PRELIMINARY PROXY STATEMENT
SUBJECT TO COMPLETION
DATED FEBRUARY 23, 2024
March , 2017[ ], 2024
Dear Stockholder:
You are cordially invited to attend Triangle Capital Corporation’s 2017the 2024 Annual Meeting of Stockholders of Barings BDC, Inc., to be held virtually on Wednesday,Tuesday, May 3, 20177, 2024 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/BBDC2024.
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.
| Sincerely yours, | ||
| Eric Lloyd | ||
| & Executive Chairman | ||
BARINGS BDC, INC.
300 South Tryon Street, Suite 2500
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held On Wednesday,Tuesday, May 3, 20177, 2024
To the Stockholders of Triangle Capital Corporation:Barings BDC, Inc.:
The 20172024 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,Tuesday, May 3, 20177, 2024 at 8:30 a.m. (Eastern Time) forat the following purposes: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 eightthree Class III directors to serve for one yeara three-year term and until their successors have been duly elected and qualifiedqualify (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 or warrants, options or rights to acquire its common stock during(during the next year12 months following such authorization) at a price below the Company’s then currentthen-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);
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 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 [ ], 2024, to all stockholders of record entitled to vote at the close of business on February 23, 2017. 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 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.
| By order of the Board of Directors, | ||
| Alexandra Pacini | ||
Charlotte, North Carolina
March , 2017[ ], 2024
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 Tuesday, May 7, 2024:
Our notice of the Annual 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 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.
300 South Tryon Street, Suite 2500
PROXY STATEMENT
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 20172024 Annual Meeting of Stockholders to be held virtually on Wednesday,Tuesday, May 3, 20177, 2024 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/BBDC2024, 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 reportAnnual Report for the fiscal year ended December 31, 20162023, which includes audited financial statements for the year ended December 31, 2023, are first being sent to stockholdersreleased on or about March , 2017.[ ], 2024 to the Company's stockholders of record as 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 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 proposal to authorize the Company, with the subsequent approval of its Board of Directors, to issue and sell shares of its common stock or warrants, options or rights to acquire its common stock during(during the next year12 months following such authorization) at a price below the Company’s then currentits then-current net asset value (i.e., book value) per share FORin one or more offerings, subject to certain limitations set forth herein (including, without limitation, that the approvalnumber of the compensation of our named executive officers, THREE YEARS for the frequency of stockholder votes approving compensation of our named executive officers,shares issued and FOR the approvalsold pursuant to such authority does not exceed 30% of the Company’s Omnibus Incentive Plan then-outstanding common stock immediately prior to each such offering).
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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.
Only questions submitted via the live webcast that are fivepertinent 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 III directors to serve for one yeara three-year term and until their successors have been duly elected and qualifiedqualify (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 or warrants, options or rights to acquire its common stock during(during the next year12 months following such authorization) at a price below the Company’s then currentthen-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) (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);
If there appear to be insufficient votes to obtain a non-binding advisory vote, with respect to how frequently a stockholder vote to approve the compensation of our named executive officers should occur; and
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.
VOTING SECURITIES
You may vote at the Annual Meeting?
2 2017 (the day before the Annual Meeting);
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.
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 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, 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”“FOR” votes from each of the following: (1) a majority of the outstanding shares of the Company’s common stock entitled to vote at the Annual Meetingstock; and (2) a majority of the outstanding shares of the Company’s common stock entitled to vote at the Annual Meeting whichthat are not held by affiliated persons of the Company. With respect toFor purposes of Proposal No. 2, only, Section 2(a)(42) of the Investment Company Act of 1940, or the 1940 Act,as amended (the “1940 Act”), defines “a majoritya “majority of the outstanding shares” as the vote of the lesser of: (1) 67% or more of the common stockvoting securities of the Company present or represented by proxy at the Annual Meeting, if the holders of more than 50% of the Company's outstanding common stockvoting securities of the Company are present virtually or represented by proxy; or (2) more than 50% of the outstanding common stockvoting securities of the Company. For purposes of the vote on this proposal,Proposal No. 2, abstentions and broker non-votes, if any, will have the effect of votes cast against thisthe 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.
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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 proxy. For purposesrequesting 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 vote on this proposal, abstentionsCompany will reimburse for its expenses in so doing. In addition to the use of mail, directors, officers and broker non-votes will not be counted as votes cast and will have no effect onregular employees of Barings LLC, the resultCompany’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 vote, although they will be considered presentservices of Broadridge Financial Solutions, Inc. ("Broadridge") for the purpose of determining the presence of a quorum. Even though your vote is advisory and therefore not binding on us, the Compensation Committee of our Board of Directors will review the voting results and take them into consideration when making future decisions regarding executive compensation.
fees for additional compensation for soliciting proxies.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.
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Stockholders will continue until you are notified otherwise or until you revoke your consent. 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 you did not respond that you did not wanta stockholder wishes 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 2016 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 2016 Annual Report and proxy statement to a stockholder at a shared address to which a single copy of the documents was delivered.
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 three Class III Directors of one yearthe Company—David Mihalick, Thomas W. Okel and serve until their successors are duly elected and qualified.
Pursuant to ourthe Company's Seventh Amended and Restated Bylaws in an uncontested election of directors,(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. (If the number of nominees were to exceed the number of directors to be elected, i.e., a contested election, directors would be elected by a plurality of the votes cast at the Annual Meeting.) 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.
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
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NOMINEES FOR CLASS III 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 | ||||||||||||
| Interested Director | |||||||||||||||||
David Mihalick(3) (51) | 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), 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 (61) | Director | Class III Director; Term expires 2024; Director since August 2018 | Executive Director (2011 - 2019), Catawba Lands Conservancy. | 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 (60) | 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 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.
