The board of directors has determined that each of the directors and the director nominees are independent and has no relationship with us, except as a director and stockholder of NMFC, with the exception of Steven B. Klinsky, as a result of his positions as founder and chief executive officer of New Mountain Capital, L.L.C., Robert A. Hamwee, as a result of his position as chief executive officer of NMFC and Adam B. Weinstein, as a result of his positions as executive vice president and chief administrative officer of NMFC.
Board Leadership Structure
NMFCs board of directors monitors and performs an oversight role with respect to NMFCs business and affairs, compliance with regulatory requirements and the services, expenses and performance of service providers to NMFC. Among other things, NMFCs board of directors approves the appointment of the Administrator and officers, reviews and monitors the services and activities performed by the Administrator and officers and approves the engagement, and reviews the performance of, NMFCs independent public accounting firm.
Under NMFCs bylaws, NMFCs board of directors may designate a chairman to preside over the meetings of the board of directors and meetings of the stockholders and to perform such other duties as may be assigned to the chairman by the board of directors. NMFC does not have a fixed policy as to whether the chairman of the board should be an independent director and believe that they should maintain the flexibility to select the chairman and reorganize the leadership structure, from time to time, based on the criteria that is in the best interests of NMFC and its stockholders at such times.
Mr. Klinsky currently serves as the chairman of NMFCs board of directors. Mr. Klinsky is an interested person of NMFC as defined in Section 2(a)(19) of the 1940 Act because he is the founder and chief executive officer of New Mountain Capital, L.L.C., serves on the investment committee of the Investment Adviser and is the managing member of the sole member of the Investment Adviser. NMFC believes that Mr. Klinskys history with New Mountain Capital, L.L.C., familiarity with our investment objectives and investment strategy, and extensive knowledge of the financial services industry and the investment valuation process in particular qualify him to serve as the chairman of NMFCs board of directors. NMFC believes that, at present, they are best served through this leadership structure, as Mr. Klinskys relationship with the Investment Adviser and New Mountain Capital, L.L.C., provides an effective bridge and encourages an open dialogue between NMFCs management and its board of directors, ensuring that all groups act with a common purpose.
NMFCs board of directors does not currently have a designated lead independent director. NMFC is aware of the potential conflicts that may arise when a non-independent director is chairman of the board of directors, but believes these potential conflicts are offset by its strong corporate governance policies. NMFCs corporate governance policies include regular meetings of the independent directors in executive session without the presence of interested directors and management over which the chairman of the audit committee presides, the establishment of audit, valuation, nominating and corporate governance and compensation committees comprised solely of independent directors and the appointment of a chief compliance officer, with whom the independent directors meet regularly without the presence of interested directors and other members of management, for administering NMFCs compliance policies and procedures.
NMFC recognizes that different board leadership structures are appropriate for companies in different situations. NMFC intends to continue to re-examine its corporate governance policies on an ongoing basis to ensure that they continue to meet NMFCs needs.
Board of Directors Role In Risk Oversight
NMFCs board of directors performs its risk oversight function primarily through (1) its four standing committees which report to the board of directors, each of which is comprised solely of independent directors and (2) active monitoring by NMFCs chief compliance officer and its compliance policies and procedures.
NMFCs audit committee, valuation committee, nominating and corporate governance committee and compensation committee assist NMFCs board of directors in fulfilling its risk oversight responsibilities. The audit committees risk oversight responsibilities include overseeing NMFCs accounting and financial reporting processes, NMFCs systems of internal controls regarding finance and accounting, and audits of NMFCs financial statements, including the independence of NMFCs independent auditors. The valuation committee is responsible for making recommendations in accordance with the valuation policies and procedures adopted by NMFCs board of directors, reviewing valuations and any reports of independent valuation firms, confirming that