It is not possible to predict whether any shares of the Company’s common stock issued in the future will trade at, above, or below net asset value.
Since the 2008 recession, lingering economic conditions in the U.S. credit markets from periods of contraction or recession have contributed to significant stock price volatility for capital providers such as the Company and have made access to capital more challenging for many smaller businesses. However, these changes in the credit market conditions also have beneficial effects for capital providers like the Company because small business are selling for lower prices, are generally willing to pay higher interest rates and are generally willing to accept contractual terms that are more favorable to the Company in their investment agreements. Accordingly, for firms that continue to have access to capital, the Company believes that a challenging economic environment could provide investment opportunities on an advisory basis,more favorable terms than have been available in recent periods. In addition, in light of the compensationfact that any debt capital that may be available may be at a higher cost and on less favorable terms and conditions than in past periods, the Company’s ability to take advantage of our NEOs asthese opportunities may be largely dependent upon its access to equity capital.
Stockholder approval of the proposal to sell shares of the Company's common stock at a price below its then-current net asset value per share, subject to the conditions set forth in this Proxy Statement. Specifically,proposal, would provide the Company with the flexibility to invest in such attractive investment opportunities, which typically need to be made expeditiously.
Trading History
The following table, reflecting the public trading history of our common stock since January 1, 2020, lists the high and low closing sales prices for our common stock, and such closing sales prices as percentages of the net asset values per share for the relevant periods. On March 6, 2023, the record date, the last reported closing sale price of our common stock on the NYSE was $8.71. Net asset value per share in the table below is determined as of the last day in the relevant quarter and therefore may not reflect the net asset value per share on the date of the high and low closing sales prices. The net asset values shown are based on outstanding shares at the end of each period.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Net Asset
Value | | Closing Sales Price | | Premium (Discount) of High Closing Sales Price
to Net Asset Value | | Premium (Discount) of Low Closing Sales Price
to Net Asset Value |
| High | | Low | |
| Year ended December 31, 2020 | | | | | | | | | | |
| First Quarter | | $ | 9.23 | | | $ | 10.54 | | | $ | 5.34 | | | 14.2 | % | | (42.1) | % |
| Second Quarter | | $ | 10.23 | | | $ | 8.41 | | | $ | 6.22 | | | (17.8) | % | | (39.2) | % |
| Third Quarter | | $ | 10.97 | | | $ | 8.44 | | | $ | 7.36 | | | (23.1) | % | | (32.9) | % |
| Fourth Quarter | | $ | 10.99 | | | $ | 9.28 | | | $ | 7.51 | | | (15.6) | % | | (31.7) | % |
| Year ended December 31, 2021 | | | | | | | | | | |
| First Quarter | | $ | 11.14 | | | $ | 10.20 | | | $ | 8.83 | | | (8.4) | % | | (20.7) | % |
| Second Quarter | | $ | 11.39 | | | $ | 10.77 | | | $ | 10.16 | | | (5.4) | % | | (10.8) | % |
| Third Quarter | | $ | 11.40 | | | $ | 11.07 | | | $ | 10.36 | | | (2.9) | % | | (9.1) | % |
| Fourth Quarter | | $ | 11.36 | | | $ | 11.47 | | | $ | 10.62 | | | 1.0 | % | | (6.5) | % |
| Year ended December 31, 2022 | | | | | | | | | | |
| First Quarter | | $ | 11.86 | | | $ | 11.20 | | | $ | 10.07 | | | (5.6) | % | | (15.1) | % |
| Second Quarter | | $ | 11.41 | | | $ | 10.90 | | | $ | 9.24 | | | (4.5) | % | | (19.0) | % |
| Third Quarter | | $ | 11.28 | | | $ | 10.41 | | | $ | 8.32 | | | (7.7) | % | | (26.2) | % |
| Fourth Quarter | | $ | 11.05 | | | $ | 9.26 | | | $ | 8.06 | | | (16.2) | % | | (27.1) | % |
| Year ending December 31, 2023 | | | | | | | | | | |
| First Quarter (through March 6, 2023) | | * | | $ | 8.95 | | | $ | 8.22 | | | * | | * |
* Net asset value has not yet been calculated for this Proposal No. 3, commonly knownperiod.
Greater Investment Opportunities Due to Larger Capital Resources
The additional capital raised through an offering of the Company’s common stock may help the Company generate additional deal flow. With more capital to make investments, the Company could be a more meaningful capital provider and such additional capital would allow it to compete more effectively for high quality investment opportunities. Such investment opportunities may be funded with proceeds of an offering of shares of the Company’s common stock.
Status as a “Say-On-Pay” proposal, gives ourBDC and RIC and Maintaining a Favorable Debt-to-Equity Ratio
As a BDC and a regulated investment company, or RIC, for tax purposes, the Company is dependent on its ability to raise capital through the issuance of its common stock. RICs generally must distribute substantially all of their earnings to stockholders as dividends in order to achieve pass-through tax treatment, which prevents the opportunityCompany from retaining any meaningful amount of earnings to express their viewssupport operations, which may include making new investments (including investments in existing portfolio companies). Further, under the 1940 Act, the Company must meet a debt-to equity ratio of less than approximately 2:1 in order to incur debt or issue senior securities. Therefore, to continue to build the Company’s investment portfolio, the Company endeavors to maintain consistent access to capital through the public and private debt markets and the public equity markets enabling it to take advantage of investment opportunities as they arise.
Exceeding the approximate 2:1 debt-to-equity ratio could have severe negative consequences for a BDC, including the inability to pay dividends, breach of applicable debt covenants and failure to qualify for tax treatment as a RIC. Although the Company does not currently expect that it will exceed this debt-to-equity ratio, the markets it operates in and the general economy may be volatile and uncertain. Even though the underlying performance of a particular portfolio company may not indicate an impairment or its inability to repay all principal and interest in full, volatility in the capital markets may negatively impact the valuations of investments and create unrealized losses on certain investments. Any such write-downs in value, as well as unrealized losses based on the compensationunderlying performance of our NEOs. This vote is not intended to addressthe Company’s portfolio companies, if any, particular form of compensation but rather the overall compensation of our NEOswill negatively impact stockholders’ equity and the philosophy, policiesresulting debt-to-equity ratio. Issuing additional equity would allow the Company to realign its debt-to-equity ratio and practices described in this Proxy Statement. More detailed discussion regarding the compensation of our NEOs is provided under the captions “Compensation Discussion and Analysis” and “Executive Compensation” above.
Our compensation program is designedtake steps to (i) enable usavoid these negative consequences. In addition to attract and retain the best talent in the financial industries in which we compete; (ii) align our executive compensation packages withmeeting legal requirements applicable to BDCs, having a more favorable debt-to-equity ratio would also generally strengthen the Company’s performance;balance sheet and (iii) use long-term equity awardsgive it more flexibility to align employee and stockholder interests. In furtherance of these objectives, the Compensation Committee regularly evaluates the compensation of our NEOs and determines the appropriate amounts and the constituent elements of their compensation packages.fully execute its business strategy.
We are asking our stockholders to indicate their support for the compensation of our NEOs as set forth in this Proxy Statement. Accordingly, we recommend our stockholders vote “FOR” the following advisory resolution at the Annual Meeting:
“RESOLVED, that the stockholders of Triangle Capital Corporation approve, on an advisory basis, the compensation of Triangle Capital Corporation’s named executive officers, as disclosed in Triangle Capital Corporation's Proxy Statement for the 2018 Annual Meeting of Stockholders pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, executive compensation tables and narrative discussion.”Summary
The vote for this Proposal No. 3 is advisory, and is therefore not binding upon the Compensation Committee, our Board of Directors orbelieves it is desirable to have the Company. Our Compensation Committeeflexibility to issue shares of the Company’s common stock at a price below the Company’s then-current net asset value per share in certain instances when it is in the best interests of the Company and ourits stockholders. This would, among other things, provide access to capital markets to pursue attractive investment and acquisition opportunities during periods of volatility, improve capital resources to enable the Company to compete more effectively for high quality investment opportunities and add financial flexibility to comply with regulatory requirements and any applicable debt facility covenants, including the 2:1 debt-to-equity ratio limit under the 1940 Act. It could also minimize the likelihood that the Company would be required to sell assets that the Company would not otherwise sell, which sales could occur at times and at prices that are disadvantageous to the Company.
The final terms of any sale of the Company’s common stock at a price below the then-current net asset value per share will be determined by the Board of Directors in connection with such issuance, and the shares of common stock will not include preemptive rights. Any transaction in which the Company issues such shares of common stock, including the nature and amount of consideration that would be received by the Company at the time of issuance and the use of any proceeds therefrom, will be reviewed and approved by the Board of Directors at the time of issuance. If this proposal is approved, no further authorization from the stockholders will be solicited prior to any such issuance in accordance with the terms of this proposal. If approved, the authorization would be effective for a period expiring on the first anniversary of the date of the stockholders’ approval of this proposal and would permit the Company to engage in such transactions at various times within that period, subject to further approval from the Board of Directors.
Conditions to Sales Below Net Asset Value
Stockholder approval is a condition that must be satisfied prior to any sales of the Company’s common stock at a price below the then-current net asset value per share, and the opinionsCompany is seeking such approval in this proposal. If this proposal is approved by the Company’s stockholders, the Company would not issue and sell its common stock at a price below its per share net asset value unless the number of ourshares issued and sold pursuant to such authority does not exceed 30% of the Company’s then-outstanding common stock immediately prior to each such offering. To the extent the Company issues and sells shares of its common stock, regardless of the price at which such shares are sold, the Company’s market capitalization and the amount of its publicly tradable common stock will increase, thus affording all common stockholders potentially greater liquidity in the market for the Company’s shares.
In addition, if this proposal is approved, the Company will issue and sell shares of its common stock at a price below net asset value per share only if the following conditions are met:
▪a majority of the Company’s directors who have no financial interest in the issuance and sale and a majority of such directors who are not interested persons of the Company have determined that any such sale would be in the best interests of the Company and its stockholders; and
▪a majority of the Company’s directors who have no financial interest in the issuance and sale, and a majority of such directors who are not interested persons of the Company, in consultation with the underwriter or underwriters of the offering if it is to be underwritten, and as of a time immediately prior to the extent therefirst solicitation by or on behalf of the Company of firm commitments to purchase such securities or immediately prior to the issuance of such securities, have determined in good faith that the price at which such securities are to be issued and sold is not less than a price which closely approximates the market value of those securities, less any significant vote againstdistributing commission or discount.
In determining whether or not to sell additional shares of the compensation of our NEOs as disclosed in this Proxy Statement, we will carefully consider our stockholders’ concerns, andCompany’s common stock at a price below the Compensation Committee and ournet asset value per share, the Board of Directors will evaluatebe obligated to act in the best interests of the Company and its stockholders.
Key Stockholder Considerations
Before voting on this proposal or giving proxies with regard to this matter, stockholders should consider the dilutive effect on the net asset value per outstanding share of common stock of the issuance of shares of the Company’s common stock at less than net asset value per share. Any sale of common stock at a price below net asset value would result in an immediate dilution to existing common stockholders. Since under this proposal shares of the Company’s common stock could be issued at a price that is substantially below the net asset value per share, the dilution could be substantial. This dilution would include reduction in the net asset value per share as a result of the issuance of shares at a price below the net asset value per share and a proportionately greater decrease in a stockholder’s interest in the earnings and assets of the Company and voting interest in the Company than the increase in the assets of the Company resulting from such issuance. If this Proposal No. 2 is approved, the Board of Directors of the Company may, consistent with its fiduciary duties, approve the sale of the Company’s common stock at any discount to its then-current net asset value per share; however, the Board of Directors will consider the potential dilutive effect of the issuance of shares of common stock at a price below the net asset value per share when considering whether to authorize any actionssuch issuance and will act in the best interests of the Company and its stockholders in doing so. It should be noted that the maximum number of shares that the Company could issue and sell at a per share price below net asset value per share pursuant to this authority would be limited to 30% of the Company’s then-outstanding common stock immediately prior to each such offering.
The 1940 Act establishes a connection between common share sale price and net asset value because, when shares of common stock are necessarysold at a sale price below net asset value per share, the resulting increase in the number of outstanding shares is not accompanied by a proportionate increase in the net assets of the issuer. Further, if current stockholders of the Company do not purchase any shares to addressmaintain their percentage interest, regardless of whether such concerns.offering is above or below the then-current net asset value, their voting power will be diluted. For an illustration of the potential dilutive effect of an offering of our common stock at a price below net asset value, please see the table below under the heading “Examples of Dilutive Effect of the Issuance of Shares Below Net Asset Value.”
Required VoteFinally, any sale of substantial amounts of the Company’s common stock or other securities in the open market may adversely affect the market price of the Company’s common stock and may adversely affect the Company’s ability to obtain future financing in the capital markets. In addition, future sales of the Company’s common stock to the public may create a potential market overhang, which is the existence of a large block of shares readily available for sale that could lead the market to discount the value of shares held by other investors. In the event the Company were to continue to sell its common stock at prices below net value for sustained periods of time, such offerings may result in sustained discounts in the marketplace.
Examples of Dilutive Effect of the Issuance of Shares Below Net Asset Value
The table on the following page illustrates the level of net asset value dilution that would be experienced by a nonparticipating stockholder in four different hypothetical offerings of different sizes and levels of discount from net asset value per share, although it is not possible to predict the level of market price decline that may occur. Actual sales prices and discounts may differ from the presentation below.
The examples assume that Company XYZ has 1,000,000 shares of common stock outstanding, $15,000,000 in total assets and $5,000,000 in total liabilities. The current net asset value and net asset value per share are thus $10,000,000 and $10.00. The table illustrates the dilutive effect on nonparticipating Stockholder A of (1) an offering of 50,000 shares (5% of the outstanding shares) at $9.50 per share after offering expenses and commission (a 5% discount from net asset value), (2) an offering of 100,000 shares (10% of the outstanding shares) at $9.00 per share after offering expenses and commissions (a 10% discount from net asset value), (3) an offering of 200,000 shares (20% of the outstanding shares) at $8.00 per share after offering expenses and commissions (a 20% discount from net asset value) and (4) an offering of 250,000 shares (25% of the outstanding shares) at $0.01 per share after offering expenses and commissions (a 100% discount from net asset value). Because we are not limited as to the amount of discount from net asset value at which we can offer shares, the fourth example on the following table (an offering at a price of $0.01 per share) is included, however, the Company will not offer shares at a 100% discount to net asset value. “NAV” in the table below stands for “net asset value.”
Dilutive Effect of the Issuance of Shares by Company XYZ Below Net Asset Value
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Example 1
5% Offering
at 5% Discount | | Example 2
10% Offering
at 10% Discount | | Example 3
20% Offering
at 20% Discount | | Example 4
25% Offering
at 100% Discount |
| | | Prior to Sale
Below NAV | | Following
Sale | | %
Change | | Following
Sale | | %
Change | | Following
Sale | | %
Change | | Following
Sale | | %
Change |
| Offering Price | | | | | | | | | | | | | | | | | | |
| Price per Share to Public | | — | | | $ | 10.00 | | | — | | | $ | 9.47 | | | — | | | $ | 8.42 | | | — | | | $ | 0.01 | | | — | |
| Net Proceeds per Share to Issuer | | — | | | $ | 9.50 | | | — | | | $ | 9.00 | | | — | | | $ | 8.00 | | | — | | | $ | 0.01 | | | — | |
| Decrease to NAV | | | | | | | | | | | | | | | | | | |
| Total Shares Outstanding | | 1,000,000 | | | 1,050,000 | | | 5.00 | % | | 1,100,000 | | | 10.00 | % | | 1,200,000 | | | 20.00 | % | | 1,250,000 | | | 25.00 | % |
| NAV per Share | | $ | 10.00 | | | $ | 9.98 | | | (0.24) | % | | $ | 9.91 | | | (0.91) | % | | $ | 9.67 | | | (3.33) | % | | $ | 8.00 | | | (19.98) | % |
| Dilution to Stockholder | | | | | | | | | | | | | | | | | | |
| Shares Held by Stockholder A | | 10,000 | | | 10,000 | | | — | | | 10,000 | | | — | | | 10,000 | | | — | | | 10,000 | | | — | |
| Percentage Held by Stockholder A | | 1.0 | % | | 0.95 | % | | (4.76) | % | | 0.91 | % | | (9.09) | % | | 0.83 | % | | (16.67) | % | | 0.80 | % | | (20.00) | % |
| Total Asset Values | | | | | | | | | | | | | | | | | | |
| Total NAV Held by Stockholder A | | $ | 100,000 | | | $ | 99,762 | | | (0.24) | % | | $ | 99,091 | | | (0.91) | % | | $ | 96,667 | | | (3.33) | % | | $ | 80,020 | | | (19.98) | % |
| Total Investment by Stockholder A (Assumed to Be $10.00 per Share) | | $ | 100,000 | | | $ | 100,000 | | | — | | | $ | 100,000 | | | — | | | $ | 100,000 | | | — | | | $ | 100,000 | | | — | |
| Total Dilution to Stockholder A (Total NAV Less Total Investment) | | — | | | $ | (238) | | | — | | | $ | (909) | | | — | | | $ | (3,333) | | | — | | | $ | (19,980) | | | — | |
| Per Share Amounts | | | | | | | | | | | | | | | | | | |
| NAV per Share Held by Stockholder A | | — | | | $ | 9.98 | | | — | | | $ | 9.91 | | | — | | | $ | 9.67 | | | — | | | $ | 8.00 | | | — | |
| Investment per Share Held by Stockholder A (Assumed to be $10.00 per Share on Shares Held Prior to Sale) | | $ | 10.00 | | | $ | 10.00 | | | — | | | $ | 10.00 | | | — | | | $ | 10.00 | | | — | | | $ | 10.00 | | | — | |
| Dilution per Share Held by Stockholder A (NAV per Share Less Investment per Share) | | — | | | $ | (0.02) | | | — | | | $ | (0.09) | | | — | | | $ | (0.33) | | | — | | | $ | (2.00) | | | — | |
| Percentage Dilution to Stockholder A (Dilution per Share Divided by Investment per Share) | | — | | | — | | | (0.24) | % | | — | | | (0.91) | % | | — | | | (3.33) | % | | — | | | (19.98) | % |
The Board of Directors recommends a vote “FOR” the proposal to authorize the Company, with the subsequent approval of its Board of Directors, to issue and sell shares of its common stock (during the 12 months following such authorization) at a price below its then-current net asset value per share in one or more offerings, subject to certain limitations set forth herein (including, without limitation, that the number of shares issued and sold pursuant to such authority does not exceed 30% of the Company’s then-outstanding common stock immediately prior to each such offering).
Required Vote.
Approval of this advisory resolutionproposal requires the affirmative vote of each of the following: (1) a majority of all votes castthe outstanding shares of the Company's common stock; and (2) a majority of the outstanding shares of the Company's common stock that are not held by affiliated persons of the Company. For purposes of this proposal, the 1940 Act defines a "majority of the outstanding shares” as the vote of the lesser of: (1) 67% or more of the voting securities of the Company present at the Annual Meeting in personif the holders of more than 50% of the outstanding voting securities of the Company are present virtually or represented by proxy.proxy; or (2) more than 50% of the outstanding voting securities of the Company. Abstentions and broker non-votes, if any, will nothave the effect of votes cast against this proposal.