(3) Interested Directors
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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) (55) | |||||||||||||||||
| Class I Director; Term Expires 2025; Director since August 2018 | President (since 2021), Global Head of | 3 | Director (since 2020), Chairman | |||||||||||||
| Mark F. Mulhern (64) | Director | 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). | |||||||||||||||
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Robert Knapp(58) | Director | Class I Director; Term Expires 2025; Director since December 2020 | Chief Investment Officer (since 2007), Ironsides Partners LLC (investment management firm). | 1 | Chairman (since 2023), Ironsides Medical, Inc.; Director (since 2007), Africa Opportunity Fund Ltd.; Director (since 2010), Pacific Alliance Asia Opportunity Fund and Pacific Alliance Group Asset Management Ltd.; Director and Treasurer (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 | ||||||||||||
(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.
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CLASS II DIRECTORS: TERM EXPIRING 2026
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(70) | Director | Class II Director; Term expires 2026; 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 (69) | Director | 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). | 1 | Director (2012-2022), Sierra Income Corporation; Director (since 2012), KIPP NYC; Trustee (2000-2014), City University of | ||||||||||||
| John A. Switzer (67) | Director | Class II Director; Term expires 2026; Director since August 2018 | Director, Weisiger Group (formerly Carolina Tractor and Equipment Company (CTE)) (since 2017). | 2 | Director (since March 2021), BCIC; Director and Audit Committee member (since 2019), HomeTrust Bancshares, Inc. | ||||||||||||
(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.
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Qualifications of Director Nominees and Other Directors.
Nominees for Class III Directors; Term expiring at the 2024 Annual Stockholder Meeting
•Mr. Mihalick — Mr. Mihalick brings over forty16 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 investment industriesreal 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 determined that his intimate knowledgeHead of U.S. High Yield, where he was responsible for the CompanyU.S. High Yield and his familiarityInvestment 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 critical tocompany 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 oversightUnited States Air Force Academy, an M.S. from the University of our strategic goalsWashington and the evaluationan M.B.A. from Wake Forest University.
•Mr. Okel — Mr. Okel brings over 20 years of our operational performance.
•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
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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.
Directors Continuing in Office
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 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 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 held 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. 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 membermember. 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 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 oversight of our company’s compensation and financial objectives.
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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
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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 experience,advised by Barings) since March 2021, and since May 2017, has served as wella 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 his successful leadershipa 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.
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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 varietythird 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, 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 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.
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DIRECTOR COMPENSATION
| 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 | $ | 120,000 | $ | — | $ | 120,000 | ||||||||||||||
| Valerie Lancaster-Beal | $ | 120,000 | $ | — | $ | 120,000 | ||||||||||||||
(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 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 | 2016 | $ | 33,750 | $ | 50,000 | — | $ | 83,750 | |||||||||
| Mark M. Gambill | 2016 | $ | 31,500 | $ | 50,000 | — | $ | 81,500 | |||||||||
| Benjamin S. Goldstein | 2016 | $ | 67,000 | $ | 50,000 | — | $ | 117,000 | |||||||||
| Mark Mulhern | 2016 | $ | 11,667 | $ | — | — | $ | 11,667 | |||||||||
| Simon B. Rich, Jr. | 2016 | $ | 55,250 | $ | 50,000 | — | $ | 105,250 | |||||||||
| Sherwood H. Smith, Jr. | 2016 | $ | 46,250 | $ | 50,000 | — | $ | 96,250 | |||||||||
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CORPORATE GOVERNANCE
Director Independence
Meetings of the Board of Directors and Committees
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. We encourage, but do not require, our directors to attend annual meetings of stockholders. All members of our then nine directorsthe then-constituted Board of Directors attended our 2016 Annual Meeting of Stockholders. Mr. Mulhern was not a director on the date of our 2016Company's 2023 Annual Meeting of Stockholders.
Audit Committee
The members of ourthe Company’s Audit Committee are Messrs. Goldstein, Mulhern, RichOkel, Switzer, Knapp and Smith.Byers and Mses. Olmstead 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. 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
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standards. The Board of Directors also has determined that each of Messrs. Goldstein, Mulhern, RichOkel, Switzer, Knapp, and SmithByers 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 2016.standards.
Compensation Committee
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.
The members of the Compensation Committee are Messrs. Dunwoody, Goldstein, Mulhern, Okel, Switzer, Knapp and Smith,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. SmithMs. Olmstead serves as the chairmanchair of the Compensation Committee. OurNo members of the Compensation Committee held five meetings during 2016.2023 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 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.
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The members of the Nominating and Corporate Governance Committee are Messrs. Gambill, Mulhern, RichOkel, Switzer, Knapp, and Smith,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 two meetings during 2016.
Communication with the Board of Directors
The Composition of the Board of Directors.
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. Tucker serves as the Chairman of our Board of Directors and, prior to February 3, 2016, served as our Chief Executive Officer. Mr. Poole 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. We believeThe Board of Directors believes that consolidating ourits leadership structure without an independent chairmanis 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 an efficientample opportunity for direct communication and effective management model which fosters direct accountability, effective decision making and alignment of corporate strategyinteraction between ourthe Board of Directors and management. Mr. Tucker 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
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.
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
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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
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.
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EXECUTIVE OFFICERS AND INVESTMENT COMMITTEE
Michael DeSieno, 37, has served as the Company’s Chief Accounting Officer since November 2023. Mr. DeSieno also serves as Chief Accounting Officer of each of BPCC and BCIC. Mr. DeSieno previously served as Senior Director, Head of U.S. Accounting and Financial Reporting for Barings LLC. Prior to joining Barings in 2017, Mr. DeSieno held SEC Reporting roles with MSC Industrial Direct Co., Inc. and Hilton Worldwide. Mr. DeSieno began his career as an auditor with Cherry Bekaert. Mr. DeSieno is a graduate of James Madison University where he obtained a BBA degree in Accounting and a Master of Sciences in Accounting degree. He is also a Virginia Certified Public Accountant.
Ian Fowler, 60, 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 previously served until May 2023 as the President and Chief Executive Officer of BCIC since inception and previously served from December 2022 until May 2023 as Chief Executive Officer of BPCC, prior to which time he served as Co-Chief Executive Officer of BPCC beginning in May 2021. 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.
