SCHEDULE 14A

(RULE 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

 

 

Filed by the Registrant  ☒                             Filed by a Party other than the Registrant  ☐

Check the appropriate box:

 

  Preliminary Proxy Statement
  Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
  Definitive Proxy Statement
  Definitive Additional Materials
  Soliciting Material Pursuant to § 240.14a-12

Goldman Sachs BDC, Inc.

(Name of Registrant as Specified in its Charter)

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

  No fee required.
  Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
  (1)  

Title of each class of securities to which transactions applies:

 

     

  (2)  

Aggregate number of securities to which transaction applies:

 

     

  (3)  

Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined):

 

     

  (4)  

Proposed maximum aggregate value of transaction:

 

     

  (5)  

Total fee paid:

 

     

  Fee paid previously with preliminary materials.
  Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identity the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
  (1)  

Amount Previously Paid:

 

     

  (2)  

Form, Schedule or Registration Statement No.:

 

     

  (3)  

Filing Party:

 

     

  (4)  

Date Filed:

 

     

 

 

 


LOGO

GOLDMAN SACHS BDC, INC.

200 West Street

New York, New York 10282

May 22, 2018

Dear Stockholder:

You are cordially invited to attend the 2018 Annual Meeting of Stockholders (the “Meeting”) of Goldman Sachs BDC, Inc. (the “Company”) to be held on Friday, June 15, 2018, at 10:00 a.m. (Eastern time), at the offices of Goldman Sachs Asset Management, L.P., located at 30 Hudson Street, Jersey City, New Jersey 07302. Please note that if you plan to attend the Meeting in person, photographic identification will be required for admission.

The Meeting is being held (i) to elect one Class I director of the Company, who will serve until the 2021 annual meeting of stockholders or until her successor is duly elected and qualified, (ii) to ratify the selection of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2018 and (iii) to approve the application of the reduced asset coverage requirements in Section 61(a)(2) of the Investment Company Act of 1940, as amended, to the Company, which would permit the Company to double the maximum amount of leverage that it is permitted to incur by reducing the asset coverage requirement applicable to the Company from 200% to 150%.

A formal Notice of Annual Meeting and Proxy Statement setting forth in detail the matters to come before the Meeting are attached hereto, and a proxy card is enclosed for your use. You should read the Proxy Statement carefully. You will also receive separate proxy materials for the 2018 Special Meeting of Stockholders, which will be held on the same date and at the same location as the Meeting. Please be certain to vote each proxy card that you receive from us.

WHETHER OR NOT YOU PLAN TO BE PRESENT AT THE MEETING, YOUR VOTE IS VERY IMPORTANT. If you do not plan to be present in person at the Meeting, you can vote by signing, dating and returning the enclosed proxy card promptly or by using the Internet or telephone voting options as described on your proxy card. If you have any questions regarding the proxy materials, please contact the Company at (800) 621-2550. Your prompt response will help reduce proxy costs—which are paid by the Company and indirectly by its stockholders—and will also mean that you can avoid receiving follow-up phone calls and mailings.

Sincerely,

/s/ Brendan McGovern

Brendan McGovern

Chief Executive Officer and President

PLEASE SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD IN THE ENCLOSED ENVELOPE OR USE THE INTERNET OR TELEPHONE VOTING OPTIONS TO CAST YOUR VOTE AS SOON AS POSSIBLE. YOUR VOTE IS IMPORTANT.


LOGO

GOLDMAN SACHS BDC, INC.

200 West Street

New York, New York 10282

NOTICE OF ANNUAL MEETING

To Be Held On Friday, June 15, 2018

May 22, 2018

Notice is hereby given to the owners of shares of common stock (the “Stockholders”) of Goldman Sachs BDC, Inc. (the “Company”) that:

The 2018 Annual Meeting of Stockholders (the “Meeting”) will be held on Friday, June 15, 2018, at 10:00 a.m. (Eastern time), at the offices of Goldman Sachs Asset Management, L.P. (“GSAM”), located at 30 Hudson Street, Jersey City, New Jersey 07302, for the following purposes (the “Proposals”):

 

  1. to elect one Class I director of the Company, who will serve until the 2021 annual meeting of the stockholders or until her successor is duly elected and qualified;

 

  2. to ratify the selection of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2018; and

 

  3. to approve the application of the reduced asset coverage requirements in Section 61(a)(2) of the Investment Company Act of 1940, as amended, to the Company, which would permit the Company to double the maximum amount of leverage that it is permitted to incur by reducing the asset coverage requirement applicable to the Company from 200% to 150%.

The matters referred to above are discussed in the Proxy Statement attached to this Notice. On May 1, 2018, the Board of Directors of the Company, including each of the independent directors, unanimously recommended that you vote “FOR” each of the Proposals.