ADDITIONAL INFORMATION
The Notice of Annual Meeting, this proxy statement and our annual report for the fiscal year ended December 31, 2022 are available free of charge at the following Internet address: https://ir.barings.com/annual-shareholder-meeting-materials.
STOCKHOLDER NOMINATIONS AND PROPOSALS FOR THE 2024 ANNUAL MEETING
The Company's annual meeting of stockholders generally is held in May of each year. We will consider for inclusion in the Company's proxy materials for the 2024 Annual Meeting of Stockholders, stockholder proposals that are received at the Company's executive offices, in writing, no later than 5:00 p.m. (Eastern Time) on November 11, 2023, and that comply with all applicable requirements of Rule 14a-8 promulgated under the Securities Exchange Act of 1934, as amended, or the Exchange Act.
In addition, any stockholder who wishes to propose a nominee to the Board of Directors or propose any other business to be considered by the stockholders (other than a stockholder proposal to be included in determining the Company’s proxy materials pursuant to Rule 14a-8 of the Exchange Act) must comply with the advance notice provisions and other requirements of the Company’s Bylaws, a copy of which is on file with the SEC and may be obtained from the Company’s Secretary upon request. Proposals must be sent to the Company’s Secretary at Barings BDC, Inc., 300 South Tryon Street, Suite 2500, Charlotte, North Carolina 28202. These notice provisions require that nominations of persons for election to the Board of Directors and proposals of business to be considered by the stockholders for the 2024 Annual Meeting of Stockholders must be made in writing and submitted to the Company’s Secretary at the address above no earlier than November 11, 2023 and no later than 5:00 p.m. (Eastern Time) on December 11, 2023 and must otherwise be a proper action by the stockholders. We advise you to review the Bylaws, which contain additional information and other requirements about advance notice of stockholder proposals and director nominations, including the different notice submission date requirements in the event that the Company’s 2024 Annual Meeting of Stockholders is held before April 4, 2024 or after June 3, 2024. In accordance with the Bylaws, the chairman of the 2024 Annual Meeting of Stockholders may determine, if the facts warrant, that a matter has not been properly brought before the meeting and, therefore, may not be considered at the meeting.
FINANCIAL STATEMENTS AVAILABLE
A letter to stockholders and a copy of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2022, which together constitute the Company's 2022 Annual Report, are being mailed along with this proxy statement. The Company's 2022 Annual Report is not incorporated into this proxy statement and shall not be considered proxy solicitation material.
We will also mail to you without charge, upon written request, a copy of any specifically requested exhibit to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2022. Requests should be sent to: Barings BDC, Inc. Investor Relations, 300 South Tryon Street, Suite 2500, Charlotte, North Carolina 28202, or such requests may be made by calling (704) 805-7200. A copy of the Company's Annual Report on Form 10-K has also been filed with the SEC and may be accessed through the SEC’s homepage (http://www.sec.gov).
HOUSEHOLDING OF PROXY MATERIALS
The SEC has adopted rules that permit companies and intermediaries, such as brokers, to satisfy the delivery requirements for proxy statements and annual reports with respect to two or more stockholders sharing the same address by delivering a single proxy statement addressed to those stockholders. This process, which is commonly referred to as “householding,” potentially provides extra convenience for stockholders and cost savings for companies.
Brokers may be householding the Company's proxy materials by delivering a single proxy statement and 2022 Annual Report to multiple stockholders sharing an address, unless contrary instructions have been received from the affected stockholders. Once you have received notice from your broker that they will be householding materials to your address, householding will continue until you are notified otherwise or until you revoke your consent. If you
did not respond that you did not want to participate in householding, you were deemed to have consented to the process. If at any time you no longer wish to participate in householding and would prefer to receive a separate proxy statement and Annual Report, or if you are receiving multiple copies of the proxy statement and 2022 Annual Report and wish to receive only one, please notify your broker if your shares are held in a brokerage account, or us if you are a stockholder of record. You can notify us by sending a written request to: Barings BDC, Inc. Investor Relations, 300 South Tryon Street, Suite 2500, Charlotte, North Carolina 28202, or by calling (888) 401-1088. In addition, we will promptly deliver, upon written or oral request to the address or telephone number above, a separate copy of votes castthe 2022 Annual Report and proxy statement to a stockholder at a shared address to which a single copy of the documents was delivered.
TABULATION AND REPORTING OF VOTING RESULTS
Preliminary voting results will not have any effect onbe announced at the resultAnnual Meeting. Final voting results will be tallied by the inspector of election after the taking of the vote on this item.
The Board of Directors Recommends a Vote “FOR” approving an advisory (non-binding) vote for the compensation of our named executive officers.
PRIVACY NOTICE
We are committed to protecting your privacy. This privacy notice explains our privacy policies. This notice supersedes any other privacy notice you may have received from us, and its terms apply both to our current stockholders and to former stockholders as well.
We will safeguard, according to strict standards of security and confidentiality, all information we receive about you. The only information we collect from you is your name, address, and number of shares you hold. This information is used only so that we can send you annual reports and other information about us, and send you proxy statements or other information required by law.
We do not share this information with any non-affiliated third party except as described below.
The People and Companies that Make Up Triangle. It is our policy that only our authorized employees who need to know your personal information will have access to it. Our personnel who violate our privacy policy are subject to disciplinary action.
Service Providers. We may disclose your personal information to companies that provide services on our behalf, such as record keeping, processing your trades, and mailing you information. These companies are required to protect your information and use it solely for the purpose for which they received it.
Courts and Government Officials. If required by law, we may disclose your personal information in accordance with a court order or at the requestAnnual Meeting. The Company will publish the final voting results in a Current Report on Form 8-K filed with the SEC within four business days following the Annual Meeting.
OTHER INQUIRIES
If you have any questions about the Annual Meeting, these proxy materials or your ownership of government regulators. Only that information required by law, subpoena, or court order will be disclosed.the Company's common stock, please contact Barings BDC, Inc. Investor Relations, 300 South Tryon Street, Suite 2500, Charlotte, North Carolina 28202, Telephone: (704) 805-7200.
OTHER BUSINESS
The Board of Directors knows of no other business to be presented for action at the 20182023 Annual Meeting of Stockholders. If, however, any other matters do come before the meeting on which action can properly be taken, it is intended that the proxies shallintention of the persons named on the enclosed proxy card to vote on such matters in accordance with the judgment of the person or persons exercising the authority conferred by the proxy at the meeting.their judgment. The submission of a proposal does not guarantee its inclusion in ourthe Company's proxy statement or presentation at the meeting unless certain requirements under applicable securities laws and ourthe Company's Bylaws are met.
You are cordially invited to attend the 20182023 Annual Meeting of Stockholders in person.of Barings BDC, Inc., to be held virtually on Thursday, May 4, 2023, at 8:30 a.m. (Eastern Time), at the following website: www.virtualshareholdermeeting.com/BBDC2023. Your vote is important and, whether or not you plan to attend the meeting, you are requested to complete, date, sign and promptly return the accompanying proxy card in the enclosed postage-paid envelope.
By order of the Board of Directors,
Steven C. LillySecretary, Barings BDC, Inc.
Chief Financial Officer and Secretary
Raleigh,Charlotte, North Carolina
March 1, 201810, 2023
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
SCHEDULE 14A
(RULE 14a-101)
SCHEDULE 14A INFORMATION
PROXY IS SOLICITED ON BEHALFSTATEMENT PURSUANT TO SECTION 14(a) OF THE BOARDSECURITIES
EXCHANGE ACT OF DIRECTORS OF1934
TRIANGLE CAPITAL CORPORATION FOR THE 2018 ANNUAL MEETING OF STOCKHOLDERSFiled by the Registrant ý
Filed by a Party other than the Registrant ¨
Check the appropriate box:
| |
| Preliminary Proxy Statement |
| Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
| Definitive Proxy Statement |
| Definitive Additional Materials |
| Soliciting Material Pursuant to Section 240.14a-12 |
| | | | |
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(Name of Registrant as Specified in its Charter) |
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(Name of Person(s) Filing Proxy Statement if Other Than the Registrant) |
Payment of Filing Fee (Check the appropriate box): |
| | |
| | Fee paid previously with preliminary materials. |
| | Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11. |
300 South Tryon Street, Suite 2500
Charlotte, North Carolina 28202
(704) 805-7200
March 19, 2024
Dear Stockholder:
You are cordially invited to the 2024 Annual Meeting of Stockholders of Barings BDC, Inc., to be held
virtually on Tuesday, May 7, 2024 at 8:30 a.m. (Eastern Time), at the following website:
www.virtualshareholdermeeting.com/BBDC2024.
The undersigned stockholder of Triangle Capital Corporation (the “Company”) acknowledges receipt of the Noticenotice of Annual Meeting of Stockholders and proxy statement accompanying this letter provide an
outline of the business to be conducted at the meeting.
It is important that your shares be represented at the Annual Meeting. If you are unable to attend the meeting
virtually, I urge you to vote your shares by completing, dating and signing the enclosed proxy card and promptly
returning it in the envelope provided. If a broker or other nominee holds your shares in “street name,” your broker
has enclosed a voting instruction form, which you should use to vote those shares. The voting instruction form
indicates whether you have the option to vote those shares by telephone or by using the Internet. Your vote is
important.
BARINGS BDC, INC.
300 South Tryon Street, Suite 2500
Charlotte, North Carolina 28202
(704) 805-7200
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held On Tuesday, May 7, 2024
To the Stockholders of Barings BDC, Inc.:
The 2024 Annual Meeting of Stockholders (the “Annual Meeting”) of Barings BDC, Inc. (the “Company”)
will be held virtually on Tuesday, May 7, 2024 at 8:30 a.m. (Eastern Time) at the following website:
www.virtualshareholdermeeting.com/BBDC2024. The Annual Meeting will be held in a virtual meeting format
only. You will not be able to attend the Annual Meeting in person.
You are being asked to consider and vote upon the following proposals:
1. To elect three Class III directors to serve for a three-year term and until their successors have been
duly elected and qualify (Proposal No. 1);
2. To approve a proposal to authorize the Company, pursuant to subsequent approval of its Board of
Directors, to issue and hereby appoints E. Ashton Poolesell shares of its common stock (during the 12 months following such authorization) at a price
below the Company’s then-current net asset value per share in one or more offerings, subject to certain limitations
set forth in the Proxy Statement accompanying this Notice (including, without limitation, that the number of shares
issued and Steven C. Lilly, or any onesold pursuant to such authority does not exceed 30% of them,the Company’s then-outstanding common stock
immediately prior to each such offering) (Proposal No. 2); and each with full power of substitution, to act
3. To transact such other business as attorneys and proxiesmay properly come before the meeting.
We have enclosed our annual report on Form 10-K for the undersignedyear ended December 31, 2023, proxy statement
and a proxy card.
Our Board of Directors has fixed the close of business on March 8, 2024, as the record date for the
determination of stockholders entitled to notice of and to vote at the Annual Meeting and at any adjournment or
postponement thereof. We intend to mail these materials on or about March 19, 2024, to all the sharesstockholders of common stock of the Company that the undersigned is record
entitled to vote at the Annual Meeting.
Each Company stockholder is invited to attend the Annual Meeting virtually. You or your proxyholder will be
able to attend the Annual Meeting online, vote and submit questions by visiting
www.virtualshareholdermeeting.com/BBDC2024 and using a control number assigned by Broadridge Financial
Solutions, Inc. (“Broadridge”). Please see "How To Participate in the Annual Meeting" in the accompanying proxy
statement for more information.
Whether or not you expect to be present at the virtual Annual Meeting, please sign the enclosed proxy card
and return it promptly in the self-addressed envelope provided. Instructions are shown on the proxy card. If a broker
or other nominee holds your shares in “street name,” that is they are registered in the name of your broker, bank,
trustee or other nominee, you should have received a notice containing voting instructions from your nominee rather
than from us. You should follow the voting instructions in the notice to ensure that your vote is counted. The voting
instruction form indicates whether you have the option to vote those shares by telephone or by using the Internet.
Your vote is extremely important to the Company. In the event there are not sufficient votes for a quorum or
to approve or ratify any of the foregoing proposals at the time of the Annual Meeting, the Annual Meeting may be
adjourned in order to permit further solicitation of proxies by the Company.
OUR BOARD OF DIRECTORS INCLUDING EACH OF THE INDEPENDENT DIRECTORS,
UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" EACH OF THE PROPOSALS.
If you have additional questions and you are a Barings BDC, Inc., stockholder you may contact the
Company’s Investor Relations department at 1-888-401-1088, or by email at BDCinvestorrelations@barings.com.
You may also contact Broadridge, the Company's proxy solicitor, toll-free at 1-877-777-4652 for directions on how
to attend the Annual Meeting virtually and how to vote during the virtual meeting.
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By order of the Board of Directors, |
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Secretary, Barings BDC, Inc. |
Charlotte, North Carolina
March 19, 2024
This is an important Annual Meeting. To ensure proper representation at the Annual Meeting, please
complete, sign, date and return the proxy card in the enclosed, self-addressed envelope, or vote your shares
electronically via the Internet or by telephone. Please see the enclosed proxy statement and the enclosed proxy
card for details about electronic voting. Even if you vote your shares prior to this Annual Meeting, you still
may attend the meeting and vote your shares electronically via the live webcast if you wish to change your
vote.
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to
Be Held on Tuesday, May 7, 2024:
Our notice of the CompanyAnnual Meeting, proxy statement, and annual report on Form 10-K for the year ended
December 31, 2023 are available on the internet at https://materials.proxyvote.com/06759L.
The following information applicable to the Annual Meeting may be found in the notice of the Annual Meeting,
proxy statement and accompanying proxy card:
▪The date, time and location of the meeting;
▪A list of the matters intended to be acted on and our Board of Directors' recommendations regarding those
matters;
▪Any control/identification numbers that you need to access your proxy card; and
▪Information on how to obtain directions to attend the Annual Meeting electronically via the live webcast.
BARINGS BDC, INC.
300 South Tryon Street, Suite 2500
Charlotte, North Carolina 28202
(704) 805-7200
PROXY STATEMENT
2024 Annual Meeting of Stockholders
This proxy statement is furnished in connection with the solicitation of proxies by the Board of Directors of Barings
BDC, Inc. (the “Company,” “Barings BDC,” “we,” “us” or “our”) for use at our 2024 Annual Meeting of
Stockholders to be held virtually on Tuesday, May 2, 2018,7, 2024 at 8:30 a.m., Eastern Time, (Eastern Time) at the Woman's Club of Raleigh, 3300 Woman's Club Drive, Raleigh, North Carolina 27612,following website:
www.virtualshareholdermeeting.com/BBDC2024, and at any postponement or adjournment thereof (the “Annual
Meeting”). The Notice of Annual Meeting, this proxy statement, the accompanying proxy card and our Annual
Report for the fiscal year ended December 31, 2023, which includes audited financial statements for the year ended
December 31, 2023, are first being released on or about March 19, 2024 to the Company's stockholders of record as indicated
of the close of business on March 8, 2024.
We encourage you to access the Annual Meeting prior to the start time. The live webcast will begin promptly at 8:30
a.m. (Eastern Time) on Tuesday, May 7, 2024. We will have technicians ready to assist you with any technical
difficulties you may have accessing the live webcast. Technical support will be available on the meeting website
starting approximately 8:15 a.m. (Eastern Time) and will remain available until the Annual Meeting has finished.
The virtual meeting platform is fully supported across browsers and devices running the most updated version of
applicable software and plugins. Participants should ensure that they have a strong WiFi connection if they intend to
participate in thisthe Annual Meeting. Participants should also give themselves plenty of time to log in and ensure that
they can hear audio prior to the start of the Annual Meeting. Please see “How to Participate in the Annual Meeting”
below for additional details.
We encourage you to vote your shares, either by voting electronically via the live webcast of the Annual Meeting or
by granting a proxy (i.e., authorizing someone to vote your shares). If you properly sign, date and mail the
accompanying proxy card or authorize your proxy by telephone or through the Internet, and the Company receives it
in time for voting at the Annual Meeting, the persons named as proxies will vote your shares in the manner that you
specify. If you give no instructions on the proxy card you execute, the shares covered by the proxy card will be
voted “FOR” the election of the nominees as directors and "FOR" the proposal to authorize the Company,
with the subsequent approval of its Board of Directors, to issue and sell shares of its common stock (during
the 12 months following such authorization) at a price below its then-current net asset value per share in one
or more offerings, subject to certain limitations set forth herein (including, without limitation, that the
number of shares issued and sold pursuant to such authority does not exceed 30% of the Company’s then-
outstanding common stock immediately prior to each such offering). If any other business is brought before
the Annual Meeting, your votes will be cast at the discretion of the proxy holders, subject to applicable SEC
rules.
Any stockholder “of record” (i.e., stockholders holding shares directly in their name) giving a valid proxy for the
Annual Meeting may revoke it before it is exercised by giving a later-dated properly executed proxy, by giving
notice of revocation to the Company's Secretary in writing before the Annual Meeting or by voting electronically via
the live webcast of the Annual Meeting. However, the mere presence of the stockholder at the Annual Meeting does
not revoke the proxy. Any stockholder of record attending the Annual Meeting virtually by live webcast may vote
THIS PROXY IS REVOCABLE AND WILL BE VOTED AS DIRECTED BY THE UNDERSIGNED BELOW; where no choiceelectronically whether or not he or she has previously authorized his or her shares to be voted by proxy.
If your shares are registered in the name of a bank, brokerage firm or other nominee, you will receive instructions
from your bank, broker, or other nominee that you must follow in order to instruct how your shares are to be voted at
the Annual Meeting. If your shares are registered in the name of a bank, brokerage firm or other nominee, to revoke
any voting instructions prior to the time the vote is specified, ittaken at the Annual Meeting, you must contact such broker, bank
or other institution or nominee to determine how to revoke your vote in accordance with its policies a sufficient time
in advance of the Annual Meeting. Unless revoked as stated above, the shares of common stock represented by valid
proxies will be voted “FOR” Proposal Nos. 1, 2on all matters to be acted upon at the Annual Meeting.
If you want to submit a question during the Annual Meeting, log into the live webcast at
www.virtualshareholdermeeting.com/BBDC2024, type your question into the “Ask a Question” field, and 3.click
Please sign“Submit.”
Only questions submitted via the live webcast that are pertinent to Annual Meeting matters will be answered during
the Annual Meeting, subject to time constraints. Questions or comments that are not related to the proposals under
discussion, are about personal concerns not shared by stockholders generally, or use blatantly offensive language
may be ruled out of order. Additionally, the Company may not be able to answer multiple questions submitted by
the same stockholder. The Company intends to post and date this proxyanswer questions pertinent to the Annual Meeting matters
that cannot be answered during the Annual Meeting due to time constraints online at the Company’s website at
https://ir.barings.com/annual-shareholder-meeting-materials. The questions and answers will be available as soon as
practicable after the Annual Meeting and will remain available until one week after posting.