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 Management CommitteeChief Operating Officer since May 2023 and Investment Committee.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 also serves as the Treasurer for PEOC. 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 Company, Mr. Dombcik was a Managing DirectorU.S. retail banking division for Royal Bank of South Franklin Street Partners, a Small Business Investment Company (SBIC) focused on providing junior capital to middle market companies.Canada. Prior to joining South Franklin Street Partners, Mr. Dombcik served as Executive Vice PresidentRBC Bank, Ms. Murray spent seven years at Progress Energy, Inc. 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)held various positions in finance, accounting and Vice President of Brown, Gibbons, Lang & Company L.P., a middle market investment bank with officestax, most recently in ChicagoStrategy and Cleveland. Mr. DombcikFinancial Planning. Ms. Murray began hisher career as a commercial banking officerTax Consultant 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. HePricewaterhouseCoopers. Ms. Murray is a graduate of MiamiNorth Carolina State University where she obtained a B.S. degree in Accounting and John Carroll University.a Master of Accounting degree. She is also a North Carolina Certified Public Accountant.
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Alexandra Pacini, 31, is the Company in 2004Company's Secretary and currentlya Director at Barings LLC. Ms. Pacini also serves as Senior Managing Directorthe Secretary of BCIC, BPCC, Barings Global Short Duration High Yield Fund, PEOC, Barings Corporate Investors and Barings Participation Investors
Ashlee Steinnerd, 42, has served as the Company’s Chief OriginationLegal 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, PEOC, and Barings Participation Investors. Ms. Steinnerd has been a member of the Company’s Management Committee and Investment Committee.
The Company is externally managed by Barings LLC, which is registered with the SEC under the Investment Advisers Act of Garland S. Tucker, III
Included in Barings GPFG is Barings North American Private Finance Team (the “U.S. Investment Team”), which consists of 48 investment professionals (as of December 31, 2023) 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 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.
| Name | Principal Position | Year | Base Salary | Bonus | Restricted Stock Awards(1) | All Other Compensation(2) | Total | |||||||||||||||
| E. Ashton Poole | CEO | 2016 | $ | 432,500 | $ | 535,000 | $ | 745,025 | $ | 115,829 | $ | 1,828,354 | ||||||||||
| 2015 | $ | 407,500 | $ | 647,500 | $ | 980,100 | $ | 97,546 | $ | 2,132,646 | ||||||||||||
| 2014 | $ | 400,000 | $ | 700,000 | $ | 573,980 | $ | 79,826 | $ | 1,753,806 | ||||||||||||
| Steven C. Lilly | CFO | 2016 | $ | 333,750 | $ | 485,000 | $ | 648,610 | $ | 117,084 | $ | 1,584,444 | ||||||||||
| 2015 | $ | 325,000 | $ | 580,000 | $ | 871,200 | $ | 84,427 | $ | 1,860,627 | ||||||||||||
| 2014 | $ | 310,000 | $ | 625,000 | $ | 860,970 | $ | 104,573 | $ | 1,900,543 | ||||||||||||
| Jeffrey A. Dombcik | CCO(3) | 2016 | $ | 294,375 | $ | 415,000 | $ | 508,370 | $ | 107,180 | $ | 1,324,925 | ||||||||||
| 2015 | $ | 290,000 | $ | 512,000 | $ | 653,400 | $ | 78,890 | $ | 1,534,290 | ||||||||||||
| 2014 | $ | 282,500 | $ | 525,000 | $ | 756,610 | $ | 96,011 | $ | 1,660,121 | ||||||||||||
| Cary B. Nordan | COO(4) | 2016 | $ | 294,375 | $ | 440,000 | $ | 604,785 | $ | 108,100 | $ | 1,447,260 | ||||||||||
| 2015 | $ | 290,000 | $ | 555,000 | $ | 696,960 | $ | 78,992 | $ | 1,620,952 | ||||||||||||
| 2014 | $ | 282,500 | $ | 565,000 | $ | 808,790 | $ | 99,924 | $ | 1,756,214 | ||||||||||||
| Douglas A. Vaughn | CAO(5) | 2016 | $ | 294,375 | $ | 440,000 | $ | 473,310 | $ | 107,367 | $ | 1,315,052 | ||||||||||
| 2015 | $ | 290,000 | $ | 457,500 | $ | 609,840 | $ | 78,771 | $ | 1,436,111 | ||||||||||||
| 2014 | $ | 282,500 | $ | 475,000 | $ | 782,700 | $ | 96,195 | $ | 1,636,395 | ||||||||||||
| Garland S. Tucker, III | Former | 2016 | $ | 358,289 | $ | 2,500,000 | $ | 823,910 | $ | 98,223 | $ | 3,780,422 | ||||||||||
| CEO(6) | 2015 | $ | 432,500 | $ | 670,000 | $ | 1,132,560 | $ | 122,814 | $ | 2,357,874 | |||||||||||
| 2014 | $ | 425,000 | $ | 725,000 | $ | 1,226,230 | $ | 154,627 | $ | 2,530,857 | ||||||||||||
| Brent P.W. Burgess | Former | 2016 | $ | 295,625 | $ | — | $ | 648,610 | $ | 111,432 | $ | 1,055,667 | ||||||||||
| CIO(7) | 2015 | $ | 367,500 | $ | 570,000 | $ | 827,640 | $ | 85,294 | $ | 1,850,434 | |||||||||||