If Proposal 3 is approved by the Stockholders, the Company and GSAM intend to reduce the base management fees payable under the investment management agreement between the Company and GSAM to annual rate of 1.00% (0.25% per quarter) of the average value of the Company’s gross assets (excluding cash and cash equivalents, but including assets purchased with borrowed amounts) at the end of each of the two most recently completed calendar quarters beginning immediately following stockholder approval. If Proposal 3 is not approved by Stockholders, the Company will continue to operate within the 200% asset coverage requirement until (1) such time as it receives Stockholder approval of a similar proposal at a future meeting or (2) one year after the Board of Directors approves application of the modified asset coverage requirements to the Company. Until such time, the Company would continue to operate in accordance with its current investment strategy.

Stockholders of record at the close of business on Thursday, May 10, 2018 are entitled to receive notice of, and to vote at, the Meeting and at any postponements or adjournments thereof. Each Stockholder is invited to attend the Meeting in person. Please note that if you plan to attend the Meeting in person, photographic identification will be required for admission.


Your vote is extremely important to us. If you will not attend the Meeting in person, we urge you to sign, date and promptly return the enclosed proxy card in the envelope provided, which is addressed for your convenience and needs no postage if mailed in the United States. You may also vote easily and quickly by Internet or by telephone. In the event there are not sufficient votes for a quorum or to approve the Proposals at the time of the Meeting, the Meeting may be postponed or adjourned in order to permit further solicitation of proxies by the Board of Directors of the Company.

By Order of the Board of Directors

of Goldman Sachs BDC, Inc.

/s/ Caroline Kraus

Caroline Kraus

Secretary


YOUR VOTE IS IMPORTANT

NO MATTER HOW MANY SHARES YOU OWN

To secure the largest possible representation at the Meeting, please mark your proxy card, sign it, date it, and return it in the postage-paid envelope provided (unless you are voting by Internet or by telephone). If you sign, date and return a proxy card but give no voting instructions, your shares will be voted “FOR” all of the proposals indicated on the card. If you prefer, you may instead vote via the Internet or by telephone. To vote in this manner, you should refer to the directions below.

To vote via the Internet, please access the website found on your proxy card and follow the on-screen instructions on the website.

To vote by telephone, Stockholders within the United States should call the toll-free number found on the proxy card and follow the recorded instructions. Stockholders outside the United States should vote via the Internet or by submitting a proxy card instead.

You may revoke your proxy at any time at or before the Meeting (1) by notifying the Secretary of the Company in writing at the Company’s principal executive offices, (2) by submitting a properly executed, later-dated proxy or (3) by attending the Meeting and voting in person.


LOGO

ANNUAL MEETING

OF

GOLDMAN SACHS BDC, INC.

200 West Street

New York, New York 10282

PROXY STATEMENT

May 22, 2018

This Proxy Statement is furnished in connection with the solicitation of proxies by and on behalf of the Board of Directors (the “Board”) of Goldman Sachs BDC, Inc. (the “Company”) for use at the 2018 Annual Meeting of Stockholders (the “Meeting”), to be held at the offices of Goldman Sachs Asset Management, L.P. (“GSAM”), located at 30 Hudson Street, Jersey City, New Jersey 07302, on Friday, June 15, 2018, at 10:00 a.m. (Eastern time), and any postponement or adjournment thereof. Much of the information in this Proxy Statement is required under rules of the Securities and Exchange Commission (the “SEC”), and some of it is technical in nature. If there is anything you do not understand, please contact the Company at (800) 621-2550.

This Proxy Statement, the accompanying Notice of Annual Meeting and proxy card and the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 are being mailed to stockholders (the “Stockholders”) of the Company of record as of Thursday, May 10, 2018 (the “Record Date”) on or about May 24, 2018.

PURPOSE OF THE MEETING

At the Meeting, you will be asked to vote on the following proposals:

 

  1. To elect one Class I director of the Company who will serve until the 2021 annual meeting of the stockholders or until her successor is duly elected and qualified (“Proposal 1”);

 

  2. To ratify the selection of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2018 (“Proposal 2”); and

 

  3. To approve the application of the reduced asset coverage requirements in Section 61(a)(2) of the Investment Company Act of 1940, as amended (the “1940 Act”), to the Company (“Proposal 3”), which would permit the Company to double the maximum amount of leverage that it is permitted to incur by reducing the asset coverage requirement applicable to the Company from 200% to 150%.