PURPOSE OF ANNUAL MEETING
At the Annual Meeting, you will be asked to consider and vote on the reverse sidefollowing proposals:
1.To elect three Class III directors to serve for a three-year term and return ituntil their successors have been duly
elected and qualify (Proposal No. 1);
2.To approve a proposal to authorize the Company, pursuant to subsequent approval of its Board of
Directors, to issue and sell shares of its common stock (during the 12 months following such authorization)
at a price below the Company’s then-current net asset value per share in one or more offerings, subject to
certain limitations set forth herein (including, without limitation, that the enclosed envelope.number of shares issued and sold
(CONTINUED ON REVERSE SIDE)pursuant to such authority does not exceed 30% of the Company’s then-outstanding common stock
immediately prior to each such offering) (Proposal No. 2); and
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ANNUAL MEETING OF STOCKHOLDERS
TRIANGLE CAPITAL CORPORATION
May 2, 2018
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Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Triangle Capital Corporation, Alliance Advisors, LLC, Attn: Charlotte Brown, 200 Broadacres Drive, 3rd Floor, Bloomfield, New Jersey 07003 as soon as possible.
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” PROPOSAL NOS. 1, 2 and 3.
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1. The election of the following eight persons as Directors who will serve as directors of Triangle Capital Corporation until the 2019 Annual Meeting and until their successors have been duly elected and qualified. | | Board of Directors Recommendation | FOR
| | AGAINST
| | ABSTAIN
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E. Ashton Poole | | | | | | For | ¨ | | ¨ | | ¨ | |
Steven C. Lilly | | | | | | For | ¨ | | ¨ | | ¨ | |
W. McComb Dunwoody | | | | | | For | ¨ | | ¨ | | ¨ | |
Mark M. Gambill | | | | | | For | ¨ | | ¨ | | ¨ | |
Benjamin S. Goldstein | | | | | | For | ¨ | | ¨ | | ¨ | |
Mark F. Mulhern | | | | | | For | ¨ | | ¨ | | ¨ | |
Simon B. Rich, Jr. | | | | | | For | ¨ | | ¨ | | ¨ | |
Garland S. Tucker, III | | | | | | For | ¨ | | ¨ | | ¨ | |
| | | | | | | | |
| | | FOR
| | AGAINST | | ABSTAIN | |
2. To ratify the appointment of Ernst & Young LLP as the Company's independent registered public accounting firm for the fiscal year ending December 31, 2018 | | For | ¨ | | ¨ | | ¨ | |
| | | FOR
| | AGAINST | | ABSTAIN | |
3. Advisory vote to approve the compensation of our named executive officers. | | For | ¨ | | ¨ | | ¨ | |
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In their discretion, the proxies are authorized to vote uponTo transact such other business as may properly come before the meeting, or any postponement or
adjournment thereof.
The Board of Directors is not aware of any matter to be presented for action at the Annual Meeting other than the
matters set forth herein. Should any other matter requiring a vote of stockholders arise, it is the intention of the
persons named in the proxy to vote in accordance with their discretion on such matters. Stockholders have no
dissenters' or appraisal rights in connection with any of the proposals described herein.
Adjournment and Additional Solicitation
If there appear to be insufficient votes to obtain a quorum at the Annual Meeting, the chairman of the meeting or the
stockholders who are represented in person (electronically via the live webcast) or by proxy may vote to adjourn the
Annual Meeting to permit further solicitation of proxies. If adjournment is submitted to the stockholders for
approval, the designated Company proxy holders will vote proxies held by each of them for such adjournment to
permit the further solicitation of proxies. Approval of any proposal to adjourn the Annual Meeting submitted to the
stockholders for approval requires the affirmative vote of a majority of the votes cast on the proposal.
A stockholder vote may be taken on any of the proposals in this Proxy Statement prior to any such adjournment if
there are sufficient votes for approval of such proposal.
VOTING SECURITIES
You may vote at the Annual Meeting only if you were a holder of record of the Company's common stock at the
close of business on March 8, 2024 or if you hold a valid proxy from a stockholder of record as of such record date.
As of March 8, 2024, there were 106,067,070 shares of the Company's common stock outstanding. Each share of
common stock is entitled to one vote on each matter submitted to a vote at the Annual Meeting. Stockholders do not
have the right to cumulate votes in the election of directors.
QUORUM REQUIRED
A quorum must be present at the Annual Meeting for any business to be conducted. The presence at the Annual
Meeting, electronically via live webcast or by proxy, of the holders of shares of common stock of the Company
entitled to cast a majority of the votes entitled to be cast as of the record date of March 8, 2024 will constitute a
quorum for the purposes of the Annual Meeting. If there are not sufficient votes for a quorum or to approve or ratify
any of the foregoing proposals at the time of the Annual Meeting, the chairman of the meeting may adjourn the
Annual Meeting in order to permit further solicitation of proxies by the Company.
Abstentions and broker non-votes, if any, will be treated as shares present for the purpose of determining a quorum
for the Annual Meeting. A “broker non-vote” with respect to a matter occurs when a broker, bank or other institution
or nominee holding shares on behalf of a beneficial owner returns a proxy but has not provided voting instructions
because it has not received voting instructions from the beneficial owner on a particular proposal and does not have,
or chooses not to exercise, discretionary authority to vote the shares on such proposals. If a stockholder does not
vote electronically via the live webcast or does not submit voting instructions to its broker, bank or other nominee,
the broker, bank or other nominee will only be permitted to vote the stockholder’s shares on “routine” proposals.
There are no “routine” proposals at the Annual Meeting. Therefore, the Company does not expect to receive any
broker non-votes at the Annual Meeting.
VOTES REQUIRED
Proposal No. 1
You may vote “For” or “Against” or abstain from voting on Proposal No. 1 (to elect three Class III directors to serve
for a term of three years, and until their successors are duly elected and qualify). For nominees for director listed in
Proposal No. 1 to be elected, each director nominee requires a majority of the votes cast for his or her election,
which means that each director nominee must receive more votes cast “FOR” than “AGAINST” that director
nominee. For purposes of the vote on this proposal, abstentions and broker non-votes, if any, will not be counted as
votes cast and will have no effect on the result of the vote, although they will be considered present for the purpose
of determining the presence of a quorum. If an incumbent director nominee does not receive the required number of
votes for re-election, then under Maryland law, he or she will continue to serve as a director of the Company until
his or her successor is duly elected and qualifies, subject to the Company's corporate governance guidelines
discussed further below.
Proposal No. 2
You may vote “For” or “Against” or abstain from voting on Proposal No. 2 (to authorize the Company, with the
subsequent approval of its Board of Directors, to issue and sell shares of its common stock (during the 12 months
following such authorization) at a price below its then-current net asset value per share in one or more offerings,
subject to certain limitations set forth herein (including, without limitation, that the number of shares issued and sold
pursuant to such authority does not exceed 30% of the Company’s then-outstanding common stock immediately
prior to each such offering)). To be approved, Proposal No. 2 must receive “FOR” votes from each of the following:
(1) a majority of the outstanding shares of the Company’s common stock; and (2) a majority of the outstanding
shares of the Company’s common stock that are not held by affiliated persons of the Company. For purposes of
Proposal No. 2, the Investment Company Act of 1940, as amended (the “1940 Act”), defines a “majority of the
outstanding shares” as the vote of the lesser of: (1) 67% or more of the voting securities of the Company present at
the Annual Meeting, if the holders of more than 50% of the outstanding voting securities of the Company are present
virtually or represented by proxy; or (2) more than 50% of the outstanding voting securities of the Company. For
purposes of the vote on Proposal No. 2, abstentions and broker non-votes, if any, will have the effect of votes cast
against the proposal.
HOW TO PARTICIPATE IN THE ANNUAL MEETING
The Annual Meeting will be conducted virtually, on Tuesday, May 7, 2024 at 8:30 a.m. (Eastern Time) via live
webcast.
Stockholders of record can participate in the Annual Meeting virtually by logging in to
www.virtualshareholdermeeting.com/BBDC2024 and following the instructions provided. We recommend that you
log in at least ten minutes before the Annual Meeting to ensure you are logged in when the meeting starts. Only
registered stockholders as of March 8, 2024, the record date for the Annual Meeting, may submit questions and vote
at the Annual Meeting. You may still virtually participate in the Annual Meeting if you vote by proxy in advance of
the Annual Meeting.
Upon written request from a stockholder of record as of the record date, the Company's legal counsel, Dechert LLP,
will stream the webcast live at its offices located at 1900 K Street NW, Washington, DC 20006. Please note that no
members of the Company's management or the Board will be in attendance at this location. If you wish to attend the
Annual Meeting via webcast at the Washington, DC offices of Dechert LLP, please submit a written request to
Barings BDC, Inc., Attention: Corporate Secretary, 300 South Tryon Street, Suite 2500, Charlotte, NC 28202, to be
received no later than April 30, 2024. Your written request must include your name as stockholder of record and the
number of shares of the Company’s common stock you hold.
Please note that if you hold your shares through a bank, broker or other nominee (i.e., in street name), you may be
able to authorize your proxy by telephone or the Internet, as well as by mail. You should follow the instructions you
receive from your bank, broker or other nominee to vote these shares. Also, if you hold your shares in street name,
you must obtain a proxy executed in your favor from your bank, broker or nominee to be able to participate in and
vote via the Annual Meeting webcast.
The Company and Dechert LLP are sensitive to the health and travel concerns of the Company's
stockholders and recommendations from public health officials. As a result, the location, means, or other
details of attending the webcast of the Annual Meeting at Dechert LLP's Washington, DC offices may change.
In the event of such a change, and if a stockholder of record has requested to attend the meeting via webcast
at Dechert LLP's Washington, DC offices, the Company will issue a press release announcing the change and
file the announcement on the SEC's EDGAR system, along with other steps, but may not deliver additional
soliciting materials to stockholders or otherwise amend the proxy materials. The Company plans to announce
these changes, if any, at https://ir.barings.com/, and encourages you to check the “Investor Relations” and
“Latest News” sections of this website prior to the Annual Meeting if you plan to attend the webcast at the
Washington, DC offices of Dechert LLP.
INFORMATION REGARDING THIS SOLICITATION
The Company will bear the cost of solicitation of proxies in the form accompanying this statement. Proxies will be
solicited by mail or by requesting brokers and other custodians, nominees and fiduciaries to forward proxy soliciting
material to the beneficial owners of shares of common stock held of record by such brokers, custodians, nominees
and fiduciaries, each of whom the Company will reimburse for its expenses in so doing. In addition to the use of
mail, directors, officers and regular employees of Barings LLC, the Company’s external investment adviser
(“Barings” or the “Adviser”), without special compensation therefor, may solicit proxies personally or by telephone,
electronic mail, facsimile or other electronic means from stockholders. The address of Barings LLC is 300 South
Tryon Street, Suite 2500, Charlotte, NC 28202.
The Company has engaged the services of Broadridge Financial Solutions, Inc. ("Broadridge") for the purpose of
assisting in the solicitation of proxies at an anticipated cost of approximately $54,000 plus reimbursement of certain
expenses and fees for additional services requested. We may also reimburse brokerage firms, banks and other agents
for the cost of forwarding proxy materials to beneficial owners and obtaining your voting instructions. Please note
that Broadridge may solicit stockholder proxies by telephone on behalf of the Company. They will not attempt to
influence how you vote your shares, but only ask that you take the time to authorize your proxy. You may also be
asked if you would like to authorize your proxy over the telephone and to have your voting instructions transmitted
to the Company’s proxy tabulation firm.
Stockholders may authorize proxies and provide their voting instructions through the Internet, by telephone, or by
mail by following the instructions on the proxy card. These options require stockholders to input the Control
Number, which is provided on the proxy card. If you authorize a proxy using the Internet, after visiting
www.proxyvote.com and inputting your Control Number, you will be prompted to provide your voting instructions.
Stockholders will have an opportunity to review their voting instructions and make any necessary changes before
submitting their voting instructions and terminating their Internet link. Stockholders who authorize a proxy via the
Internet, in addition to confirming their voting instructions prior to submission, will, upon request, receive an e-mail
confirming their instructions.
If a stockholder wishes to participate in the Annual Meeting but does not wish to authorize his, her or its proxy by
telephone or Internet, the stockholder may authorize a proxy by mail by completing and executing the
accompanying proxy card and returning it in the postage-paid envelope or attend the Annual Meeting via live
webcast.
YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL
MEETING VIRTUALLY, PLEASE PROMPTLY VOTE YOUR SHARES EITHER BY MAIL, BY
TELEPHONE, OR VIA THE INTERNET.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Board of Directors is currently comprised of nine Directors divided into three (3) classes, with terms expiring in
2024, 2025 and 2026. The term of office of Class III Directors ends on the date of the Annual Meeting (or on the
date their respective successors are elected and qualify, if later).
The three Class III Directors of the Company—David Mihalick, Thomas W. Okel and Jill Olmstead—have been
nominated by the Board of Directors (upon the recommendation of the Nominating and Corporate Governance
Committee) for election for a three-year term expiring in 2027. No person being nominated as a Class III Director is
being proposed for election pursuant to any agreement or understanding between such person, on the one hand, and
the Company or any other person or entity, on the other hand. Each Class III Director has agreed to serve as a
director if elected and has consented to be named as a nominee.
Pursuant to the Company's Seventh Amended and Restated Bylaws (the “Bylaws”), a nominee for director is elected
to the Board of Directors if the number of votes cast for such nominee’s election exceed the number of votes cast
against such nominee’s election. Pursuant to the Company's corporate governance guidelines, incumbent directors
must agree to tender their resignation if they fail to receive the required number of votes for re-election, and in such
event the Board of Directors will act within 90 days following certification of the stockholder vote to determine
whether to accept the director’s resignation. These procedures are described in more detail in the Company's
corporate governance guidelines, which are available under “Governance Documents” on the Investor Relations
section of the Company's website at https://ir.barings.com/governancedocs. The Board of Directors may consider
any factors it deems relevant in deciding whether to accept a director’s resignation. If a director’s resignation offer is
not accepted by the Board of Directors, the Company expects that such director would continue to serve until his or
her successor is duly elected and qualifies, or until the director’s earlier death, resignation, or removal. Any such
director will be eligible for nomination for election as a director at future Annual Meetings.
The Board of Directors recommends that you vote “FOR” the election of the nominees named in this proxy
statement.
In the absence of instructions to the contrary, it is the intention of the persons named as proxies to vote such
proxy for the election of all the nominees named below. If any of the nominees should decline or be unable to
serve as a director, it is intended that the proxy will be voted for the election of such person or persons who
are nominated as replacements. The Board of Directors has no reason to believe that any of the persons
named below will be unable or unwilling to serve.
Information about the Nominees for Director and Other Directors
The following chart summarizes the professional experience and additional considerations that contributed to the
Nominating and Corporate Governance Committee’s and the Board of Directors’ conclusion that each nominee for
Director and other Director should serve on the Board of Directors. The term “Fund Complex” included in the
director biographies included in this proxy statement includes the Company, Barings Capital Investment Corporation
(“BCIC”) (a non-listed business development company), Barings Private Credit Corporation (“BPCC”) (a
perpetually offered non-listed business development company), Barings Global Short Duration High Yield Fund (a
closed-end fund), Barings Corporate Investors (a closed-end fund), and Barings Participation Investors (a closed-end
fund). The director information in the following chart is organized by class and, within each class, by “Interested
Directors” and “Non-Interested Directors.” “Interested Directors” are “interested persons,” as defined in Section
2(a)(19) of the 1940 Act, of the Company.
NOMINEES FOR CLASS III DIRECTORS
| | | | | |
| Position(s) Held with Company | Term and Length of Time Served | Principal Occupations During Past 5 Years | Number of Portfolios Overseen in Fund Complex (2) | Other Directorships of Public or Registered Investment Companies Held by Director or Nominee for Director During Past 5 Years |
| | | | | |
| | Class III Director; Term expires 2024; Director since November 2020 | Head of Private Assets (since 2021), Head of U.S. Public Fixed Income and Member of Global Investment Grade Allocation Committee (2019-2021), Head of U.S. High Yield and Member of Global High Yield Allocation Committee (2017-2021), Barings LLC (global asset manager). | | Director (since March 2021), BCIC; Trustee (since 2020), Barings Global Short Duration High Yield Fund (closed-end investment company advised by Barings); Trustee (since 2022), Barings Corporate Investors (a closed-end fund advised by Barings); Trustee (since 2022), Barings Participation Investors (a closed-end fund advised by Barings); Trustee (2020-2021), Barings Funds Trust (open-end investment company advised by Barings until 2021. |
| | | | | |
| | | | | |
| | Class III Director; Term expires 2024; Director since August 2018 | Executive Director (2011 - 2019), Catawba Lands Conservancy. | | Director (since 2021), BPCC; Director (since 2020), BCIC; Trustee (since 2012), Barings Global Short Duration High Yield Fund (closed-end investment company advised by Barings); Trustee (since 2015), Horizon Funds (mutual fund complex); Trustee (2013-2021), Barings Funds Trust (open-end investment company advised by Barings until 2021); Trustee (2022-2024), Barings Private Equity Opportunities and Commitments Fund (a non-diversified, closed-end management investment company advised by Barings until February 2024). |
| | Class III Director; Term expires 2024; Director since August 2018 | Chief Human Resources Officer, (since 2018), LendingTree, Inc.; Founding Partner (2010-2018), Spivey & Olmstead, LLC (talent and leadership consulting firm). | | Director (since 2021), BPCC; Trustee (since Aug. 2021), Barings Global Short Duration High Yield Fund (closed-end investment company advised by Barings); Director (since 2020), BCIC; Trustee (2022-2024), Barings Private Equity Opportunities and Commitments Fund (a non- diversified, closed-end management investment company advised by Barings until February 2024). |
(1)The business address of each nominee for director is 300 South Tryon Street, Suite 2500, Charlotte, NC 28202. The age
of each individual is as of the date of the Annual Meeting.
(2)Including the Company.
(3)Interested Director due to affiliations with Barings LLC.
CLASS I DIRECTORS: TERM EXPIRING 2025
| | | | | |
| Position(s) Held with Company | Term and Length of Time Served | Principal Occupations During Past 5 Years | Number of Portfolios Overseen in Fund Complex (2) | Other Directorships of Public or Registered Investment Companies Held by Director or Nominee for Director During Past 5 Years |
| | | | | |
| Chief Executive Officer and Executive Chairman of the Board of Directors | Class I Director; Term Expires 2025; Director since August 2018 | President (since 2021), Global Head of Private Assets (2020-2021), Deputy Head of Global Markets & Head of Private Fixed Income (2019-2020), Head of Global Private Finance (2013-2019), Barings LLC (global asset manager). | | Director (since 2020), Chairman (since 2021), BCIC; Director (Chairman) (since 2021), BPCC. |
| | | | | |
| | Class I Director; Term Expires 2025; Director since October 2016 (Triangle Capital) | Executive Vice President and Chief Financial Officer (2014 - 2022), Highwood Properties, Inc. (publicly traded real estate investment trust). | | Director (since 2021), BPCC; Trustee (since 2021), Barings Global Short Duration High Yield Fund (closed-end investment company advised by Barings); Director (since 2020), Intercontinental Exchange (NYSE: ICE); Director (since 2020), ICE Mortgage Technology; Director (since 2020), BCIC; Director (since 2015), McKim and Creed (engineering service firm); Director and Audit Committee member (2012-2014), Highwood Properties (real estate investment trust); Director (2015-2017), Azure MLP (midstream oil and gas); Trustee (2022-2024), Barings Private Equity Opportunities and Commitments Fund (a non-diversified, closed-end management investment company advised by Barings until February 2024). |
| | | | | |
| | Class I Director; Term Expires 2025; Director since December 2020 | Chief Investment Officer (since 2007), Ironsides Partners LLC (investment management firm). | | Director (since 2007), Africa Opportunity Fund Ltd.; Director (since 2010), Pacific Alliance Asia Opportunity Fund and Pacific Alliance Group Asset Management Ltd.; Director (since 2010), Sea Education Association; Director (since 2015), Lamington Road DAC (successor to Emergent Capital Inc.); Director (since 2018), Okeanis Eco Tankers Corp.; Director (2017-2023), Children's School of Science; Director (2016-2022), Mass Eye & Ear; Director (2003-2020), MVC Capital; Director (2012-2019), Castle Private Equity; Director (2017-2018), MPC Container Ships. |
(1)The business address of each director is 300 South Tryon Street, Suite 2500, Charlotte, NC 28202. The age of each
individual is as of the date of the Annual Meeting.