| 2014 | $ | 360,000 | $ | 575,000 | $ | 913,150 | $ | 110,537 | $ | 1,958,687 | ||||||||||||
| Name | Year | Company 401(k) Contribution | Company Deferred Comp. Plan Contribution | Deferred Compensation Plan Earnings | Company Paid Life Insurance Premiums | Accrued Unused Vacation | Severance Pay | Total All Other Compensation | ||||||||||||||
| E. Ashton Poole | 2016 | $ | 35,000 | $ | 60,000 | $ | 19,464 | $ | 1,365 | $ | — | $ | — | $ | 115,829 | |||||||
| 2015 | $ | 35,000 | $ | 60,000 | $ | 1,181 | $ | 1,365 | $ | — | $ | — | $ | 97,546 | ||||||||
| 2014 | $ | 34,500 | $ | 40,000 | $ | 3,961 | $ | 1,365 | $ | — | $ | — | $ | 79,826 | ||||||||
| Steven C. Lilly | 2016 | $ | 35,000 | $ | 45,000 | $ | 36,146 | $ | 938 | $ | — | $ | — | $ | 117,084 | |||||||
| 2015 | $ | 35,000 | $ | 45,000 | $ | 3,489 | $ | 938 | $ | — | $ | — | $ | 84,427 | ||||||||
| 2014 | $ | 34,500 | $ | 45,000 | $ | 24,135 | $ | 938 | $ | — | $ | — | $ | 104,573 | ||||||||
| Jeffrey A. Dombcik | 2016 | $ | 35,000 | $ | 40,000 | $ | 31,295 | $ | 885 | $ | — | $ | — | $ | 107,180 | |||||||
| 2015 | $ | 35,000 | $ | 40,000 | $ | 3,005 | $ | 885 | $ | — | $ | — | $ | 78,890 | ||||||||
| 2014 | $ | 34,500 | $ | 40,000 | $ | 20,626 | $ | 885 | $ | — | $ | — | $ | 96,011 | ||||||||
| Cary B. Nordan | 2016 | $ | 35,000 | $ | 40,000 | $ | 32,220 | $ | 880 | $ | — | $ | — | $ | 108,100 | |||||||
| 2015 | $ | 35,000 | $ | 40,000 | $ | 3,112 | $ | 880 | $ | — | $ | — | $ | 78,992 | ||||||||
| 2014 | $ | 34,500 | $ | 40,000 | $ | 24,544 | $ | 880 | $ | — | $ | — | $ | 99,924 | ||||||||
| Douglas A. Vaughn | 2016 | $ | 35,000 | $ | 40,000 | $ | 31,641 | $ | 726 | $ | — | $ | — | $ | 107,367 | |||||||
| 2015 | $ | 35,000 | $ | 40,000 | $ | 3,045 | $ | 726 | $ | — | $ | — | $ | 78,771 | ||||||||
| 2014 | $ | 34,500 | $ | 40,000 | $ | 20,969 | $ | 726 | $ | — | $ | — | $ | 96,195 | ||||||||
| Garland S. Tucker, III | 2016 | $ | 35,000 | $ | — | $ | 57,847 | $ | 5,376 | $ | — | $ | — | $ | 98,223 | |||||||
| 2015 | $ | 35,000 | $ | 75,000 | $ | 5,537 | $ | 7,277 | $ | — | $ | — | $ | 122,814 | ||||||||
| 2014 | $ | 34,500 | $ | 75,000 | $ | 37,850 | $ | 7,277 | $ | — | $ | — | $ | 154,627 | ||||||||
| Brent P.W. Burgess | 2016 | $ | 7,950 | $ | — | $ | 41,660 | $ | 1,411 | $ | 17,308 | $ | 43,103 | $ | 111,432 | |||||||
| 2015 | $ | 35,000 | $ | 45,000 | $ | 4,129 | $ | 1,165 | $ | — | $ | — | $ | 85,294 | ||||||||
| 2014 | $ | 34,500 | $ | 45,000 | $ | 29,872 | $ | 1,165 | $ | — | $ | — | $ | 110,537 | ||||||||
| Name | Grant Date | Stock Awards Number of Shares of Stock | Grant Date Fair Value of Stock | ||||||
| E. Ashton Poole(1) | February 3, 2016 | 42,500 | $ | 745,025 | |||||
| Steven C. Lilly(1) | February 3, 2016 | 37,000 | $ | 648,610 | |||||
| Jeffrey A. Dombcik(1) | February 3, 2016 | 29,000 | $ | 508,370 | |||||
| Cary B. Nordan(1) | February 3, 2016 | 34,500 | $ | 604,785 | |||||
| Douglas A. Vaughn(1) | February 3, 2016 | 27,000 | $ | 473,310 | |||||
| Garland S. Tucker, III(2) | February 3, 2016 | 47,000 | $ | 823,910 | |||||
| Brent P.W. Burgess(3) | February 3, 2016 | 37,000 | $ | 648,610 | |||||
Portfolio Managers
Matthew Freund and Bryan High serve as portfolio managers to incentivize our NEOs to focusthe Company. Their biographies and experience is as follows:
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Matthew Freund, 35, serves as the Company's Co-Portfolio Manager. Mr. Freund also serves as the Co-Portfolio Manager for BPCC and as President for BCIC and BPCC. Mr. Freund is also a board member for Eclipse Business Credit, a specialty lender focused on financialproviding asset backed loans. Mr. Freund was previously a member of Barings' Global Private Finance Group, responsible for executing, underwriting, and operating resultsmonitoring North American private finance investments. He has worked in the near termindustry since 2009. Prior to joining Barings LLC in 2015, Mr. Freund worked for US Bank structuring bank loans to support leveraged buyouts for private equity sponsors. Prior to US Bank, Mr. Freund worked in underwriting and the creationanalytical roles at Bank of stockholder value over the long-term.
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 Capital Solutions and a co-Portfolio Manager for Capital Solutions funds. Mr. High joined Barings LLC in 2016, annual cash bonuses comprised 29.3%, 30.6%, 31.3%, 30.4%, 33.5%2007, and 66.1%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 total compensation for Messrs. Poole, Lilly, Dombcik, Nordan, Vaughn and Tucker, respectively. Mr. Burgess did not receive an annual cash bonus for 2016.
| 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 | 107,658 | (3) | $ | 1,974,448 | |||
| Steven C. Lilly | 92,070 | (4) | $ | 1,688,564 | |||
| Jeffrey A. Dombcik | 73,313 | (5) | $ | 1,344,560 | |||
| Cary B. Nordan | 81,313 | (6) | $ | 1,491,280 | |||
| Douglas A. Vaughn | 70,313 | (7) | $ | 1,289,540 | |||
| Garland S. Tucker, III | — | $ | — | ||||
| Brent P. W. Burgess | — | $ | — | ||||
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| Name | Number of Shares Acquired on Vesting(1) | Value Realized on Vesting | ||||||
| E. Ashton Poole | 26,954 | (2) | $ | 508,341 | (3) | |||
| Steven C. Lilly | 34,319 | $ | 621,517 | (4) | ||||
| Jeffrey A. Dombcik | 28,773 | $ | 521,079 | (4) | ||||
| Cary B. Nordan | 31,089 | $ | 563,022 | (4) | ||||
| Douglas A. Vaughn | 28,523 | $ | 516,552 | (4) | ||||
| Garland S. Tucker, III | 169,658 | $ | 3,072,506 | (4) | ||||
| Brent P.W. Burgess | 131,752 | (5) | $ | 2,515,693 | (6) | |||
| Name | Executive Contributions in 2016 ($) | Registrant Contributions in 2016 ($)(1) | Aggregate Earnings in 2016 ($)(2) | Aggregate Withdrawals/ Distributions in 2016 ($) | Aggregate Balance at 12/31/2016 ($)(3) | |||||||||||||
| E. Ashton Poole | — | $ | 60,000 | $ | 19,464 | — | $ | 144,606 | ||||||||||
| Steven C. Lilly | — | $ | 45,000 | $ | 36,146 | — | $ | 310,213 | ||||||||||
| Jeffrey A. Dombcik | — | $ | 40,000 | $ | 31,295 | — | $ | 267,930 | ||||||||||
| Cary B. Nordan | — | $ | 40,000 | $ | 32,220 | — | $ | 276,593 | ||||||||||
| Douglas A. Vaughn | — | $ | 40,000 | $ | 31,641 | — | $ | 271,165 | ||||||||||
| Garland S. Tucker, III | — | $ | 75,000 | $ | 57,847 | — | $ | 494,582 | ||||||||||
| Brent P.W. Burgess | — | $ | 45,000 | $ | 41,660 | — | $ | 361,845 | ||||||||||
| 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 | — | — | 107,658 | $ | 1,974,448 | ||||||||
| Steven C. Lilly | — | — | 92,070 | $ | 1,688,564 | ||||||||
| Jeffrey A. Dombcik | — | — | 73,313 | $ | 1,344,560 | ||||||||
| Cary B. Nordan | — | — | 81,313 | $ | 1,491,280 | ||||||||
| Douglas A. Vaughn | — | — | 70,313 | $ | 1,289,540 | ||||||||
| Garland S. Tucker, III | — | — | — | $ | — | ||||||||
| Brent P. W. Burgess | — | — | — | $ | — | ||||||||
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 23, 2017,March 8, 2024, 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 23, 2017, 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 23, 2017.March 8, 2024. Percentage of beneficial ownership is based on 40,640,838[ ] shares of common stock outstanding as of February 23, 2017. TheMarch 8, 2024. 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 | 210,334 | (5) | * | over $100,000 | ||||||
| Steven C. Lilly | 275,283 | (6) | * | over $100,000 | ||||||
| Jeffrey A. Dombcik | 159,132 | (7) | * | over $100,000 | ||||||
| Cary B. Nordan | 185,666 | (8) | * | over $100,000 | ||||||
| Douglas A. Vaughn | 184,982 | (9) | * | over $100,000 | ||||||
| Garland S. Tucker, III | 217,917 | (10) | * | over $100,000 | ||||||
| Independent Directors | ||||||||||
| W. McComb Dunwoody | 155,564 | (11) | * | over $100,000 | ||||||
| Mark M. Gambill | 24,687 | (11) | * | over $100,000 | ||||||
| Benjamin S. Goldstein | 52,408 | (11) | * | over $100,000 | ||||||
| Mark F. Mulhern | 2,500 | * | $50,000 - $100,000 | |||||||
| Simon B. Rich, Jr. | 93,253 | (12) | * | over $100,000 | ||||||
| Sherwood H. Smith, Jr. | 122,820 | (13) | * | over $100,000 | ||||||
| All directors and executive officers as a group | 1,684,546 | 4.1 | % | over $100,000 | ||||||
| Name of Beneficial Owner | Number of Shares Beneficially Owned(1) | Percentage of Class(2) | Dollar Range of Equity Securities Beneficially Owned(3) | |||||||||||||||||||||||
| Directors and Executive Officers: | ||||||||||||||||||||||||||
| Interested Directors | ||||||||||||||||||||||||||
| Eric Lloyd | [ ] | * | [ ] | |||||||||||||||||||||||
| David Mihalick | [ ] | * | [ ] | |||||||||||||||||||||||
| Non-Interested Directors | ||||||||||||||||||||||||||
| Mark F. Mulhern | [ ] | * | [ ] | |||||||||||||||||||||||
| Thomas W. Okel | [ ] | * | [ ] | |||||||||||||||||||||||
| Jill Olmstead | [ ] | * | [ ] | |||||||||||||||||||||||
| John A. Switzer | [ ] | * | [ ] | |||||||||||||||||||||||
| Robert Knapp | [ ] | * | [ ] | |||||||||||||||||||||||
| Steve Byers | [ ] | * | [ ] | |||||||||||||||||||||||
| Valerie Lancaster-Beal | [ ] | * | [ ] | |||||||||||||||||||||||
| Executive Officers Who Are Not Directors | ||||||||||||||||||||||||||
| Michael DeSieno | [ ] | * | [ ] | |||||||||||||||||||||||
| Ian Fowler | [ ] | * | [ ] | |||||||||||||||||||||||
| Elizabeth Murray | [ ] | * | [ ] | |||||||||||||||||||||||
| Ashlee Steinnerd | [ ] | * | [ ] | |||||||||||||||||||||||
| All directors and executive officers as a group (13 persons) | [ ] | * | [ ] | |||||||||||||||||||||||
| Five-Percent Stockholders: | ||||||||||||||||||||||||||
| Barings LLC | [ ] | [ ] | [ ] | |||||||||||||||||||||||
* Less than 1.0%
(1)Beneficial ownership in this column has been determined in accordance with Rule 13d-3 |
(2)Based on a minimumtotal of five times[ ] shares issued and outstanding as of March 8, 2024.