(2) Including the Company.
(3)Interested Director due to affiliations with Barings LLC.
CLASS II DIRECTORS: TERM EXPIRING 2026
| | | | | |
| Position(s) Held with Company | Term and Length of Time Served | Principal Occupations During Past 5 Years | Number of Portfolios Overseen in Fund Complex (2) | Other Directorships of Public or Registered Investment Companies Held by Director or Nominee for Director During Past 5 Years |
| | | | | |
| | Class II Director; Term expires 2026; Director since February 2022 | Independent Consultant (since 2014). | | Director (since 2011), Chairman (since 2016) Deutsche Bank DBX ETF Trust; Trustee (since 2016), The Arbitrage Funds Trust; Director (2012-2022), Chairman (2012-2022), Sierra Income Corporation. |
Valerie Lancaster- Beal (69) | | Class II Director; Term expires 2026; Director since February 2022 | President and Chief Executive Officer (since 2014), VLB Associates, LLC (management consulting firm providing financial and operational advisory services); Chief Financial Officer (2015-2021), Odyssey Media (marketing and communications company). | | Director (2012-2022), Sierra Income Corporation; Director (since 2012), KIPP NYC; Trustee (2000-2014), City University of New York; Board Member (2006 - 2010), Georgetown University Board of Regents. |
| | Class II Director; Term expires 2026; Director since August 2018 | Director, Weisiger Group (formerly Carolina Tractor and Equipment Company (CTE)) (since 2017). | | Director (since March 2021), BCIC; Director and Audit Committee member (since 2019), HomeTrust Bancshares, Inc. |
(1)The business address of each director is 300 South Tryon Street, Suite 2500, Charlotte, NC 28202. The age of each
individual is as of the date of the Annual Meeting.
(2)Including the Company.
Qualifications of Director Nominees and Other Directors.
The following provides an overview of the considerations that led the Nominating and Corporate Governance
Committee and the Board of Directors to recommend and approve the election or appointment of the individuals
serving as a Director or nominee for Director. Each of the Directors has demonstrated superior credentials and
recognition in his or her respective field and the relevant expertise and experience upon which to be able to offer
advice and guidance to the Company’s management. In recommending the election or appointment of the Board
members or nominees, the Nominating and Corporate Governance Committee generally considers certain factors
including the current composition of the Board of Directors, overall business expertise, gender, cultural and racial
diversity, whether the composition of the Board of Directors contains a majority of independent directors as
determined under the NYSE listing standards and the 1940 Act, the candidate’s character and integrity, whether the
candidate possesses an inquiring mind, vision and the ability to work well with others, conflicts of interest
interfering with the proper performance of the responsibilities of a director, a candidate’s overall business
experience, what type of diversity he or she brings to the Board of Directors, whether the candidate has sufficient
time to devote to the affairs of the Company, including consistent attendance at Board of Directors and committee
meetings and advance review of materials and whether each candidate can be trusted to act in the best interests of
the Company and its stockholders.
Nominees for Class III Directors; Term expiring at the 2024 Annual Stockholder Meeting
•Mr. Mihalick — Mr. Mihalick brings over 16 years of experience in the financial services industry. He is
Barings LLC's Head of Private Assets, managing the firm's global private markets businesses, including
direct middle-market lending, private placements, infrastructure debt, private structured finance, diversified
alternative equity and real estate. He is also a member of Barings LLC's Senior Leadership Team. Prior to
his current role, Mr. Mihalick served as Head of U.S. Public Fixed Income and Head of U.S. High Yield,
where he was responsible for the U.S. High Yield and Investment Grade Investment Groups. Prior to
joining Barings LLC in 2008, he was a Vice President with Wachovia Securities Leveraged Finance Group.
At Wachovia (now Wells Fargo) he was responsible for sell-side origination of leveraged loans and high
yield bonds to support both corporate and private equity issuers. Prior to entering the financial services
industry, he served as an officer in the United States Air Force and worked in the telecommunications
industry for 7 years. Mr. Mihalick serves as a trustee or director of Barings Capital Investment Corporation,
a business development company advised by Barings, Barings Global Short Duration High Yield Fund, a
closed-end investment company advised by Barings, Barings Corporate Investors and Barings Participation
Investors, both closed-end funds advised by Barings. Mr. Mihalick holds a B.S. from the United States Air
Force Academy, an M.S. from the University of Washington and an M.B.A. from Wake Forest University.
•Mr. Okel — Mr. Okel brings over 20 years of experience in the underwriting, structuring, distribution and
trading of debt used for corporate acquisitions, leveraged buyouts, recapitalizations and refinancings. He
previously served as Executive Director of Catawba Lands Conservancy, a non-profit land trust. Prior to
joining Catawba Lands Conservancy, he served as Global Head of Syndicated Capital Markets at Bank of
America Merrill Lynch, where he managed capital markets, sales, trading and research for the United
States, Europe, Asia and Latin America from 1989 to 2010. He currently serves as trustee or director of
several public companies and non-profit organizations, including Barings Private Credit Corporation and
Barings Capital Investment Corporation (both business development companies advised by Barings);
Barings Global Short Duration High Yield Fund, a closed-end investment company advised by Barings;
Barings Private Equity Opportunities and Commitments Fund, a non-diversified, closed-end management
investment company advised by Barings; and is Chairman of the Board of Directors of Horizon Funds, a
mutual fund complex. Mr. Okel holds a Bachelor of Arts in Economics from Davidson College and a
Masters of Management, Finance, Accounting and Marketing from Kellogg School of Management,
Northwestern University.
•Ms. Olmstead — Ms. Olmstead brings over 21 years of senior leadership experience in Human Resources
in the financial services industry to her role as the Chair of the Board's Compensation Committee. She is
currently the Chief Human Resources Officer at LendingTree, Inc. and was a Founding Partner of Spivey &
Olmstead, LLC, a Talent and Leadership Consulting firm with expertise in the fields of executive
development and talent management founded in June 2010. She also currently serves on the boards of
Barings Private Credit Corporation and Barings Capital Investment Corporation (both business
development companies advised by Barings); Barings Global Short Duration High Yield Fund, a closed-
end investment company advised by Barings; and Barings Private Equity Opportunities and Commitments
Fund, a non-diversified, closed-end management investment company advised by Barings. The Board
benefits from her experience working with executive-level and senior management at various companies,
helping lead their efforts on talent strategies, including succession planning, building strong performance
cultures, and diversity and inclusion work. She has a strategic and pragmatic approach to talent
management with an eye toward bottom line results. In her capacity as Managing Director (2006 to 2009)
and Executive Vice President (2000 to 2006) at Wachovia Corporation (now Wells Fargo) she was both the
Head of Human Resources for the Corporate and Investment Bank and the Head of Human Resources for
the International Businesses. Prior to this, she formed and led the Leadership Practices Group at Wachovia
to create and implement a company-wide talent management process that identified, developed, tracked and
promoted high potential leaders throughout their careers. Ms. Olmstead received a Bachelor of Science at
Clemson University and a Masters in Organization Behavior and Development at Fielding University,
Santa Barbara, CA.
Directors Continuing in Office
Class I Directors; Term expiring at the 2025 Annual Stockholder Meeting
•Mr. Lloyd — Mr. Lloyd brings over 30 years of experience in investment management, investment
banking, leveraged finance and risk management to the Board. Mr. Lloyd is President of Barings LLC
where he leads a diverse set of organizations, spanning cross-asset investment, sales and marketing,
business and product development and research. Mr. Lloyd also works closely with all the investment
teams at Barings LLC. Prior to his current role, Mr. Lloyd served as Head of Private Assets. Mr. Lloyd has
worked in the industry since 1990. Prior to joining Barings in 2013, Mr. Lloyd served as Head of Market
and Institutional Risk for Wells Fargo, was on Wells Fargo’s Management Committee and was a member
of the Board of Directors of Wells Fargo Securities. Before the acquisition of Wachovia, Mr. Lloyd worked
in Wachovia’s Global Markets Investment Banking division and served on the division’s Operating
Committee where he held various leadership positions, including Head of Wachovia’s Global Leveraged
Finance Group. Mr. Lloyd serves as the Chairman of the Board of Directors to Barings Private Capital
Corporation and Barings Capital Investment Corporation, both business development companies advised by
Barings. Mr. Lloyd holds a B.S. in Finance from the University of Virginia's McIntire School of
Commerce.
•Mr. Mulhern — Mr. Mulhern brings significant public company experience, both as a senior executive and
as a board member. From September 2014 until his retirement on January 1, 2022, he served as Executive
Vice President and Chief Financial Officer of Highwoods Properties, Inc., a Raleigh, North Carolina based
publicly-traded real estate investment trust. Prior to joining Highwoods, Mr. Mulhern served as Executive
Vice President and Chief Financial Officer of Exco Resources, Inc. Prior to Exco, he served as Senior Vice
President and Chief Financial Officer of Progress Energy, Inc. from 2008 until its merger with Duke
Energy Corporation in 2012. He joined Progress Energy in 1996 as Vice President and Controller and
served in a number of leadership roles at Progress Energy, including Vice President of Strategic Planning,
Senior Vice President of Finance and President of Progress Ventures. He also spent eight years at Price
Waterhouse, now known as PwC. Mr. Mulhern previously served on the Highwoods Board of Directors
and Audit Committee from January 2012 through August 2014. He currently serves on the boards of
Barings Private Credit Corporation and Barings Capital Investment Corporation, both business
development companies advised by Barings); Barings Global Short Duration High Yield Fund, a closed-
end investment company advised by Barings; and Barings Private Equity Opportunities and Commitments
Fund, a non-diversified, closed-end management investment company advised by Barings. Additionally,
Mr. Mulhern serves on the board of the Intercontinental Exchange, a Fortune 500 company and provider of
marketplace infrastructure, data service and technology solutions to a broad range of customers. He also
serves on the board of Ellie Mae, Inc., the operating company of ICE Mortgage Technology, both of which
are subsidiaries of Intercontinental Exchange. Mr. Mulhern also currently serves on the board of McKim
and Creed, a North Carolina based professional engineering services firm. Mr. Mulhern is a Certified
Public Accountant and is a graduate of St. Bonaventure University.
•Mr. Knapp — Mr. Knapp brings over 25 years of experience in the financial services industry to the Board.
He is the Founder and Chief Investment Officer of Ironsides Partners LLC, a Boston-based investment
manager specializing in closed-end funds, holding companies, and asset value investing generally.
Ironsides and related entities serve as the manager and general partner to various funds and managed
accounts for institutional clients. Mr. Knapp is also a director of Okeanis Eco Tankers, the Pacific Alliance
Asia Opportunity Fund and its related entities and Pacific Alliance Group Asset Management Ltd., based in
Hong Kong, and Lamington Road DAC, the successor to Emergent Capital. He is a principal and director
of Africa Opportunity Partners Limited, a Cayman Islands company that serves as the investment manager
to Africa Opportunity Fund Limited. Additionally, Mr. Knapp serves as a member of the Board of
Managers of Veracity Worldwide LLC and is Chairman of Ironsides Medical, Inc. Mr. Knapp previously
served as the Lead Independent Director of MVC Capital, Inc. until completion of its merger with the
Company in December 2020 and was previously an independent, nonexecutive director of Castle Private
Equity AG and MPC Container Ships. He also acted as Managing Director for over ten years at Millennium
Partners in New York. In the non-profit sector, Mr. Knapp serves as a Trustee and Treasurer of the Sea
Education Association, both based in Woods Hold, Massachusetts.
Class II Directors; Term expiring at the 2026 Annual Stockholder Meeting
•Mr. Byers — Mr. Byers is a senior executive with over 30 years of leadership experience in finance,
operations and control, investment management and capital markets with leading national firms in asset
management, banking and brokerage. Mr. Byers serves as the Independent Chairman of the Board of
Directors of Deutsche Bank DBX ETF Trust and as a member of the audit and nominating committees.
Since 2016, Mr. Byers has also served as a board member of the Mutual Fund Directors Forum, an
independent, non-profit organization serving independent directors of U.S. funds registered with the
Securities and Exchange Commission under the 1940 Act. Mr. Byers served as an Independent Director
and Chairman of Sierra Income Corporation, a non-traded business development company (BDC)
sponsored by Medley LLC (NYSE:MCC), from 2012 to 2022. Sierra Income merged with Barings BDC,
Inc. in February, 2022, in connection with which Mr. Byers was appointed to the Board of Directors of
Barings BDC, Inc. From 2002 to 2012, Mr. Byers also served as Trustee for the College of William and
Mary Graduate School of Business. Since 2014, Mr. Byers has been engaged periodically as an
independent consultant to provide expert reports and opinions in financial and investment related matters.
From 2000 to 2006, Mr. Byers served as an investment executive with Dreyfus Corporation and served as
Vice Chairman, Executive Vice President, Chief Investment Officer, member of the Board of Directors and
Executive Committee, and fund officer of 90 investment companies, responsible for investment
performance of approximately $200 billion in assets under management. Prior to joining Dreyfus
Corporation, Mr. Byers served in executive positions at PaineWebber Group from 1986 to 1997, and served
in such capacities as chairman of the Investment Policy and Risk Oversight Committee, Capital Markets
Director of Risk and Credit Management, and was NASD registered as General Principal, Financial and
Operations Principal and Branch Principal. Prior to PaineWebber, Mr. Byers was an executive at Citibank/
Citicorp from 1979 to 1986. Mr. Byers received his M.B.A. in Finance from Roth Graduate School of
Business, Long Island University and his B.A. in Economics from Long Island University. In December
2014, Mr. Byers was recognized by the National Association of Corporate Directors as a Board Leadership
Fellow.
•Ms. Lancaster-Beal — Ms. Lancaster-Beal is a financial professional with extensive management and
board level experience in corporate governance, credit and financial analysis. Ms. Lancaster-Beal is the
President and Chief Executive Officer of VLB Associates, a management consulting firm she founded in
January 2014 that provides financial and operational advisory services to middle-market businesses,
investment firms and non-profit organizations. In this capacity, she previously served as the Chief
Financial Officer of Odyssey Media from 2015 to 2021, and as the Chief Administrative and Finance
Director of Data Capital Management from 2015 to 2017. Prior to this, she served as Managing Director at
M.R. Beal & Company, which she co-founded in April 1988, until 2014. Ms. Lancaster-Beal was a Senior
Vice President of Drexel Burnham Lambert from 1984 to 1988 and as Vice President of Citicorp
Investment Bank from 1978 to 1984. Ms. Lancaster-Beal served as an Independent Director and Chair of
the Nominating and Governance committee and the Audit committee of Sierra Income Corporation, a non-
traded business development company (BDC) sponsored by Medley LLC (NYSE:MCC), from 2012 to
2022. Sierra Income merged with Barings BDC, Inc. in February, 2022, in connection with which Ms.
Lancaster-Beal was appointed to the Board of Directors of Barings BDC, Inc. Ms. Lancaster-Beal currently
serves on the Board of Directors of KIPP NYC, a network of free, public charter schools. She also
previously served as a Trustee on the Board of the City University of New York from 2000 to 2014, where
she chaired the Faculty, Staff and Administration Committee and served on the Finance Committee.
Additionally, Ms. Lancaster-Beal served on the Board of Regents of Georgetown University from 2006 to
2010. Ms. Lancaster-Beal holds a B.A. in Economics from Georgetown University and an M.B.A. from the
Wharton School of Business of the University of Pennsylvania.
•Mr. Switzer — Mr. Switzer brings over 35 years of public accounting firm experience to the Board. Mr.
Switzer has served as a member of the Board of Directors of Barings Capital Investment Corporation (a
business development company advised by Barings) since March 2021, and since May 2017, has served as
a member of the Board of Directors of Weisiger Group (formerly Carolina Tractor and Equipment
Company (CTE)), a large, privately held Southeastern supplier of construction, forestry, paving, and
material handling equipment. Since September 2019, Mr. Switzer has also served as a member of the Board
of Directors of HomeTrust Bancshares, Inc., a publicly traded regional banking organization, where he also
serves on the Audit Committee. Previously, Mr. Switzer served as managing partner of KPMG's Charlotte
office (starting in 2009) until retirement in 2016, where he was also the market leader for KPMG’s
Carolinas, Florida, and San Juan offices. Prior to these positions, he served as managing partner of
KPMG’s Cleveland (1999 to 2007) and Kentucky (Louisville and Lexington) (1988 to 1998) offices. Mr.
Switzer currently serves on the boards of The Foundation for the Mint Museum and the National
Association of Corporate Directors, Carolinas Chapter. Mr. Switzer is a Certified Public Accountant and
holds a B.S. in Accounting from the University of Kentucky.
COMPENSATION DISCUSSION
The Company’s executive officers are employees of Barings and do not receive any direct compensation from the
Company. Barings serves as our external investment adviser and manages the Company’s investment portfolio
under the terms of a third amended and restated investment advisory agreement (the "Advisory Agreement"), in
connection with which the Company pays Barings a base management fee and an incentive fee, the details of which
are disclosed in the Company’s annual report on Form 10-K for the fiscal year ended December 31, 2023, which is
being delivered to stockholders along with this proxy statement.
The Company’s day-to-day investment operations are managed by Barings and services necessary for its business,
including the origination and administration of its investment portfolio are provided by individuals who are
employees of Barings, as investment adviser and administrator, pursuant to the terms of the Advisory Agreement
and an administration agreement (the "Administration Agreement"). The Company reimburses Barings, in its
capacity as administrator, for the costs and expenses incurred by it in performing its obligations and providing
personnel and facilities under the Administration Agreement in an amount to be negotiated and mutually agreed to
by the Company and Barings quarterly in arrears. In no event will the agreed-upon quarterly expense amount exceed
the amount of expenses that would otherwise be reimbursable by the Company under the Administration Agreement
for the applicable quarterly period, and Barings will not be entitled to the recoupment of any amounts in excess of
the agreed-upon quarterly expense amount. The costs and expenses incurred by Barings on our behalf under the
Administration Agreement include, but are not limited to:
▪the allocable portion of Barings' rent for the Company’s Chief Financial Officer and Chief Compliance
Officer and their respective staffs, which is based upon the allocable portion of the usage thereof by such
personnel in connection with their performance of administrative services under the Administration
Agreement;
▪the allocable portion of the salaries, bonuses, benefits and expenses of the Company’s Chief Financial
Officer and Chief Compliance Officer and their respective staffs, which is based upon the allocable portion
of the time spent by such personnel in connection with performing administrative services for the Company
under the Administration Agreement;
▪the actual cost of goods and services used for the Company and obtained by Barings from entities not
affiliated with the Company, which is reasonably allocated to the Company on the basis of assets, revenues,
time records or other methods conforming with generally accepted accounting principles;
▪all fees, costs and expenses associated with the engagement of a sub-administrator, if any; and
▪costs associated with (a) the monitoring and preparation of regulatory reporting, including proceduralregistration
statements and amendments thereto, prospectus supplements, and tax reporting, (b) the coordination and
oversight of service provider activities and the direct cost of such contractual matters related thereto and (c)
the preparation of all financial statements and the coordination and oversight of audits, regulatory inquiries,
certifications and sub-certifications.