(3)Beneficial ownership in this column has been determined in accordance with Rule 16a-1(a)(2) of the amountExchange Act. The dollar range of his annual base salary, our named executive officers must own fully vested sharesequity securities beneficially owned is based on a stock price of our common stock equal to a minimum$[ ] per share as of four times 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 CEO, our named executive officers, and our independent directorsMarch 8, 2024. Dollar ranges are required to achieve these share ownership requirements after five years of service.as follows: None, $1 — $10,000, $10,001 — $50,000, $50,001 — $100,000, or over $100,000.
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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 2016,ended December 31, 2023, all Section 16(a) filing requirements applicable to the executive officers, directors and stockholderssuch persons were met in a timely satisfied.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 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.
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
26
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 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.
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
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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
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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 Audit Committee has selected,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
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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 BoardTrustee 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 Directors has approved,a “change of control repurchase event,” as defined in the appointmentNovember 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 Ernst & Young LLP as the Company’s independent auditor forprincipal amount of such November 2026 Notes plus accrued and unpaid interest to the year ending December 31, 2017.
repurchase date.
The foregoing report shall not be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filingNovember 2026 Notes were offered to qualified institutional buyers pursuant to Rule 144A under the Securities Act orand 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, exceptand 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 that we specifically incorporate thisof 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 by reference,to the holders of the February 2029 Notes and shall not otherwise be deemed filedthe Trustee if the Company is no longer subject to the reporting requirements under such Securities Act and/orthe Exchange Act. These covenants are subject to important limitations and exceptions that are described in the February 2029 Notes Indenture.
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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.
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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, 2017. Ernst & Young2024. KPMG LLP also will serve as the independent registered public accounting firmauditors for all of ourthe Company’s wholly-owned subsidiaries. It is expected that a representativesubsidiaries 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 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.
Independent Registered Public Accounting Firm’sFirm's Fees
The following table provides information regarding the following fees to Ernst & Youngbilled by KPMG LLP for work performed in 2015for the fiscal years ended December 31, 2023 and 20162022, or attributable to the audit of our 2015the 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 | $ | 1,378,403 | $ | 1,292,758 | |||||||||||||
| Audit Related Fees | — | 1,210,652 | (1) | ||||||||||||||
| Tax Fees | 272,100 | 138,950 | |||||||||||||||
| Other Fees | — | — | |||||||||||||||
| TOTAL FEES | $ | 1,650,503 | $ | 2,642,360 | |||||||||||||
(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 2016 financial statements: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.
Fiscal Year Ended December 31, 2015 | Fiscal Year Ended December 31, 2016 | |||||||||||
| Audit Fees | $ | 692,327 | (1) | $ | 720,869 | (2) | ||||||
| Audit Related Fees | — | — | ||||||||||
| Tax Fees | 98,000 | 93,000 | ||||||||||
| Other Fees | — | — | ||||||||||
| TOTAL FEES | $ | 790,327 | $ | 813,869 | ||||||||
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 ourthe 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.
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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 20152023 and 2016,2022, 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.
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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.
| 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.
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PROPOSAL NO. 2
APPROVAL TO SELL SHARES OF COMMON STOCK OR WARRANTS, OPTIONS OR RIGHTS TO
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 or warrants, options or rights to acquire its common stock at a price below the currentthen-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 or warrants, options or rights to acquire its common stock during the next year at a price below the Company’s then current net asset value per share at the time of sale if itsthe Company’s stockholders approve suchhave approved a sale andbelow net asset value per share within the Company’s directors makeone-year period immediately prior to any such sale, provided that the Board of Directors also makes certain determinations. determinations prior to any such sale.
Pursuant to this provision, the Company is seeking the approval of its common stockholders so that it may, in one or more public or private offerings of its common stock, or warrants, options or rights to acquire its common stock,issue and sell shares of its common stock or warrants, options or rights to acquire its common stock at a price below its then currentthen-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 earlier of thefirst anniversary of the date of the stockholders’ approval of this Annual Meeting orproposal and would permit the dateCompany to engage in such transactions at various times within that period, subject to further approval from the Board of the Company’s 2018 Annual Meeting of Stockholders, which is expected to be held in May 2018.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, at times the Company’s common stock has traded both above its net asset value per share, and at times the Company’s common stock has traded below its net asset value per share. At each of the Company’s Annual Meetings of Stockholders from 2008 to 2016,2017, 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 common stockholders of record to offer and sell shares of its common stock or warrants, options or rights to acquire its common stock at prices that, net of underwriting discount or commissions, may be less than net asset value so as toper share in one or more offerings. This stockholder approval would permit the flexibilityCompany to issue and sell shares of its common stock in accordance with pricing standards that market conditions may require.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 eightten underwritten follow-on equity offerings completed since its IPO, only two were priced below the then currentthen-current net asset value per share (both during 2009).
Reasons to Offer Common Stock or Warrants, Options or Rights to Acquire 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 asome 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.
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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. For example, BDCs as an industry have been trading below net asset valueothers, including recently as a result of such stock market volatility.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
Stockholder approval of the proposal to sell shares of its common stock or warrants, options or rights to acquire itsthe Company's common stock at a price below the Company’s then currentits 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, 2014,2021, lists the high and low closing sales prices for our common stock, and thesuch closing sales prices as percentages of the net asset values.values per share for the relevant periods. On February 23, 2017,March 8, 2024, the record date, the last reported closing sale price of our common stock on the NYSE was $20.13.$[ ]. 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.
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Net Asset Value | Sales Price | Premium (Discount) of High Sales Price to Net Asset Value | Premium (Discount) of Low Sales Price to Net Asset Value | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| High | Low | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Year ended December 31, 2014 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net Asset Value | 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 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Year ended December 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Year ended December 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Year ended December 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| First Quarter | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| First Quarter | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| First Quarter | $ | 15.72 | $ | 29.39 | $ | 25.75 | 87.0 | % | 63.8 | % | $ | 11.14 | $ | $ | 10.20 | $ | $ | 8.83 | (8.4) | (8.4) | % | (20.7) | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Second Quarter | $ | 15.95 | $ | 28.58 | $ | 24.68 | 79.2 | % | 54.7 | % | Second Quarter | $ | 11.39 | $ | $ | 10.77 | $ | $ | 10.16 | (5.4) | (5.4) | % | (10.8) | % | |||||||||||||||||||||||||||||||||||||||||||||
| Third Quarter | $ | 16.64 | $ | 28.67 | $ | 25.21 | 72.3 | % | 51.5 | % | Third Quarter | $ | 11.40 | $ | $ | 11.07 | $ | $ | 10.36 | (2.9) | (2.9) | % | (9.1) | % | |||||||||||||||||||||||||||||||||||||||||||||
| Fourth Quarter | $ | 16.11 | $ | 25.79 | $ | 18.18 | 60.1 | % | 12.8 | % | Fourth Quarter | $ | 11.36 | $ | $ | 11.47 | $ | $ | 10.62 | 1.0 | 1.0 | % | (6.5) | % | |||||||||||||||||||||||||||||||||||||||||||||
| Year ending December 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Year ended December 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| First Quarter | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| First Quarter | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| First Quarter | $ | 15.64 | $ | 24.95 | $ | 19.95 | 59.5 | % | 27.6 | % | $ | 11.86 | $ | $ | 11.20 | $ | $ | 10.07 | (5.6) | (5.6) | % | (15.1) | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Second Quarter | $ | 15.47 | $ | 24.71 | $ | 21.53 | 59.7 | % | 39.2 | % | Second Quarter | $ | 11.41 | $ | $ | 10.90 | $ | $ | 9.24 | (4.5) | (4.5) | % | (19.0) | % | |||||||||||||||||||||||||||||||||||||||||||||
| Third Quarter | $ | 15.48 | $ | 23.70 | $ | 15.41 | 53.1 | % | (0.5 | )% | Third Quarter | $ | 11.28 | $ | $ | 10.41 | $ | $ | 8.32 | (7.7) | (7.7) | % | (26.2) | % | |||||||||||||||||||||||||||||||||||||||||||||
| Fourth Quarter | $ | 15.23 | $ | 23.19 | $ | 16.48 | 52.3 | % | 8.2 | % | Fourth Quarter | $ | 11.05 | $ | $ | 9.26 | $ | $ | 8.06 | (16.2) | (16.2) | % | (27.1) | % | |||||||||||||||||||||||||||||||||||||||||||||
| Year ending December 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Year ended December 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| First Quarter | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| First Quarter | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| First Quarter | $ | 15.02 | $ | 20.85 | $ | 14.91 | 38.8 | % | (0.7 | )% | $ | 11.17 | $ | $ | 8.95 | $ | $ | 8.22 | (19.9) | (19.9) | % | (26.4) | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Second Quarter | $ | 14.82 | $ | 21.35 | $ | 16.00 | 44.1 | % | 8.0 | % | Second Quarter | $ | 11.34 | $ | $ | 8.01 | $ | $ | 7.19 | (29.4) | (29.4) | % | (36.6) | % | |||||||||||||||||||||||||||||||||||||||||||||
| Third Quarter | $ | 15.33 | $ | 20.60 | $ | 18.56 | 34.4 | % | 21.1 | % | Third Quarter | $ | 11.25 | $ | $ | 9.34 | $ | $ | 7.65 | (17.0) | (17.0) | % | (32.0) | % | |||||||||||||||||||||||||||||||||||||||||||||
| Fourth Quarter | $ | 15.13 | $ | 19.95 | $ | 16.40 | 31.9 | % | 8.4 | % | Fourth Quarter | $ | 11.28 | $ | $ | 9.39 | $ | $ | 8.58 | (16.8) | (16.8) | % | (23.9) | % | |||||||||||||||||||||||||||||||||||||||||||||
| Year ending December 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| First Quarter (through February 23, 2017) | * | $ | 20.35 | $ | 18.31 | * | * | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Year ending December 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| First Quarter (through March 8, 2024) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| First Quarter (through March 8, 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 or warrants, options or rights to acquire its common stock.
Status as a BDC and RIC and Maintaining a Favorable Debt to EquityDebt-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 intoin existing portfolio companies). Further, BDCsunder the 1940 Act, the Company must meet a debt todebt-to equity ratio of less than approximately 1:2:1 in order to incur debt or issue senior securities, which requires the Company to finance its investments with at least as much equity as debt and senior securities in the aggregate.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 1:2:1 debt to equitydebt-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 approximate 1:1 debt to equitydebt-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 equitydebt-to-equity ratio. Issuing additional equity would allow the Company to realign its debt to equitydebt-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 equitydebt-to-equity ratio would also generally strengthen the Company’s balance sheet and give it more flexibility to fully execute its business strategy.
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Summary
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 onlyissue and sell shares of its common stock or warrants, options or rights to acquire 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, have determined in good faith, 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.
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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 or warrants, options or rights to acquire its common stock at less than net asset value per share on the net asset value per outstanding share of common stock.share. Any sale of common stock or warrants, options or rights to acquire 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 or warrants, options or rights to acquire its 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 or warrants, options or rights to acquire common stock 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 or warrants, options or rights to acquire its 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 or warrants, options or rights to acquire 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 or warrants, options or rights to acquire 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 currentthen-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“Examples of Dilutive Effect of the Issuance of Shares Below Net Asset Value.Value.”
Finally, any sale of substantial amounts of ourthe Company’s common stock or other securities in the open market may adversely affect the market price of ourthe Company’s common stock and may adversely affect ourthe Company’s ability to obtain future financing in the capital markets. In addition, future sales of ourthe 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 wethe Company were to continue to sell ourits 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.”