DIRECTOR COMPENSATION
The Company's directors are divided into two groups — Interested Directors and Independent Directors. Interested
Directors are “interested persons” as defined in Section 2(a)(19) of the 1940 Act. During 2023, Interested Directors
did not receive any compensation from the Company for their service as members of the Board of Directors. The
compensation table below sets forth compensation that the Company's Independent Directors earned during the year
ended December 31, 2023.
| | | | | | |
| | Fees Earned or Paid in Cash | | | | |
Mark Mulhern ........................................................... | | | | | | |
John A. Switzer ......................................................... | | | | | | |
Thomas W. Okel ....................................................... | | | | | | |
Jill Olmstead ............................................................. | | | | | | |
Robert Knapp ............................................................ | | | | | | |
Steve Byers ............................................................... | | | | | | |
Valerie Lancaster-Beal .............................................. | | | | | | |
(1)All other compensation includes reimbursement of out-of-pocket expenses
Director Fees
Each Independent Director of the Board of Directors is paid an annual board retainer of $120,000, payable by the
Company in quarterly installments, and the Board’s lead independent director and the chair of the Board’s Audit
Committee will each receive an additional $10,000 annual retainer in recognition of the increased responsibilities
associated with each such position.
In addition, the Company reimburses Independent Directors for any out-of-pocket expenses related to their service
as members of the Board of Directors. The Independent Directors of the Board of Directors do not receive any
stock-based compensation for their service as members of the Board of Directors. The Company's Interested
Directors do not receive any compensation from the Company for their service as members of the Board of
Directors.
CORPORATE GOVERNANCE
Director Independence
The Board of Directors has a majority of directors who are independent under the listing standards of the New York
Stock Exchange (“NYSE”). The NYSE Listed Company Rules provide that a director of a BDC shall be considered
to be independent if he or she is not an "interested person" of the Company, as defined in Section 2(a)(19) of the
1940 Act. Section 2(a)(19) of the 1940 Act defines an "interested person" to include, among other things, any person
who has, or within the last two years had, a material business or professional relationship with the Company.
The Board of Directors has determined that Mses. Olmstead and Lancaster-Beal and Messrs. Mulhern, Okel,
Switzer, Knapp, and Byers are independent (or not “interested persons” of the Company). Based upon information
requested from each such director concerning his or her background, employment and affiliations, the Board of
Directors has affirmatively determined that none of the independent directors has a material business or professional
relationship with the Company, other than in his or her capacity as a member of the Board of Directors or any
committee thereof. None of the members of the Audit Committee, the Compensation Committee and the
Nominating and Corporate Governance Committee are "interested persons," as defined in Section 2(a)(19) of the
1940 Act, of the Company.
Meetings of the Board of Directors and Committees
In 2023, the Board of Directors held five meetings of the Board of Directors, as well as four Audit Committee
meetings, one Compensation Committee meeting, and one Nominating and Corporate Governance Committee
meeting. During 2023, none of the members of the Board of Directors attended less than 75% of the aggregate
number of meetings of the Board of Directors and of the respective committees on which they served.
Each of the Company's directors makes a diligent effort to attend all board and committee meetings, as well as each
Annual Meeting of Stockholders. We encourage, but do not require, our directors to attend annual meetings of
stockholders. All members of the then-constituted Board of Directors attended the Company's 2023 Annual Meeting
of Stockholders.
Audit Committee
The Company has a separately designated standing Audit Committee, as defined in Section 3(a)(58)(A) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Audit Committee is responsible for
oversight matters, financial statement and disclosure oversight matters, matters relating to the conducthiring, retention and
oversight of the meeting.Company’s independent registered public accounting firm, reviewing the plans, scope and results of
THIS PROXY IS REVOCABLE AND WILL BE VOTED AS DIRECTED BY THE UNDERSIGNED BELOW; where no choicethe audit engagement with the Company’s independent registered public accounting firm, approving professional
services provided by the Company’s independent registered public accounting firm, reviewing the independence of
the Company’s independent registered public accounting firm, reviewing the integrity of the audits of the financial
statements and reviewing the adequacy of the Company’s internal accounting controls. The Audit Committee also
assists our Board of Directors in establishing and monitoring the application of the valuation policies used for
determining the fair value of the Company’s investments that are not publicly traded or for which current market
values are not readily available.
The Audit Committee Charter is specified,publicly available under “Governance Documents” on the Investor Relations
section of the Company’s website at https://ir.barings.com/governance-docs. The contents of the Company’s website
are not intended to be incorporated by reference into this proxy statement or in any other report or document it willfiles
with the SEC, and any references to the Company’s website are intended to be voted “FOR” Proposal Nos. 1, 2inactive textual references only.
The members of the Company’s Audit Committee are Messrs. Mulhern, Okel, Switzer, Knapp and 3Byers and Mses.
IMPORTANT: Please sign exactlyOlmstead and Lancaster-Beal. Messrs. Mulhern and Okel and Ms. Olmstead simultaneously serve on the audit
committees of more than three public companies, and the Board has determined that each of their simultaneous
service on the audit committees of other public companies does not impair their ability to effectively serve on the
Audit Committee. Mr. Mulhern serves as your name appears on this proxy. For joint accounts, each joint owner should sign. When signingthe chairman of the Audit Committee. The Board of Directors has
determined that Mr. Mulhern is an “audit committee financial expert” as attorney, executor, administrator, trustee or guardian, please give your full title as such. Ifdefined under Item 407(d)(5) of Regulation
S-K of the signer is a corporation or partnership, please sign in full corporate or partnership name by a duly authorized officer or partner.Exchange Act and that all members of the Audit Committee are financially literate under NYSE listing
standards. The Board of Directors also has determined that each of Messrs. Mulhern, Okel, Switzer, Knapp, and
Byers and Mses. Olmstead and Lancaster-Beal meet the current independence requirements of Rule 10A-3 of the
Exchange Act and NYSE listing standards.
Compensation Committee
The Compensation Committee is responsible for determining, or recommending to the Board of Directors for
approval, the compensation of the Company’s independent directors; determining, or recommending to the Board of
Directors for determination, the compensation, if any, of the Company’s chief executive officer and all other
executive officers of the Company; and assisting the Board of Directors with matters related to compensation
generally.
In connection with reviewing, and recommending to the Board of Directors, the compensation of the independent
directors, the Compensation Committee evaluates the independent directors’ performance in light of goals and
objectives relevant to the independent directors and sets independent directors’ compensation based on such
evaluation and such other factors as the Compensation Committee deems appropriate and in the best interests of the
Company (including the cost to the Company of such compensation and a review of data of comparable business
development companies).
Currently none of the Company’s executive officers is compensated by the Company and, as a result, the
Compensation Committee does not produce and/or review a report on executive compensation practices. The
Compensation Committee also has the authority to engage compensation consultants, legal counsel or other advisors
(each, a “Consultant”) following consideration of certain factors related to such Consultants’ independence and has
the authority to form and delegate any of its responsibilities to a subcommittee of the Compensation Committee. The
Compensation Committee Charter is available under “Governance Documents” on the Investor Relations section of
our website at https://ir.barings.com/governance-docs.
The members of the Compensation Committee are Messrs. Mulhern, Okel, Switzer, Knapp and Byers, and Mses.
Olmstead and Lancaster-Beal, each of whom is not an "interested person" for purposes of Section 2(a)(19) of the
1940 Act and is independent under the applicable NYSE corporate governance listing standards. Ms. Olmstead
serves as the chair of the Compensation Committee. No members of the Compensation Committee during 2023 had
any relationship with the Company requiring disclosure under Item 404 of Regulation S-K under the Exchange Act.
Compensation Committee Interlocks and Insider Participation
No interlocking relationship, as defined by the rules adopted by the SEC, existed during the year ended
December 31, 2023 between any member of the Board of Directors or the Compensation Committee and an
executive officer of the Company.
Nominating and Corporate Governance Committee
The Nominating and Corporate Governance Committee is responsible for identifying, researching and
recommending for nomination directors for election by the Company's stockholders, recommending for appointment
nominees to fill vacancies on the Board of Directors or a committee of the Board of Directors, developing and
recommending to the Board of Directors a set of corporate governance principles and overseeing the evaluation of
the Board of Directors. The Nominating and Corporate Governance Committee’s policy is to consider nominees
properly recommended by the Company's stockholders in accordance with the Company's charter, Bylaws and
applicable law. For more information on how the Company's stockholders may recommend a nominee for a seat on
the Board of Directors, see "Stockholder Nominations and Proposals for the 2025 Annual Meeting" in this proxy
statement. The Nominating and Corporate Governance Committee also has the authority to retain, at the Company’s
expense, such consultants or advisors as the Committee may deem necessary or appropriate to carry out its duties.
The Committee has sole authority to retain or terminate any search firm or individual used to identify any director
candidate, including the sole authority to approve the search firm’s fees and retention terms.
The Nominating and Corporate Governance Committee Charter is publicly available under “Governance
Documents” on the Investor Relations section of the Company's website at https://ir.barings.com/governance-docs.
The members of the Nominating and Corporate Governance Committee are Messrs. Mulhern, Okel, Switzer, Knapp,
and Byers and Mses. Olmstead and Lancaster-Beal, each of whom is not an "interested person" for purposes of
Section 2(a)(19) of the 1940 Act and is independent under the NYSE corporate governance listing standards.
Mr. Okel serves as the chairman of the Nominating and Corporate Governance Committee. Each nominee for
election under Proposal No. 1 at the Annual Meeting was recommended by the members of the Nominating and
Corporate Governance Committee to the Board of Directors, which approved such nominees.
Communication with the Board of Directors
Barings BDC, Inc. stockholders and other interested parties may communicate with any member of our Board
(including the chairman), the chairman of any of our Board committees, or with our non-management directors as a
group by sending communications to Barings BDC, Inc., 300 South Tryon St., Suite 2500, Charlotte, North Carolina
28202, or via e-mail to BDCinvestorrelations@barings.com, or by calling the Barings BDC, Inc.’s investor relations
department at 1-888-401-1088. All such communications should indicate clearly the director or directors to whom
the communication is being sent so that each communication, other than unsolicited commercial solicitations, may
be forwarded directly to the appropriate director(s).
The Composition of the Board of Directors and Leadership Structure
The 1940 Act requires that at least a majority of the Company’s directors not be “interested persons” (as defined in
the 1940 Act) of the Company. Currently, seven of the Company’s nine directors have been determined to qualify as
independent directors (and to not be “interested persons”). However, Mr. Lloyd, our Chief Executive Officer and the
President of Barings LLC, and therefore an interested person of the Company, serves as Executive Chairman of the
Board of Directors. The Board of Directors believes that it is in the best interests of investors for Mr. Lloyd to lead
the Board of Directors because of his role as Chief Executive Officer of the Company and President of Barings LLC
and his broad experience with the day-to-day management of cross-asset class investment teams, corporate strategy,
business development and product management. In addition, the Board of Directors has designated Mr. Okel as lead
independent director to preside over all executive sessions of independent directors. The Board of Directors believes
that its leadership structure is appropriate in light of the Company’s characteristics and circumstances because the
structure allocates areas of responsibility among the individual directors and the committees in a manner that
enhances effective oversight. The Board of Directors also believes that its meeting frequency and governance
structure provides ample opportunity for direct communication and interaction between the Board of Directors and
the Company’s management.
The Oversight Role of the Board of Directors
The Board of Directors’ role in management of the Company is one of oversight. Oversight of the Company’s
investment activities extends to oversight of the risk management processes employed by Barings as part of its day-
to-day management of the Company’s investment activities. The Board of Directors reviews risk management
processes throughout the year, consulting with appropriate representatives of Barings as necessary and periodically
requesting the production of risk management reports or presentations and receiving reports from vendors and
service providers regarding cybersecurity threats and incidents. The goal of the Board of Directors’ risk oversight
function is to ensure that the risks associated with the Company’s investment activities are accurately identified,
thoroughly investigated and responsibly addressed. The Audit Committee (which consists of all the independent
directors) is responsible for approving the Company’s independent accountants, reviewing with the Company’s
independent accountants the plans and results of the audit engagement, approving professional services provided by
the Company’s independent accountants, reviewing the independence of the Company’s independent accountants
and reviewing the adequacy of the Company’s internal accounting controls. The Audit Committee also monitors the
application of the valuation policies used for determining the fair value of the Company’s investments that are not
publicly traded or for which current market values are not readily available. Stockholders should note, however, that
the Board of Directors’ oversight function cannot eliminate all risks or ensure that particular events do not adversely
affect the value of investments.
In accordance with the 1940 Act, the Company’s directors have adopted and implemented written policies and
procedures reasonably designed to prevent violation of the U.S. federal securities laws, and we review these
compliance policies and procedures annually for their adequacy and the effectiveness of their implementation. In
addition, we have designated Gregory MacCordy as the Company’s Chief Compliance Officer. As such, Mr.
MacCordy is responsible for administering the Company’s compliance program and meeting with the Board of
Directors at least annually to assess its effectiveness.
Code of Business Conduct and Ethics and Corporate Governance Guidelines
The Company and Barings are subject to Barings LLC's Global Code of Ethics Policy, and the Company has
adopted a set of corporate governance guidelines covering ethics and business conduct. These documents apply to
the Company's directors and officers, among other Barings employees. Barings LLC's Global Code of Ethics Policy
and the Company's corporate governance guidelines are available on the Investor Relations section of the Company's
website at https://ir.barings.com/governance-docs. Any material amendments to or waivers of a required provision
of the Barings LLC Global Code of Ethics Policy and/or the Company's corporate governance guidelines will be
reported on our website and/or in a Current Report on Form 8-K within four business days of the amendment or
waiver.
Under Barings LLC's Global Code of Ethics Policy, officers, directors and certain employees of Barings must first
obtain pre-clearance from Barings' compliance department before trading in the Company's securities. In addition,
the Company has adopted an Insider Trading Policy, which among other things, governs the purchase, sale, and/or
other dispositions of the Company's securities by the Company's directors and officers, and which the Company
believes are reasonably designed to promote compliance with insider trading laws, rules and regulations, and
applicable listing standards. The Company's Insider Trading Policy includes restrictions that prohibit directors and
officers of the Company from, among other things, engaging in short sales or hedging transactions with respect to
the Company's securities, including through the use of financial instruments such as prepaid variable forward
contracts, equity swaps, collars and exchange funds.
EXECUTIVE OFFICERS AND INVESTMENT COMMITTEE
The Company’s officers serve at the discretion of the Board of Directors. The biographical information of each of
the Company’s executive officers (in alphabetical order) who is not a director, as well as the Company's Secretary
and Chief Compliance Officer, who are not executive officers of the Company, is as follows:
Matthew Freund, 35, is the Company’s President and Co-Portfolio Manager and also serves as President of Barings
Private Credit Corporation and Barings Capital Investment Corporation. Mr. Freund served as a Senior Investment
Manager within Barings’ Global Private Finance Group, where he was responsible for structuring, underwriting, and
monitoring North American private finance investments supporting Barings sponsor clients. Mr. Freund is also a
board member for Eclipse Business Credit, a specialty lender focused on providing asset backed loans. He has
worked in the industry since 2009. Prior to joining Barings in 2015, Mr. Freund worked for US Bank structuring
secured loans to support leveraged buyouts for private equity sponsors. Prior to joining US Bank, Mr. Freund
worked in underwriting and analytical roles at Bank of America as part of corporate and middle market coverage.
He has a B.S. in Business Administration degree from Saint Louis University and is a member of the CFA Institute.
Gregory MacCordy, 64, has served as the Company's Chief Compliance Officer since February 2023 and is a
Director at ACA Group (“ACA”). Mr. MacCordy is an experienced compliance, risk and subject matter expert with
over 30 years of regulatory and financial services experience. He serves as chief compliance officer or chief risk
officer for SEC registered investment advisers and investment companies such as business development companies
and interval funds. Prior to ACA, Mr. MacCordy worked at the U.S. Securities & Exchange Commission where he
was an Industry Expert and Specialized Compliance Examiner in the Asset Management Unit (Enforcement
Division) conducting enforcement investigations of investment companies, investment advisers, and mutual funds in
the areas of business development companies, CLOs, private equity, hedge funds, real estate and fixed income
trading. Mr. MacCordy also spent 18 years at The Teachers Insurance and Annuity Association of America-College
Retired Equity Fund (TIAA) beginning as a securities analyst and ultimately becoming a Managing Director. During
his time at TIAA, he was responsible for investment decisions, credit research, valuation and stress testing,
regulatory filings, and the development of risk and compliance program policies and procedures. Mr. MacCordy
holds a Bachelor of Science and Business Administration in Accounting from University of Missouri and a MBA in
Finance from New York University Stern School of Business.
Elizabeth Murray, 46, has served as the Company’s Chief Operating Officer since May 2023 and as its Chief
Financial Officer since April 2023. Ms. Murray also serves as the Chief Operating Officer and Chief Financial
Officer of BCIC and BPCC. Ms. Murray is also a board member for Rocade LLC, a specialty finance company
focused on litigation finance. Ms. Murray previously was the Chief Accounting Officer for the Company, BCIC, and
BPCC and previously served as the Vice President of Financial Reporting at Triangle Capital Corporation prior to
the externalization of the investment management of the Company to Barings LLC. Prior to joining Triangle Capital
Corporation in 2012, Ms. Murray worked in Financial Planning and Analysis for RBC Bank, the U.S. retail banking
division for Royal Bank of Canada. Prior to RBC Bank, Ms. Murray spent seven years at Progress Energy, Inc. and
held various positions in finance, accounting and tax, most recently in Strategy and Financial Planning. Ms. Murray
began her career as a Tax Consultant with PricewaterhouseCoopers. Ms. Murray is a graduate of North Carolina
State University where she obtained a B.S. degree in Accounting and a Master of Accounting degree. She is also a
North Carolina Certified Public Accountant.
Alexandra Pacini, 31, is the Company's Secretary and a Director at Barings LLC. Ms. Pacini also serves as the
Secretary of BCIC, BPCC, Barings Global Short Duration High Yield Fund, Barings Corporate Investors and
Barings Participation Investors
Ashlee Steinnerd, 42, has served as the Company’s Chief Legal Officer since February 2023 and is the Head of
Regulatory at Barings LLC. Ms. Steinnerd also serves as Chief Legal Officer of BCIC, BPCC, Barings Global Short
Duration High Yield Fund, Barings Corporate Investors, and Barings Participation Investors. Ms. Steinnerd has been
a member of the Barings LLC legal team since 2019, advising Barings LLC on a variety of regulatory issues. Prior
to joining Barings LLC, Ms. Steinnerd was Senior Counsel in the Securities and Exchange Commission’s Office of
the Investor Advocate. Ms. Steinnerd held several roles during her tenure at the Securities and Exchange
Commission between 2011 and 2019. Ms. Steinnerd holds a B.S. in Applied International Finance and Applied
International Economics from the American University of Paris, France and a J.D. from Rutgers School of Law.