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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 | 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 | 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 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Price per Share to Public | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Price per Share to Public | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net Proceeds per Share to Issuer | — | $ | 9.50 | — | $ | 9.00 | — | $ | 8.00 | — | $ | 0.01 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Decrease to NAV | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total Shares Outstanding | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total Shares Outstanding | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 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 | % | 1,000,000 | 1,050,000 | 1,050,000 | 5.00 | 5.00 | % | 1,100,000 | 10.00 | 10.00 | % | 1,200,000 | 20.00 | 20.00 | % | 1,250,000 | 25.00 | 25.00 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| NAV per Share | $ | 10.00 | $ | 9.98 | (0.24 | )% | $ | 9.91 | (0.91 | )% | $ | 9.67 | (3.33 | )% | $ | 8.00 | (19.98 | )% | NAV per Share | $ | 10.00 | $ | $ | 9.98 | (0.24) | (0.24) | % | $ | 9.91 | (0.91) | (0.91) | % | $ | 9.67 | (3.33) | (3.33) | % | $ | 8.00 | (19.98) | (19.98) | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Dilution to Stockholder | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares Held by Stockholder A | 10,000 | 10,000 | — | 10,000 | — | 10,000 | — | 10,000 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares Held by Stockholder A | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares Held by Stockholder A | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Percentage Held by Stockholder A | 1.0 | % | 0.95 | % | (4.76 | )% | 0.91 | % | (9.09 | )% | 0.83 | % | (16.67 | )% | 0.80 | % | (20.00 | )% | 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 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total NAV Held by Stockholder A | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total NAV Held by Stockholder A | $ | 100,000 | $ | 99,762 | (0.24 | )% | $ | 99,091 | (0.91 | )% | $ | 96,667 | (3.33 | )% | $ | 80,020 | (19.98 | )% | $ | 100,000 | $ | $ | 99,762 | (0.24) | (0.24) | % | $ | 99,091 | (0.91) | (0.91) | % | $ | 96,667 | (3.33) | (3.33) | % | $ | 80,020 | (19.98) | (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 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| NAV per Share Held by Stockholder A | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 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) | $ | 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 | )% | Percentage Dilution to Stockholder A (Dilution per Share Divided by Investment per Share) | — | — | — | (0.24) | (0.24) | % | — | (0.91) | (0.91) | % | — | (3.33) | (3.33) | % | — | (19.98) | (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 or warrants, options or rights to acquire its common stock during(during the next year12 months following such authorization) at a price below the Company’s then currentits then-current net asset value (i.e., book value) per share.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).
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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 entitled to vote at the Annual Meeting;stock; and (2) a majority of the outstanding shares of the Company's common stock entitled to vote at the Annual Meeting whichthat are not held by affiliated persons of the Company. For purposes of this proposal, the 1940 Act defines “a majoritya "majority of the outstanding shares” as: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 such companythe Company are present virtually or represented by proxy; or (2) more than 50% of the outstanding voting securities of such company, whichever is the less.Company. Abstentions and broker non-votes, if any, will have the effect of votes cast against this proposal.
The Dodd-Frank Wall Street ReformNotice of Annual Meeting, this proxy statement and Consumer Protection Actour annual report for the fiscal year ended December 31, 2023 are available free of 2010, orcharge at the Dodd-Frank Act, enables ourfollowing 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 to vote to approve, on an advisory basis, the compensationgenerally is held in May of our NEOs as set forth in this Proxy Statement. Specifically, this Proposal No. 3, commonly known as a “Say-On-Pay” proposal, gives our stockholders the opportunity to express their views on the compensation of our NEOs. This vote is not intended to address any particular form of compensation but rather the overall compensation of our NEOs and the philosophy, policies 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.
| Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column(a)) | |||||||
| (a) | (b) | (c) | ||||||||
| Equity compensation plans approved by security holders(1) | — | — | 678,095 | (2) | ||||||
| Equity compensation plans not approved by security holders | — | — | — | |||||||
| Total | — | — | 678,095 | |||||||
In addition, any stockholder who wishes to the extent consistent with 162(m) of the Code with respect to compensation intended to qualify with such section, the performance goals may be calculated without regard to certain extraordinary or pre-determined items.
Company’s Bylaws, a complete liquidation or dissolutioncopy of the Company; or
FINANCIAL STATEMENTS AVAILABLE
A letter to stockholders approved an increase inand a copy of the numberCompany'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 shares reservedany specifically requested exhibit to the Company's Annual Report on Form 10-K for issuance under the Equity Incentive Planfiscal 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 1,500,000 shares. The same year, wecalling (704) 805-7200. A copy of the Company's Annual Report on Form 10-K has also been filed a request 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 exemptive reliefproxy statements and annual reports with respect to amend our annual grant of $30,000 in restricted stocktwo or more stockholders sharing the same address by delivering a single proxy statement addressed to non-employee directorsthose stockholders. This process, which is commonly referred to $50,000 worth of restricted stockas “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 non-employee directors based on the closing stock price of our common stock on the grant date. On March 21, 2013, wemultiple stockholders sharing an address, unless contrary instructions have been received an order from the SEC,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
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did not respond that you did not want to participate in householding, you were deemed to have consented to the Revised Order, granting such exemptive relief. Awards under the Omnibus Plan will comply with all aspects of the Revised Order, including the following:
Preliminary voting results will be the equivalent of $50,000 worth of shares taken at the market value at the close of the New York Stock Exchange on the date of grant. The annual awards of restricted stock to non-employee directors under the Omnibus Plan are automatic and not subject to change without SEC approval.
OTHER INQUIRIES
If you have any effect onquestions about the resultAnnual Meeting, these proxy materials or your ownership of the vote on this item.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.
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OTHER BUSINESS
The Board of Directors knows of no other business to be presented for action at the 20172024 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 20172024 Annual Meeting of Stockholders in person.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.
March , 2017[ ], 2024
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PRELIMINARY FORM OF PROXY CARD
SUBJECT TO COMPLETION
DATED FEBRUARY 23, 2024
PRELIMINARY FORM OF PROXY CARD
SUBJECT TO COMPLETION
DATED FEBRUARY 23, 2024
PRELIMINARY FORM OF PROXY CARD
SUBJECT TO COMPLETION
DATED FEBRUARY 23, 2024