Investment Committee
The Company is externally managed by Barings LLC, which is registered with the SEC under the Investment
Advisers Act of 1940, as amended. Barings also provides the administrative services necessary for us to operate.
Barings, a wholly-owned subsidiary of MassMutual Life Insurance Company (“MassMutual”), is a leading global
asset management firm, whose primary investment capabilities include fixed income, private credit, real estate,
equity, and alternative investments. Subject to the overall supervision of our Board, a majority of which is made up
of directors that are not “interested persons,” as defined in Section 2(a)(19) of the 1940 Act, of the Company or
Barings, Barings’ Global Private Finance Group (“Barings GPFG”) manages our day-to-day operations, and
provides investment advisory and management services to us. Barings GPFG is part of Barings' $301.1 billion (as of
December 31, 2023) Global Fixed Income Platform that invests in liquid, private and structured credit. Barings
GPFG manages private funds and separately managed accounts, along with multiple public vehicles.
Included in Barings GPFG is Barings North American Private Finance Team (the “U.S. Investment Team”), which
consists of 43 investment professionals (as of March 15, 2024) located in three offices in the United States. The U.S.
Investment Team provides a full set of solutions to the North American middle market, including revolvers, first and
second lien senior secured loans, unitranche structures, mezzanine debt and equity co-investments. The U.S.
Investment Team averages over 11 years of industry experience at the Managing Director and Director level.
The Barings North American Private Finance investment committee (the “Investment Committee”), which is
responsible for our investment origination and portfolio monitoring activities for middle-market companies in North
America, consists of three interim members: Terry Harris, Bryan High and Tyler Gately. Collectively, the
Investment Committee has over 70 years of industry experience, and each member averages approximately 23 years
of industry experience. A majority of the votes cast at a meeting at which a majority of the members of the
Investment Committee is present is required to approve all investments in new middle-market companies.
The European and Asia-Pacific Investment Committees, which are responsible for the Company's investment
origination and portfolio monitoring activities for middle-market companies in European and Asia-Pacific
geographies, consist of three interim members: Terry Harris, Bryan High and Stuart Mathieson.
Barings believes that the individual and shared experiences of these senior team members provide the Investment
Committee with an appropriate balance of shared investment philosophy and difference of background and opinion.
Portfolio Managers
Matthew Freund and Bryan High serve as portfolio managers to the Company. Mr. Freund's biography and
experience are set forth above, under "Executive Officers and Investment Committee." Mr. High's biography and
experience are as follows:
Bryan High, 43, serves as the Company's Co-Portfolio Manager. Mr. High also serves as Co-Portfolio Manager for
BPCC and as Chief Executive Officer of BCIC and BPCC. Mr. High is Head of Barings GPFG and Head of Barings
Capital Solutions and a co-Portfolio Manager for Capital Solutions funds. Mr. High joined Barings LLC in 2007,
and has extensive experience in public and private credit, distressed debt / special situations and private equity. Mr.
High currently serves on the investment committees for Capital Solutions, U.S. High Yield and Private Structured
Finance. Prior to joining Barings LLC, Mr. High was an investment banker at a boutique M&A firm where he
advised on middle market transactions. Mr. High also worked at Banc of America Securities LLC in the
restructuring advisory group. Mr. High has a B.S. in business administration from the University of North Carolina
at Chapel Hill.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information with respect to the beneficial ownership of the Company's common stock
as of March 8, 2024, the record date, by the Company's directors and executive officers, both individually and as a
group, and by each person known to the Company to beneficially own 5% or more of the outstanding shares of the
Company’s common stock. With respect to persons known to the Company to beneficially own 5% or more of the
outstanding shares of the Company’s common stock, the Company bases such knowledge on beneficial ownership
filings made by the holders with the SEC and other information known to the Company. Other than as set forth in
the table below, none of the Company's directors or executive officers are deemed to beneficially own shares of the
Company's common stock. Beneficial ownership is determined in accordance with the rules of the SEC and includes
voting or investment power with respect to the securities. There is no common stock subject to options or warrants
that are currently exercisable or exercisable within 60 days of March 8, 2024. Percentage of beneficial ownership is
based on 106,067,070 shares of common stock outstanding as of March 8, 2024. Unless otherwise indicated by
footnote, the business address of each person listed below is 300 South Tryon Street, Suite 2500, Charlotte, North
Carolina 28202.
| | | | | | | | |
| | Number of Shares Beneficially Owned(1) | | | | | | Dollar Range of Equity Securities Beneficially Owned(3) |
Directors and Executive Officers: | | | | | | | | |
| | | | | | | | |
Eric Lloyd ................................................................... | | | | | | | | |
David Mihalick ........................................................... | | | | | | | | |
| | | | | | | | |
Mark F. Mulhern ........................................................ | | | | | | | | |
Thomas W. Okel ........................................................ | | | | | | | | |
Jill Olmstead ............................................................... | | | | | | | | |
John A. Switzer .......................................................... | | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
Executive Officers Who Are Not Directors | | | | | | | | |
Matthew Freund ......................................................... | | | | | | | | |
Elizabeth Murray ........................................................ | | | | | | | | |
Ashlee Steinnerd ........................................................ | | | | | | | | |
All directors and executive officers as a group (12 persons) ...................................................................... | | | | | | | | |
Five-Percent Stockholders: ...................................... | | | | | | | | |
Barings LLC ............................................................... | | | | | | | | |
* Less than 1.0%
(1)Beneficial ownership in this column has been determined in accordance with Rule 13d-3 of the Exchange Act. Except as
otherwise noted, each beneficial owner of more than five percent of the Company's common stock and each director and
executive officer has sole voting and/or investment power over the shares reported.
(2)Based on a total of 106,067,070 shares issued and outstanding as of March 8, 2024.
(3)Beneficial ownership in this column has been determined in accordance with Rule 16a-1(a)(2) of the Exchange Act. The
dollar range of equity securities beneficially owned is based on a stock price of $9.69 per share as of March 8, 2024.
Dollar ranges are as follows: None, $1 — $10,000, $10,001 — $50,000, $50,001 — $100,000, or over $100,000.
DELINQUENT SECTION 16(A) REPORTS
Section 16(a) of the Exchange Act requires the Company’s officers and directors, and persons who own more than
10% of our common stock, to file reports of securities ownership and changes in such ownership with the SEC.
Officers, directors, and greater than 10% stockholders also are required by SEC rules to furnish the Company with
copies of all Section 16(a) forms they file.
Based solely on the Company’s review of Forms 3, 4 and 5 filed by such persons and information provided by the
Company’s directors and officers, the Company believes that during the year ended December 31, 2023, all Section
16(a) filing requirements applicable to such persons were met in a timely manner.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Related Party Transactions Policy and Procedure
The Company has procedures in place for the review, approval and monitoring of transactions involving the
Company and certain persons related to it. For example, the Company has a code of conduct that generally prohibits
any employee, officer or director of the Company from engaging in any transaction where there is a conflict between
such individual's personal interest and the interests of the Company. Waivers to the code of conduct can generally
only be obtained from the Chief Compliance Officer, a majority of the Board of Directors or the chairperson of the
Audit Committee and are publicly disclosed as required by applicable law and regulations. In addition, the members
of the Audit Committee oversee, on an ongoing basis, and conduct a prior review of all transactions between the
Company and related persons (as defined in Item 404 of Regulation S-K) that are required to be disclosed in the
Company's proxy statement.
As a BDC, the Company is also subject to certain regulatory requirements that restrict the Company's ability to
engage in certain related-party transactions. The Company has separate policies and procedures that have been
adopted to ensure that it does not enter into any such prohibited transactions without seeking necessary approvals,
including prohibited transactions under the 1940 Act.
BDCs generally are prohibited under the 1940 Act from knowingly participating in certain transactions with their
affiliates without the prior approval of their independent directors and, in some cases, of the U.S. Securities and
Exchange Commission (the “SEC”). Those transactions include purchases and sales, and so-called “joint”
transactions, in which a BDC and one or more of its affiliates engage in certain types of profit-making activities.
Any person that owns, directly or indirectly, 5.0% or more of a BDC’s outstanding voting securities will be
considered an affiliate of the BDC for purposes of the 1940 Act, and a BDC generally is prohibited from engaging in
purchases or sales of assets or joint transactions with such affiliates, absent the prior approval of the BDC’s
independent directors. Additionally, without the approval of the SEC, a BDC is prohibited from engaging in
purchases or sales of assets or joint transactions with the BDC’s officers and directors, and investment adviser,
including funds managed by the investment adviser and its affiliates.
BDCs may, however, invest alongside certain related parties or their respective other clients in certain circumstances
where doing so is consistent with current law and SEC staff interpretations. For example, a BDC may invest
alongside such accounts consistent with guidance promulgated by the SEC staff permitting the BDC and such other
accounts to purchase interests in a single class of privately placed securities so long as certain conditions are met,
including that the BDC’s investment adviser, acting on the BDC’s behalf and on behalf of other clients, negotiates
no term other than price. Co-investment with such other accounts is not permitted or appropriate under this guidance
when there is an opportunity to invest in different securities of the same issuer or where the different investments
could be expected to result in a conflict between the BDC’s interests and those of other accounts.
The 1940 Act generally prohibits BDCs from making certain negotiated co-investments with certain affiliates absent
an order from the SEC permitting the BDC to do so. Pursuant to Barings’ existing SEC co-investment exemptive
relief under the 1940 Act (the "Exemptive Relief"), the Company is generally permitted to co-invest with funds
affiliated with Barings if a "required majority" (as defined in Section 57(o) of the 1940 Act) of the Company's
independent directors make certain conclusions in connection with a co-investment transaction, including that (1)
the terms of the transaction, including the consideration to be paid, are reasonable and fair to the Company and its
stockholders and do not involve overreaching in respect of the Company or its stockholders on the part of any
person concerned and (2) the transaction is consistent with the interests of the Company's stockholders and is
consistent with the Company's investment objective and strategies. Co-investments made under the Exemptive
Relief are subject to compliance with the conditions and other requirements contained in the Exemptive Relief,
which could limit the Company’s ability to participate in a co-investment transaction.
The Company’s executive officers and the members of Barings’ Investment Committee, as well as the other
principals of Barings, manage other funds affiliated with Barings, including BCIC and BPCC and other closed-end
investment companies. In addition, Barings' investment team has responsibilities for managing U.S. and global
middle-market debt investments for certain other investment funds and accounts. Accordingly, they have obligations
to investors in those entities, the fulfillment of which may not be in the best interests of, or may be adverse to the
interests of, the Company or its stockholders. In addition, certain of the other funds and accounts managed by
Barings may provide for higher management or incentive fees, greater expense reimbursements or overhead
allocations, or permit Barings and its affiliates to receive higher origination and other transaction fees, all of which
may contribute to this conflict of interest and create an incentive for Barings to favor such other funds or accounts.
Although the professional staff of Barings will devote as much time to the Company’s management as appropriate to
enable Barings to perform its duties in accordance with the Advisory Agreement, the investment professionals of
Barings may have conflicts in allocating their time and services among the Company, on the one hand, and the other
investment vehicles managed by Barings or one or more of its affiliates on the other hand.
Barings may face conflicts in allocating investment opportunities between the Company and affiliated investment
vehicles that have overlapping investment objectives with ours, including BCIC and BPCC. In addition, the
Company may not be made aware of and/or be given the opportunity to participate in certain investments made by
investment funds which are managed by advisers affiliated with Barings and do not participate in the co-investment
program described in the Exemptive Relief. In situations where co-investment with other affiliated funds or accounts
is not permitted or appropriate, Barings will need to decide which account will proceed with the investment in
accordance with its allocation policies and procedures. Although Barings will endeavor to allocate investment
opportunities in a fair and equitable manner in accordance with its allocation policies and procedures, it is possible
that, in the future, the Company may not be given the opportunity to participate in investments made by investment
funds managed by Barings or an investment manager affiliated with Barings if such investment is prohibited by the
Exemptive Relief or the 1940 Act. These restrictions, and similar restrictions that limit the Company's ability to
transact business with its officers or directors or their affiliates, including funds managed by Barings, may limit the
scope of investment opportunities that would otherwise be available to the Company.
Advisory Agreement
The Company is party to the Advisory Agreement with Barings, in which certain directors and officers of the
Company and members of the Investment Committee may have indirect ownership and pecuniary interests. For the
year ended December 31, 2023, the base management fee determined in accordance with the terms of the Advisory
Agreement was approximately $32.6 million. For the year ended December 31, 2023, the income-based fee
determined in accordance with the terms of the Advisory Agreement was approximately $32.0 million.
Administration Agreement
Pursuant to the terms of the Administration Agreement between Barings and the Company, Barings provides the
Company with certain administrative and other services necessary to conduct the Company's day-to-day operations.
The Company reimburses Barings, in its capacity as administrator, for the costs and expenses incurred and billed to
the Company by Barings in performing its obligations and providing personnel and facilities under the
Administration Agreement, or such lesser amount as may be agreed to by the Company and Barings from time to
time. If the Company and Barings agree to a reimbursement amount for any period which is less than the full
amount otherwise permitted under the Administration Agreement, then Barings will not be entitled to recoup any
difference thereof in any subsequent period or otherwise. See "Compensation Discussion" above for more
information. For the fiscal year ended December 31, 2023, the Company incurred and was invoiced by Barings for
expenses of approximately $2.2 million under the terms of the Administration Agreement.
Barings Credit Support Agreements
In connection with the Company’s merger with MVC Capital, Inc., in December 2020, the Company entered into a
Credit Support Agreement (the “MVC Capital Credit Support Agreement”) with Barings, pursuant to which Barings
has agreed to provide credit support to the Company in the amount of up to $23.0 million relating to the net
cumulative realized and unrealized losses on the acquired MVC Capital, Inc. investment portfolio over a 10-year
period. The MVC Capital Credit Support Agreement is intended to give stockholders of the combined company
following the merger of the Company and MVC Capital, Inc. downside protection from net cumulative realized and
unrealized losses on the acquired MVC Capital, Inc. portfolio and insulate the combined company’s stockholders
from potential value volatility and losses in MVC Capital, Inc.’s portfolio following the closing of the merger. There
is no fee or other payment by the Company to Barings or any of its affiliates in connection with the MVC Capital
Credit Support Agreement. Any cash payment from Barings to the Company under the MVC Capital Credit Support
Agreement will be excluded from the incentive fee calculations under the Advisory Agreement.
In connection with the Company’s merger with Sierra Income Corporation, in February 2022, the Company entered
into a Credit Support Agreement (the “SIC Credit Support Agreement”) with Barings, pursuant to which Barings has
agreed to provide credit support to the Company in the amount of up to $100.0 million relating to the net cumulative
realized and unrealized losses on the acquired Sierra Income Corporation investment portfolio over a 10-year period.
The SIC Credit Support Agreement is intended to give stockholders of the combined company following the merger
of the Company and Sierra Income Corporation downside protection from net cumulative realized and unrealized
losses on the acquired Sierra Income Corporation portfolio and insulate the combined company’s stockholders from
potential value volatility and losses in Sierra Income Corporation’s portfolio following the closing of the merger.
There is no fee or other payment by the Company to Barings or any of its affiliates in connection with the SIC Credit
Support Agreement. Any cash payment from Barings to the Company under the SIC Credit Support Agreement will
be excluded from the incentive fee calculations under the Advisory Agreement.
August 2020 Note Purchase Agreement
On August 3, 2020, the Company entered into a Note Purchase Agreement (the “August 2020 NPA”) with
Massachusetts Mutual Life Insurance Company, which wholly-owns Barings, governing the issuance of (1) $50.0
million in aggregate principal amount of Series A senior unsecured notes due August 2025 (the “Series A Notes”)
with a fixed interest rate of 4.66% per year, and (2) up to $50.0 million in aggregate principal amount of additional
senior unsecured notes due August 2025 with a fixed interest rate per year to be determined (the “Additional Notes”
and, collectively with the Series A Notes, the “August 2025 Notes”), in each case, to qualified institutional investors
in a private placement. The Company issued an aggregate principal amount of $25.0 million of the Series A Notes
on September 24, 2020 and an aggregate principal amount of $25.0 million of the Series A Notes on September 29,
2020, both of which will mature on August 4, 2025 unless redeemed, purchased or prepaid prior to such date in
accordance with their terms. Interest on the August 2025 Notes is due semiannually in March and September of each
year, beginning in March 2021. In addition, the Company is obligated to offer to repay the August 2025 Notes at par
(plus accrued and unpaid interest to, but not including, the date of prepayment) if certain change in control events
occur. Subject to the terms of the August 2020 NPA, the Company may redeem the August 2025 Notes in whole or
in part at any time or from time to time at the Company’s option at par plus accrued interest to the prepayment date
and, if redeemed on or before November 3, 2024, a make-whole premium. The August 2025 Notes are guaranteed
by certain of the Company’s subsidiaries and are the Company’s general unsecured obligations that rank pari passu
with all outstanding and future unsecured unsubordinated indebtedness issued by the Company. Upon the
occurrence of an event of default, the holders of at least 66-2/3% in principal amount of the August 2025 Notes at
the time outstanding may declare all August 2025 Notes then outstanding to be immediately due and payable.
On November 4, 2020, the Company amended the August 2020 NPA to reduce the aggregate principal amount of
unissued Additional Notes from $50.0 million to $25.0 million. The Company's permitted issuance period for the
Additional Notes under the August 2020 NPA expired on February 3, 2022, prior to which date the Company had
issued no Additional Notes.
November 2020 Note Purchase Agreement
On November 4, 2020, the Company entered into a Note Purchase Agreement (the “November 2020 NPA”)
governing the issuance of (1) $62.5 million in aggregate principal amount of Series B senior unsecured notes due
November 2025 (the “Series B Notes”) with a fixed interest rate of 4.25% per year and (2) $112.5 million in
aggregate principal amount of Series C senior unsecured notes due November 2027 (the “Series C Notes” and,
collectively with the Series B Notes, the “November Notes”) with a fixed interest rate of 4.75% per year, in each
case, to qualified institutional investors in a private placement. Each stated interest rate is subject to a step up of (x)
0.75% per year, to the extent the applicable November Notes do not satisfy certain investment grade conditions and/
or (y) 1.50% per year, to the extent the ratio of the Company’s secured debt to total assets exceeds specified
thresholds, measured as of each fiscal quarter end. The November Notes were delivered and paid for on November
5, 2020.
The Series B Notes will mature on November 4, 2025, and the Series C Notes will mature on November 4, 2027
unless redeemed, purchased or prepaid prior to such date by the Company in accordance with their terms. Interest on
the November Notes is due semiannually in May and November, beginning in May 2021. In addition, the Company
is obligated to offer to repay the November Notes at par (plus accrued and unpaid interest to, but not including, the
date of prepayment) if certain change in control events occur. Subject to the terms of the November 2020 NPA, the
Company may redeem the Series B Notes and the Series C Notes in whole or in part at any time or from time to time
at the Company’s option at par plus accrued interest to the prepayment date and, if redeemed on or before May 4,
2025, with respect to the Series B Notes, or on or before May 4, 2027, with respect to the Series C Notes, a make-
whole premium. The November Notes are guaranteed by certain of the Company’s subsidiaries, and are the
Company's general unsecured obligations that rank pari passu with all outstanding and future unsecured
unsubordinated indebtedness issued by the Company. Upon the occurrence of an event of default, the holders of at
least 66-2/3% in principal amount of the November Notes at the time outstanding may declare all November Notes
then outstanding to be immediately due and payable.
Barings’ parent company, Massachusetts Mutual Life Insurance Company, holds $25.0 million in aggregate
principal amount of the Series B Notes.
February 2021 Note Purchase Agreement
On February 25, 2021, the Company entered into a Note Purchase Agreement (the “February 2021 NPA”) governing
the issuance of (1) $80.0 million in aggregate principal amount of Series D senior unsecured notes due February 26,
2026 (the “Series D Notes”) with a fixed interest rate of 3.41% per year and (2) $70.0 million in aggregate principal
amount of Series E senior unsecured notes due February 26, 2028 (the “Series E Notes” and, collectively with the
Series D Notes, the “February Notes”) with a fixed interest rate of 4.06% per year, in each case, to qualified
institutional investors in a private placement. Each stated interest rate is subject to a step up of (x) 0.75% per year, to
the extent the applicable February Notes do not satisfy certain investment grade rating conditions and/or (y) 1.50%
per year, to the extent the ratio of the Company’s secured debt to total assets exceeds specified thresholds, measured
as of each fiscal quarter end. The February Notes were delivered and paid for on February 26, 2021.
The Series D Notes will mature on February 26, 2026, and the Series E Notes will mature on February 26, 2028
unless redeemed, purchased or prepaid prior to such date by the Company in accordance with the terms of the
February 2021 NPA. Interest on the February Notes is due semiannually in February and August of each year,
beginning in August 2021. In addition, the Company is obligated to offer to repay the February Notes at par (plus
accrued and unpaid interest to, but not including, the date of prepayment) if certain change in control events occur.
Subject to the terms of the February 2021 NPA, the Company may redeem the Series D Notes and the Series E
Notes in whole or in part at any time or from time to time at the Company’s option at par plus accrued interest to the
prepayment date and, if redeemed on or before August 26, 2025, with respect to the Series D Notes, or on or before
August 26, 2027, with respect to the Series E Notes, a make-whole premium. The February Notes are guaranteed by
certain of the Company’s subsidiaries, and are the Company's general unsecured obligations that rank pari passu
with all outstanding and future unsecured unsubordinated indebtedness issued by the Company. Upon the
occurrence of certain events of default, the holders of at least 66-2/3% in principal amount of the February Notes at
the time outstanding may declare all February Notes then outstanding to be immediately due and payable.
Barings’ parent company, Massachusetts Mutual Life Insurance Company, holds $25.0 million in aggregate
principal amount of the Series D Notes.
November 2026 Notes Indenture
On November 23, 2021, the Company and U.S. Bank Trust Company, National Association (the “Trustee”) entered
into an Indenture (the “Base Indenture”) and a First Supplemental Indenture (the “First Supplemental Indenture”
and, together with the Base Indenture, the “November 2026 Notes Indenture”). The First Supplemental Indenture
relates to the Company’s issuance of $350.0 million aggregate principal amount of its 3.300% notes due 2026 (the
“November 2026 Notes”).
The November 2026 Notes will mature on November 23, 2026 and may be redeemed in whole or in part at the
Company’s option at any time or from time to time at the redemption prices set forth in the November 2026 Notes
Indenture. The November 2026 Notes bear interest at a rate of 3.300% per year payable semi-annually in May and
November of each year, commencing in May 2022. The November 2026 Notes are general unsecured obligations of
the Company that rank senior in right of payment to all of the Company’s existing and future indebtedness that is
expressly subordinated in right of payment to the November 2026 Notes, rank pari passu with all existing and future
unsecured unsubordinated indebtedness issued by the Company, rank effectively junior to any of the Company’s
secured indebtedness (including unsecured indebtedness that the Company later secures) to the extent of the value of
the assets securing such indebtedness, and rank structurally junior to all existing and future indebtedness (including
trade payables) incurred by the Company’s subsidiaries, financing vehicles or similar facilities.
The November 2026 Notes Indenture contains certain covenants, including covenants requiring the Company to
comply with the asset coverage requirements of Section 18(a)(1)(A) as modified by Sections 61(a)(1) and (2) of the
1940 Act, whether or not it is subject to those requirements, and to provide financial information to the holders of
the November 2026 Notes and the Trustee if the Company is no longer subject to the reporting requirements under
the Exchange Act. These covenants are subject to important limitations and exceptions that are described in the
November 2026 Notes Indenture.
In addition, on the occurrence of a “change of control repurchase event,” as defined in the November 2026 Notes
Indenture, the Company will generally be required to make an offer to purchase the outstanding November 2026
Notes at a price equal to 100% of the principal amount of such November 2026 Notes plus accrued and unpaid
interest to the repurchase date.
The November 2026 Notes were offered to qualified institutional buyers pursuant to Rule 144A under the Securities
Act and to certain non-U.S. persons outside the United States pursuant to Regulation S under the Securities Act.
Concurrent with the closing of November 2026 Notes offering, the Company entered into a registration rights
agreement for the benefit of the purchasers of the November 2026 Notes. Pursuant to the terms of this registration
rights agreement, the Company filed a registration statement on Form N-14 with the SEC, which was subsequently
declared effective, to permit electing holders of the November 2026 Notes to exchange all of their outstanding
restricted November 2026 Notes for an equal aggregate principal amount of new November 2026 Notes (the
“Exchange Notes”). The Exchange Notes have terms substantially identical to the terms of the November 2026
Notes, except that the Exchange Notes are registered under the Securities Act, and certain transfer restrictions,
registration rights, and additional interest provisions relating to the November 2026 Notes do not apply to the
Exchange Notes.
Barings’ parent company, Massachusetts Mutual Life Insurance Company, and certain of its subsidiaries collectively
hold $50.0 million in aggregate principal amount of the November 2026 Notes.
February 2029 Notes Indenture
On February 12, 2024, the Company issued $300 million in aggregate principal amount of 7.000% senior, unsecured
notes due 2029 (the “February 2029 Notes”) under a Second Supplemental Indenture, dated February 12, 2024,
between the Company and the Trustee (the “Second Supplemental Indenture” and, together with the Base Indenture,
the “February 2029 Notes Indenture”) to the Base Indenture.
The February 2029 Notes will mature on February 15, 2029 and may be redeemed in whole or in part at the
Company’s option at any time or from time to time at the redemption prices set forth in the February 2029 Notes
Indenture. The February 2029 Notes bear interest at a rate of 7.000% per year payable semi-annually in February
and August of each year, commencing in August 2024. The February 2029 Notes are general unsecured obligations
of the Company that rank senior in right of payment to all of the Company’s existing and future indebtedness that is
expressly subordinated in right of payment to the February 2029 Notes, rank pari passu with all existing and future
unsecured unsubordinated indebtedness issued by the Company, rank effectively junior to any of the Company’s
secured indebtedness (including unsecured indebtedness that the Company later secures) to the extent of the value of
the assets securing such indebtedness, and rank structurally junior to all existing and future indebtedness (including
trade payables) incurred by the Company’s subsidiaries, financing vehicles or similar facilities.
The February 2029 Notes Indenture contains certain covenants, including covenants requiring the Company to
comply with the asset coverage requirements of Section 18(a)(1)(A) as modified by Section 61(a)(1) and (2) of the
1940 Act, whether or not it is subject to those requirements (but giving effect to exemptive relief granted to the
Company by the SEC), and to provide financial information to the holders of the February 2029 Notes and the
Trustee if the Company is no longer subject to the reporting requirements under the Exchange Act. These covenants
are subject to important limitations and exceptions that are described in the February 2029 Notes Indenture.
In addition, on the occurrence of a “change of control repurchase event,” as defined in the February 2029 Notes
Indenture, the Company may be required by the holders of the February 2029 Notes to make an offer to purchase the
outstanding February 2029 Notes at a price equal to 100% of the principal amount of such February 2029 Notes plus
accrued and unpaid interest to the repurchase date.
Barings’ parent company, Massachusetts Mutual Life Insurance Company, holds $25.0 million in aggregate
principal amount of the February 2029 Notes.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee and Board of Directors, including a majority of the independent directors, have selected
KPMG LLP as the Company's independent registered public accounting firm for the fiscal year ending
December 31, 2024. KPMG LLP also will serve as the independent auditors for all of the Company’s wholly-owned
subsidiaries and its joint ventures, Jocassee Partners LLC, Thompson Rivers LLC, Waccamaw River LLC, and
Sierra Senior Loan Strategy JV I LLC.
We expect representatives of KPMG LLP will be present at the Annual Meeting and will have an opportunity to
make a statement if they desire to do so and to respond to appropriate questions.
Independent Registered Public Accounting Firm's Fees
Fees Paid to Independent Registered Public Accounting Firm
The following table provides information regarding the fees billed by KPMG LLP for work performed for the fiscal
years ended December 31, 2023 and 2022, or attributable to the audit of the Company's 2023 or 2022 financial
statements, including out-of-pocket expenses:
| | | | | |
| | Fiscal Year Ended December 31, 2023 | | Fiscal Year Ended December 31, 2022 | |
Audit Fees ................................ | | | | | |
Audit Related Fees ................... | | | | | |
Tax Fees ................................... | | | | | |
Other Fees ................................ | | | | | |
TOTAL FEES ......................... | | | | | |
(1)Includes fees of $1,200,000 related to audit fees of Sierra Income Corporation as of December 31, 2021.
During the fiscal years ended December 31, 2023 and 2022, KPMG LLP billed aggregate non-audit fees of
$315,169 (comprised of $43,069 related to Barings LLC and $272,100 related to Barings BDC, Inc.) and $182,337
(comprised of $43,387 related to Barings LLC and $138,950 related to Barings BDC, Inc.), respectively, for services
rendered to the Company and for services rendered to Barings LLC.
Audit Fees. Audit fees include fees for services that normally would be provided by the accountant in connection
with statutory and regulatory filings or engagements and that generally only the independent accountant can provide.
In addition to fees for the audit of the Company's annual financial statements, the audit of the effectiveness of the
Company's internal control over financial reporting and the review of the Company's quarterly financial statements
in accordance with generally accepted auditing standards, this category contains fees for comfort letters, statutory
audits, consents, and assistance with and review of documents filed with the SEC.
Audit Related Fees. Audit related fees are assurance related services that traditionally are performed by the
independent accountant, such as attest services that are not required by statute or regulation.
Tax Fees.Tax fees include corporate and subsidiary compliance and consulting.
All Other Fees. Fees for other services would include fees for products and services other than the services reported
above, including any non-audit fees.
Pre-Approval Policies and Procedures
The Audit Committee has established, and the Board of Directors has approved, a pre-approval policy that describes
the permitted audit, audit-related, tax and other services to be provided by the Company’s independent registered
accounting firm. The policy requires that the Audit Committee pre-approve the audit and non-audit services
performed by the independent registered accounting firm in order to assure that the provision of such service does
not impair the firm’s independence.
Any requests for audit, audit-related, tax and other services that have not received general pre-approval must be
submitted to the Audit Committee for specific pre-approval, irrespective of the amount, and cannot commence until
such approval has been granted. Normally, pre-approval is provided at regularly scheduled meetings of the Audit
Committee. However, the Audit Committee may delegate pre-approval authority to one or more of its members. The
member or members to whom such authority is delegated shall report any pre-approval decisions to the Audit
Committee at a subsequent meeting. The Audit Committee does not delegate its responsibilities to pre-approve
services performed by the independent registered accounting firm to management. During 2023 and 2022, 100% of
the Company’s audit fees, audit-related fees, tax fees and fees for other services provided by the Company's
independent registered public accounting firm were pre-approved by the Audit Committee.
AUDIT COMMITTEE REPORT
The Audit Committee assists the Board of Directors in its oversight of the Company’s financial reporting
process and implementation and maintenance of effective controls to prevent, deter and detect fraud by management.
In addition, the Audit Committee is directly responsible for the appointment, compensation and oversight of the
Company’s independent registered public accounting firm. Each of the members of the Audit Committee qualifies as
an “independent” director in accordance with NYSE listing standards, SEC rules and the Company’s corporate
governance guidelines.
In overseeing the preparation of the Company’s financial statements, the Audit Committee met with both
management and KPMG LLP, the Company’s independent registered public accounting firm for the fiscal year
ended December 31, 2023, to review and discuss the audited financial statements prior to their issuance and to
discuss significant accounting issues. Management advised the Audit Committee that all financial statements were
prepared in accordance with generally accepted accounting principles, and the Audit Committee discussed the
financial statements with both management and KPMG LLP.
The Audit Committee also is responsible for assisting the Board of Directors in the oversight of the qualification,
independence and performance of the Company’s independent auditor. In connection with the audit of the
Company’s financial statements for the fiscal year ended December 31, 2023, the Audit Committee regularly met in
separate, executive sessions with certain members of senior management and KPMG LLP. The Audit Committee
has discussed with KPMG LLP the matters required to be discussed by the applicable requirements of the Public
Company Accounting Oversight Board, or PCAOB, and the SEC. The Audit Committee has received from KPMG
LLP the written disclosures and the letter required by applicable requirements of the PCAOB regarding KPMG
LLP’s communications with the Audit Committee concerning independence and has discussed with KPMG LLP its
independence. In addition, the Audit Committee has considered whether the provision of non-audit services, and the
fees charged for such services, by KPMG LLP are compatible with KPMG LLP maintaining its independence from
the Company.
Based upon the review and discussions referred to above, the Audit Committee recommended to the Company’s
Board of Directors that the Company’s audited consolidated financial statements be included in the Company’s
Annual Report on Form 10-K for the fiscal year ended December 31, 2023. In addition, the Audit Committee has
selected, and recommended to the Board of Directors that it approve the appointment of KPMG LLP as the
Company’s independent registered public accounting firm for the year ending December 31, 2024.
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SIGNATURE | | DATE | | SIGNATURE | | DATE |
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The foregoing report shall not be deemed incorporated by reference by any general statement incorporating by
reference this Proxy Statement into any filing under the Securities Act of 1933, as amended (the “Securities Act”),
or the Exchange Act, except to the extent that the Company specifically incorporates this Audit Committee report by
reference, and shall not otherwise be deemed filed under such Securities Act and/or Exchange Act.
1Reflects the membership of the Audit Committee as of the date of the Audit Committee's recommendations and approval
referenced in this Audit Committee report.
PROPOSAL NO. 2
APPROVAL TO SELL SHARES OF COMMON STOCK BELOW NET ASSET VALUE (BOOK VALUE)
The Company is a closed-end investment company that has elected to be treated as a BDC under the 1940 Act. The
1940 Act generally prohibits the Company, as a BDC, from issuing and selling shares of its common stock at a price
below the then-current net asset value (i.e., book value) per share of such stock, with certain exceptions. One such
exception would permit the Company to issue and sell shares of its common stock at a price below net asset value
per share at the time of sale if the Company’s stockholders have approved a sale below net asset value per share
within the one-year period immediately prior to any such sale, provided that the Board of Directors also makes
certain determinations prior to any such sale.
Pursuant to this provision, the Company is seeking the approval of its stockholders so that it may, in one or more
public or private offerings of its common stock, issue and sell shares of its common stock at a price below its then-
current net asset value per share in one or more offerings, subject to certain conditions discussed below. It should be
noted that the maximum number of shares that the Company could issue and sell at a per share price below net asset
value per share pursuant to this authority would be limited to 30% of its then-outstanding common stock. If
approved, the authorization would be effective for a period expiring on the first anniversary of the date of the
stockholders’ approval of this proposal and would permit the Company to engage in such transactions at various
times within that period, subject to further approval from the Board of Directors.
Generally, equity securities sold in public securities offerings are priced based on public market prices quoted on
exchanges such as NYSE, rather than net asset value, or book value, per share. Since the Company’s IPO, the
Company’s common stock has traded both above and below its net asset value per share. At each of the Company’s
Annual Meetings of Stockholders from 2008 to 2017, and at its 2020, 2021, 2022, and 2023 Annual Meetings of
Stockholders, the Company requested and received approval from its stockholders to sell its stock at a price per
share below net asset value under certain circumstances. As in such prior years, the Company is seeking the
approval of a majority of its stockholders of record to offer and sell shares of its common stock at prices that, net of
underwriting discount or commissions, may be less than net asset value per share in one or more offerings. This
stockholder approval would permit the Company to issue and sell shares of its common stock in accordance with
pricing standards that market conditions generally require, and would also assure stockholders that the number of
shares issued and sold pursuant to such authority does not exceed 30% of the Company’s then-outstanding common
stock immediately prior to each such offering. If stockholders approve this proposal, the Company should have
greater flexibility in taking advantage of changing market and financial conditions in connection with an equity
offering. Of the Company’s ten underwritten follow-on equity offerings completed since its IPO, only two were
priced below the then-current net asset value per share (both during 2009).
Reasons to Offer Common Stock Below Net Asset Value
Market Conditions Have Created, and May in the Future Create, Attractive Investment and Acquisition
Opportunities
From time to time, capital markets may experience periods of disruption and instability. For example, between 2008
and 2009, the global capital markets were unstable as evidenced by periodic disruptions in liquidity in the debt
capital markets, significant write-offs in the financial services sector, the re-pricing of credit risk in the broadly
syndicated credit market and the failure of major financial institutions. Despite actions of the U.S. federal
government and foreign governments, these events contributed to worsening general economic conditions that
materially and adversely impacted the broader financial and credit markets and reduced the availability of debt and
equity capital for the market as a whole and financial services firms in particular. As a result of the disruption and
volatility in the credit markets during this time, the Company saw some measure of reduction in capital available to
certain specialty finance companies and other capital providers, causing a reduction in competition. These conditions
also generally coincided with lower stock prices for BDCs, with BDCs trading below net asset value. The Company
believes that favorable investment opportunities to invest at attractive risk-adjusted returns, including opportunities
to make acquisitions of other companies or investment portfolios at attractive values, may be created during these
periods of disruption and volatility.
While market conditions have largely recovered from the events of 2008 and 2009, there have been continuing
periods of volatility, some lasting longer than others, including recently as a result of the effects of the global
COVID-19 pandemic starting in 2020. Since the Company’s IPO in 2007, the Company’s common stock has traded
both at a premium and at a discount in relation to its net asset value, which is the equivalent of “book value,” rather
than market or publicly traded value. As of the record date of March 8, 2024, the Company's common stock traded
at a discount to net asset value per share. The possibility that shares of the Company’s common stock will continue
to trade at a discount from net asset value or trade at premiums that are unsustainable over the long-term are separate
and distinct from the risk that the Company’s net asset value will decrease. It is not possible to predict whether any
shares of the Company’s common stock issued in the future will trade at, above, or below net asset value.
Since the 2008 recession, lingering economic conditions in the U.S. credit markets from periods of contraction or
recession have contributed to significant stock price volatility for capital providers such as the Company and have
made access to capital more challenging for many smaller businesses. However, these changes in the credit market
conditions also have beneficial effects for capital providers like the Company because small business are selling for
lower prices, are generally willing to pay higher interest rates and are generally willing to accept contractual terms
that are more favorable to the Company in their investment agreements. Accordingly, for firms that continue to have
access to capital, the Company believes that a challenging economic environment could provide investment
opportunities on more favorable terms than have been available in recent periods. In addition, in light of the fact that
any debt capital that may be available may be at a higher cost and on less favorable terms and conditions than in past
periods, the Company’s ability to take advantage of these opportunities may be largely dependent upon its access to
equity capital.
Stockholder approval of the proposal to sell shares of the Company's common stock at a price below its then-current
net asset value per share, subject to the conditions set forth in this proposal, would provide the Company with the
flexibility to invest in such attractive investment opportunities, which typically need to be made expeditiously.
Trading History
The following table, reflecting the public trading history of our common stock since January 1, 2021, lists the high
and low closing sales prices for our common stock, and such closing sales prices as percentages of the net asset
values per share for the relevant periods. On March 8, 2024, the record date, the last reported closing sale price of
our common stock on the NYSE was $9.69. Net asset value per share in the table below is determined as of the last
day in the relevant quarter and therefore may not reflect the net asset value per share on the date of the high and low
closing sales prices. The net asset values shown are based on outstanding shares at the end of each period.
| | | | | | | | | | |
| | | | | | Premium (Discount) of High Closing Sales Price to Net Asset Value | | Premium (Discount) of Low Closing Sales Price to Net Asset Value |
| | | |
Year ended December 31, 2021 | | | | | | | | | | |
First Quarter ............................................. | | | | | | | | | | |
Second Quarter .......................................... | | | | | | | | | | |
Third Quarter ............................................. | | | | | | | | | | |
| | | | | | | | | | |
Year ended December 31, 2022 | | | | | | | | | | |
First Quarter .............................................. | | | | | | | | | | |
Second Quarter .......................................... | | | | | | | | | | |
Third Quarter ............................................. | | | | | | | | | | |
| | | | | | | | | | |
Year ended December 31, 2023 | | | | | | | | | | |
First Quarter .............................................. | | | | | | | | | | |
Second Quarter .......................................... | | | | | | | | | | |
Third Quarter ............................................. | | | | | | | | | | |
Fourth Quarter ........................................... | | | | | | | | | | |
Year ending December 31, 2024 | | | | | | | | | | |
First Quarter (through March 8, 2024) ...... | | | | | | | | | | |
* Net asset value has not yet been calculated for this period.
Greater Investment Opportunities Due to Larger Capital Resources
The additional capital raised through an offering of the Company’s common stock may help the Company generate
additional deal flow. With more capital to make investments, the Company could be a more meaningful capital
provider and such additional capital would allow it to compete more effectively for high quality investment
opportunities. Such investment opportunities may be funded with proceeds of an offering of shares of the
Company’s common stock.
Status as a BDC and RIC and Maintaining a Favorable Debt-to-Equity Ratio
As a BDC and a regulated investment company, or RIC, for tax purposes, the Company is dependent on its ability to
raise capital through the issuance of its common stock. RICs generally must distribute substantially all of their
earnings to stockholders as dividends in order to achieve pass-through tax treatment, which prevents the Company
from retaining any meaningful amount of earnings to support operations, which may include making new
investments (including investments in existing portfolio companies). Further, under the 1940 Act, the Company
must meet a debt-to equity ratio of less than approximately 2:1 in order to incur debt or issue senior securities.
Therefore, to continue to build the Company’s investment portfolio, the Company endeavors to maintain consistent
access to capital through the public and private debt markets and the public equity markets enabling it to take
advantage of investment opportunities as they arise.
Exceeding the approximate 2:1 debt-to-equity ratio could have severe negative consequences for a BDC, including
the inability to pay dividends, breach of applicable debt covenants and failure to qualify for tax treatment as a RIC.
Although the Company does not currently expect that it will exceed this debt-to-equity ratio, the markets it operates
in and the general economy may be volatile and uncertain. Even though the underlying performance of a particular
portfolio company may not indicate an impairment or its inability to repay all principal and interest in full, volatility
in the capital markets may negatively impact the valuations of investments and create unrealized losses on certain
investments. Any such write-downs in value, as well as unrealized losses based on the underlying performance of
the Company’s portfolio companies, if any, will negatively impact stockholders’ equity and the resulting debt-to-
equity ratio. Issuing additional equity would allow the Company to realign its debt-to-equity ratio and take steps to
avoid these negative consequences. In addition to meeting legal requirements applicable to BDCs, having a more
favorable debt-to-equity ratio would also generally strengthen the Company’s balance sheet and give it more
flexibility to fully execute its business strategy.
Summary
The Board of Directors believes it is desirable to have the flexibility to issue shares of the Company’s common stock
at a price below the Company’s then-current net asset value per share in certain instances when it is in the best
interests of the Company and its stockholders. This would, among other things, provide access to capital markets to
pursue attractive investment and acquisition opportunities during periods of volatility, improve capital resources to
enable the Company to compete more effectively for high quality investment opportunities and add financial
flexibility to comply with regulatory requirements and any applicable debt facility covenants, including the 2:1 debt-
to-equity ratio limit under the 1940 Act. It could also minimize the likelihood that the Company would be required
to sell assets that the Company would not otherwise sell, which sales could occur at times and at prices that are
disadvantageous to the Company.
The final terms of any sale of the Company’s common stock at a price below the then-current net asset value per
share will be determined by the Board of Directors in connection with such issuance, and the shares of common
stock will not include preemptive rights. Any transaction in which the Company issues such shares of common
stock, including the nature and amount of consideration that would be received by the Company at the time of
issuance and the use of any proceeds therefrom, will be reviewed and approved by the Board of Directors at the time
of issuance. If this proposal is approved, no further authorization from the stockholders will be solicited prior to any
such issuance in accordance with the terms of this proposal. If approved, the authorization would be effective for a
period expiring on the first anniversary of the date of the stockholders’ approval of this proposal and would permit
the Company to engage in such transactions at various times within that period, subject to further approval from the
Board of Directors.
Conditions to Sales Below Net Asset Value
Stockholder approval is a condition that must be satisfied prior to any sales of the Company’s common stock at a
price below the then-current net asset value per share, and the Company is seeking such approval in this proposal. If
this proposal is approved by the Company’s stockholders, the Company would not issue and sell its common stock
at a price below its per share net asset value unless the number of shares issued and sold pursuant to such authority
does not exceed 30% of the Company’s then-outstanding common stock immediately prior to each such offering. To
the extent the Company issues and sells shares of its common stock, regardless of the price at which such shares are
sold, the Company’s market capitalization and the amount of its publicly tradable common stock will increase, thus
affording all common stockholders potentially greater liquidity in the market for the Company’s shares.
In addition, if this proposal is approved, the Company will issue and sell shares of its common stock at a price below
net asset value per share only if the following conditions are met:
▪a majority of the Company’s directors who have no financial interest in the issuance and sale and a
majority of such directors who are not interested persons of the Company have determined that any such
sale would be in the best interests of the Company and its stockholders; and
▪a majority of the Company’s directors who have no financial interest in the issuance and sale, and a
majority of such directors who are not interested persons of the Company, in consultation with the
underwriter or underwriters of the offering if it is to be underwritten, and as of a time immediately prior to
the first solicitation by or on behalf of the Company of firm commitments to purchase such securities or
immediately prior to the issuance of such securities, have determined in good faith that the price at which
such securities are to be issued and sold is not less than a price which closely approximates the market
value of those securities, less any distributing commission or discount.
In determining whether or not to sell additional shares of the Company’s common stock at a price below the net
asset value per share, the Board of Directors will be obligated to act in the best interests of the Company and its
stockholders.
Key Stockholder Considerations
Before voting on this proposal or giving proxies with regard to this matter, stockholders should consider the dilutive
effect on the net asset value per outstanding share of common stock of the issuance of shares of the Company’s
common stock at less than net asset value per share. Any sale of common stock at a price below net asset value
would result in an immediate dilution to existing common stockholders. Since under this proposal shares of the
Company’s common stock could be issued at a price that is substantially below the net asset value per share, the
dilution could be substantial. This dilution would include reduction in the net asset value per share as a result of the
issuance of shares at a price below the net asset value per share and a proportionately greater decrease in a
stockholder’s interest in the earnings and assets of the Company and voting interest in the Company than the
increase in the assets of the Company resulting from such issuance. If this Proposal No. 2 is approved, the Board of
Directors of the Company may, consistent with its fiduciary duties, approve the sale of the Company’s common
stock at any discount to its then-current net asset value per share; however, the Board of Directors will consider the
potential dilutive effect of the issuance of shares of common stock at a price below the net asset value per share
when considering whether to authorize any such issuance and will act in the best interests of the Company and its
stockholders in doing so. It should be noted that the maximum number of shares that the Company could issue and
sell at a per share price below net asset value per share pursuant to this authority would be limited to 30% of the
Company’s then-outstanding common stock immediately prior to each such offering.
The 1940 Act establishes a connection between common share sale price and net asset value because, when shares
of common stock are sold at a sale price below net asset value per share, the resulting increase in the number of
outstanding shares is not accompanied by a proportionate increase in the net assets of the issuer. Further, if current
stockholders of the Company do not purchase any shares to maintain their percentage interest, regardless of whether
such offering is above or below the then-current net asset value, their voting power will be diluted. For an
illustration of the potential dilutive effect of an offering of our common stock at a price below net asset value, please
see the table below under the heading “Examples of Dilutive Effect of the Issuance of Shares Below Net Asset
Value.”
Finally, any sale of substantial amounts of the Company’s common stock or other securities in the open market may
adversely affect the market price of the Company’s common stock and may adversely affect the Company’s ability
to obtain future financing in the capital markets. In addition, future sales of the Company’s common stock to the
public may create a potential market overhang, which is the existence of a large block of shares readily available for
sale that could lead the market to discount the value of shares held by other investors. In the event the Company
were to continue to sell its common stock at prices below net value for sustained periods of time, such offerings may
result in sustained discounts in the marketplace.
Examples of Dilutive Effect of the Issuance of Shares Below Net Asset Value
The table on the following page illustrates the level of net asset value dilution that would be experienced by a
nonparticipating stockholder in four different hypothetical offerings of different sizes and levels of discount from net
asset value per share, although it is not possible to predict the level of market price decline that may occur. Actual
sales prices and discounts may differ from the presentation below.
The examples assume that Company XYZ has 1,000,000 shares of common stock outstanding, $15,000,000 in total
assets and $5,000,000 in total liabilities. The current net asset value and net asset value per share are thus
$10,000,000 and $10.00. The table illustrates the dilutive effect on nonparticipating Stockholder A of (1) an offering
of 50,000 shares (5% of the outstanding shares) at $9.50 per share after offering expenses and commission (a 5%
discount from net asset value), (2) an offering of 100,000 shares (10% of the outstanding shares) at $9.00 per share
after offering expenses and commissions (a 10% discount from net asset value), (3) an offering of 200,000 shares
(20% of the outstanding shares) at $8.00 per share after offering expenses and commissions (a 20% discount from
net asset value) and (4) an offering of 250,000 shares (25% of the outstanding shares) at $0.01 per share after
offering expenses and commissions (a 100% discount from net asset value). Because we are not limited as to the
amount of discount from net asset value at which we can offer shares, the fourth example on the following table (an
offering at a price of $0.01 per share) is included, however, the Company will not offer shares at a 100% discount to
net asset value. “NAV” in the table below stands for “net asset value.”
Dilutive Effect of the Issuance of Shares by Company XYZ Below Net Asset Value
| | | | | | | | | | | | | | | | | | |
| | | | Example 1 5% Offering at 5% Discount | | Example 2 10% Offering at 10% Discount | | Example 3 20% Offering at 20% Discount | | Example 4 25% Offering at 100% Discount |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
Price per Share to Public ........................... | | | | | | | | | | | | | | | | | | |
Net Proceeds per Share to Issuer ....................... | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
Total Shares Outstanding ................. | | | | | | | | | | | | | | | | | | |
NAV per Share ............ | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
Shares Held by Stockholder A .............. | | | | | | | | | | | | | | | | | | |
Percentage Held by Stockholder A .............. | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
Total NAV Held by Stockholder A .............. | | | | | | | | | | | | | | | | | | |
Total Investment by Stockholder A (Assumed to Be $10.00 per Share) ........ | | | | | | | | | | | | | | | | | | |
Total Dilution to Stockholder A (Total NAV Less Total Investment) .................. | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
NAV per Share Held by Stockholder A ......... | | | | | | | | | | | | | | | | | | |
Investment per Share Held by Stockholder A (Assumed to be $10.00 per Share on Shares Held Prior to Sale) ....... | | | | | | | | | | | | | | | | | | |
Dilution per Share Held by Stockholder A (NAV per Share Less Investment per Share) .. | | | | | | | | | | | | | | | | | | |
Percentage Dilution to Stockholder A (Dilution per Share Divided by Investment per Share) .................... | | | | | | | | | | | | | | | | | | |
The Board of Directors recommends a vote “FOR” the proposal to authorize the Company, with the subsequent
approval of its Board of Directors, to issue and sell shares of its common stock (during the 12 months following
such authorization) at a price below its then-current net asset value per share in one or more offerings, subject to
certain limitations set forth herein (including, without limitation, that the number of shares issued and sold
pursuant to such authority does not exceed 30% of the Company’s then-outstanding common stock immediately
prior to each such offering).
Required Vote.
Approval of this proposal requires the affirmative vote of each of the following: (1) a majority of the outstanding
shares of the Company's common stock; and (2) a majority of the outstanding shares of the Company's common
stock that are not held by affiliated persons of the Company. For purposes of this proposal, the 1940 Act defines a
"majority of the outstanding shares” as the vote of the lesser of: (1) 67% or more of the voting securities of the
Company present at the Annual Meeting if the holders of more than 50% of the outstanding voting securities of the
Company are present virtually or represented by proxy; or (2) more than 50% of the outstanding voting securities of
the Company. Abstentions and broker non-votes, if any, will have the effect of votes cast against this proposal.
ADDITIONAL INFORMATION
The Notice of Annual Meeting, this proxy statement and our annual report for the fiscal year ended December 31,
2023 are available free of charge at the following Internet address: https://ir.barings.com/annual-shareholder-
meeting-materials.
STOCKHOLDER NOMINATIONS AND PROPOSALS FOR THE 2025 ANNUAL MEETING
The Company's annual meeting of stockholders generally is held in May of each year. We will consider for inclusion
in the Company's proxy materials for the 2025 Annual Meeting of Stockholders, stockholder proposals that are
received at the Company's executive offices, in writing, no later than 5:00 p.m. (Eastern Time) on November 19,
2024, and that comply with all applicable requirements of Rule 14a-8 promulgated under the Securities Exchange
Act of 1934, as amended, or the Exchange Act.
In addition, any stockholder who wishes to propose a nominee to the Board of Directors or propose any other
business to be considered by the stockholders (other than a stockholder proposal to be included in the Company’s
proxy materials pursuant to Rule 14a-8 of the Exchange Act) must comply with the advance notice provisions and
other requirements of the Company’s Bylaws, a copy of which is on file with the SEC and may be obtained from the
Company’s Secretary upon request. Proposals must be sent to the Company’s Secretary at Barings BDC, Inc., 300
South Tryon Street, Suite 2500, Charlotte, North Carolina 28202. These notice provisions require that nominations
of persons for election to the Board of Directors and proposals of business to be considered by the stockholders for
the 2025 Annual Meeting of Stockholders must be made in writing and submitted to the Company’s Secretary at the
address above no earlier than November 19, 2024 and no later than 5:00 p.m. (Eastern Time) on December 19, 2024
and must otherwise be a proper action by the stockholders. We advise you to review the Bylaws, which contain
additional information and other requirements about advance notice of stockholder proposals and director
nominations, including the different notice submission date requirements in the event that the Company’s 2025
Annual Meeting of Stockholders is held before April 7, 2025 or after June 6, 2025. In accordance with the Bylaws,
the chairman of the 2025 Annual Meeting of Stockholders may determine, if the facts warrant, that a matter has not
been properly brought before the meeting and, therefore, may not be considered at the meeting.
FINANCIAL STATEMENTS AVAILABLE
A letter to stockholders and a copy of the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 2023, which together constitute the Company's 2023 Annual Report, are being mailed along with this
proxy statement. The Company's 2023 Annual Report is not incorporated into this proxy statement and shall not be
considered proxy solicitation material.
We will also mail to you without charge, upon written request, a copy of any specifically requested exhibit to
the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2023. Requests should be
sent to: Barings BDC, Inc. Investor Relations, 300 South Tryon Street, Suite 2500, Charlotte, North Carolina 28202,
or such requests may be made by calling (704) 805-7200. A copy of the Company's Annual Report on Form 10-K
has also been filed with the SEC and may be accessed through the SEC’s homepage (http://www.sec.gov).
HOUSEHOLDING OF PROXY MATERIALS
The SEC has adopted rules that permit companies and intermediaries, such as brokers, to satisfy the delivery
requirements for proxy statements and annual reports with respect to two or more stockholders sharing the same
address by delivering a single proxy statement addressed to those stockholders. This process, which is commonly
referred to as “householding,” potentially provides extra convenience for stockholders and cost savings for
companies.
Brokers may be householding the Company's proxy materials by delivering a single proxy statement and 2023
Annual Report to multiple stockholders sharing an address, unless contrary instructions have been received from the
affected stockholders. Once you have received notice from your broker that they will be householding materials to
your address, householding will continue until you are notified otherwise or until you revoke your consent. If you
did not respond that you did not want to participate in householding, you were deemed to have consented to the
process. If at any time you no longer wish to participate in householding and would prefer to receive a separate
proxy statement and Annual Report, or if you are receiving multiple copies of the proxy statement and 2023 Annual
Report and wish to receive only one, please notify your broker if your shares are held in a brokerage account, or us if
you are a stockholder of record. You can notify us by sending a written request to: Barings BDC, Inc. Investor
Relations, 300 South Tryon Street, Suite 2500, Charlotte, North Carolina 28202, or by calling (888) 401-1088. In
addition, we will promptly deliver, upon written or oral request to the address or telephone number above, a separate
copy of the 2023 Annual Report and proxy statement to a stockholder at a shared address to which a single copy of
the documents was delivered.
TABULATION AND REPORTING OF VOTING RESULTS
Preliminary voting results will be announced at the Annual Meeting. Final voting results will be tallied by the
inspector of election after the taking of the vote at the Annual Meeting. The Company will publish the final voting
results in a Current Report on Form 8-K filed with the SEC within four business days following the Annual Meeting.
OTHER INQUIRIES
If you have any questions about the Annual Meeting, these proxy materials or your ownership of the Company's
common stock, please contact Barings BDC, Inc. Investor Relations, 300 South Tryon Street, Suite 2500, Charlotte,
North Carolina 28202, Telephone: (704) 805-7200.
OTHER BUSINESS
The Board of Directors knows of no other business to be presented for action at the 2024 Annual Meeting of
Stockholders. If, however, any other matters do come before the meeting on which action can properly be taken, it is
the intention of the persons named on the enclosed proxy card to vote on such matters in accordance with their
judgment. The submission of a proposal does not guarantee its inclusion in the Company's proxy statement or
presentation at the meeting unless certain requirements under applicable securities laws and the Company's Bylaws
are met.
You are cordially invited to attend the 2024 Annual Meeting of Stockholders of Barings BDC, Inc., to be held
virtually on Tuesday, May 7, 2024, at 8:30 a.m. (Eastern Time), at the following website:
www.virtualshareholdermeeting.com/BBDC2024. Your vote is important and, whether or not you plan to
attend the meeting, you are requested to complete, date, sign and promptly return the accompanying proxy
card in the enclosed postage-paid envelope.
By order of the Board of Directors,
Alexandra Pacini
Secretary, Barings BDC, Inc.
Charlotte, North Carolina
March 19, 2024