If Proposal 3 is approved by the Stockholders, the Company and GSAM intend to reduce the base management fees payable under the investment management agreement (the “Investment Management Agreement”) between the Company and GSAM to an annual rate of 1.00% (0.25% per quarter) of the average value of the Company’s gross assets (excluding cash and cash equivalents, but including assets purchased with borrowed amounts) at the end of each of the two most recently completed calendar quarters beginning immediately following stockholder approval. If Proposal 3 is not approved by Stockholders, the Company will continue to operate within the 200% asset coverage requirement until (1) such time as it receives Stockholder

 

1


approval of a similar proposal at a future meeting or (2) one year after the Board approves application of the modified asset coverage requirements to the Company. Until such time, the Company would continue to operate in accordance with its current investment strategy.

INFORMATION REGARDING THIS SOLICITATION

It is expected that the solicitation of proxies will be primarily by mail. The Company’s officers, and personnel of the Company’s investment adviser, GSAM, and the Company’s transfer agent and any authorized proxy solicitation agent, may also solicit proxies by telephone, email, facsimile, Internet or in person. If the Company records votes through the Internet or by telephone, it will use procedures designed to authenticate Stockholders’ identities to allow Stockholders to authorize the voting of their shares in accordance with their instructions and to confirm that their identities have been properly recorded.

The Company will pay the expenses associated with this Proxy Statement and solicitation, in a manner agreed upon by the Board. The Company has engaged Computershare Inc. and Broadridge Financial Services, Inc. to assist in the distribution of the proxy materials and tabulation of proxies. The cost of such services with respect to the Company is estimated to be approximately $80,000, plus reasonable out-of-pocket expenses.

To vote by mail, sign, date and promptly return the enclosed proxy card in the accompanying postage pre-paid envelope. To vote by Internet or telephone, please use the control number on your proxy card and follow the instructions as described on your proxy card. If you have any questions regarding the proxy materials, please contact the Company at (800) 621-2550. If the enclosed proxy card is properly executed and received prior to the Meeting and has not been revoked, the shares represented thereby will be voted in accordance with the instructions marked on the returned proxy card or, if no instructions are marked, the proxy card will be voted “FOR” each of the Proposals described in this Proxy Statement; and in the discretion of the persons named as proxies in connection with any other matter that may properly come before the Meeting or any adjournment(s) or postponement(s) thereof.

Any person giving a proxy may revoke it at any time before it is exercised (1) by notifying the Secretary of the Company in writing at the Company’s principal executive offices, (2) by submitting a properly executed, later-dated proxy or (3) by attending the Meeting and voting in person.

If (i) you are a member of a household in which multiple Stockholders share the same address, (ii) your shares are held in “street name” and (iii) your broker or bank has received consent to household material, then your broker or bank may send to your household only one copy of this Proxy Statement, unless your broker or bank previously received contrary instructions from a Stockholder in your household. If you are part of a household that has received only one copy of this Proxy Statement, the Company will deliver promptly a separate copy of this Proxy Statement to you upon written or oral request. To receive a separate copy of this Proxy Statement, please contact the Company by calling (toll-free) (800) 621-2550 or by mail to the Company’s principal executive offices at Goldman Sachs BDC, Inc., 200 West Street, New York, New York 10282. If your shares are held with certain banks, trust companies, brokers, dealers, investment advisers and other financial intermediaries (each, an “Authorized Institution”) and you would like to receive a separate copy of future proxy statements, notices of internet availability of proxy materials, prospectuses or annual reports or you are now receiving multiple copies of these documents and would like to receive a single copy in the future, please contact your Authorized Institution.

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING TO BE HELD ON FRIDAY, JUNE 15, 2018

This Proxy Statement is available online at www.proxyvote.com (please have the control number found on your proxy card ready when you visit this website).

 

2


INFORMATION REGARDING SECURITY OWNERSHIP

Control Persons and Principal Stockholders

The following table sets forth, as of May 21, 2018, certain ownership information with respect to shares of the Company’s common stock for the nominee and each of the Company’s current directors, executive officers and directors and executive officers as a group, and each person known to the Company to beneficially own 5% or more of the outstanding shares of the Company’s common stock. With respect to persons known to the Company to beneficially own 5% or more of the outstanding shares of the Company’s common stock, such knowledge is based on beneficial ownership filings made by the holders with the SEC and other information known to the Company. The percentage ownership is based on 40,175,405 shares of common stock outstanding as of May 21, 2018.

 

Name and Address

   Type of Ownership  (4)      Shares Owned      Percentage  

Beneficial owners of 5% or more

        

The Goldman Sachs Group, Inc. (1)

     Beneficial        6,483,653        16.1

Interested Director

        

Kaysie Uniacke

     Beneficial        10,000        *  

Nominee for Independent Director

        

Susan B. McGee

     —          —          —    

Independent Directors

        

Jaime Ardila

     Beneficial        13,850        *  

Ross J. Kari

     Beneficial        5,000        *  

Ann B. Lane

     Beneficial        6,890        *  

Executive Officers

        

Brendan McGovern

     Beneficial        35,000        *  

Jon Yoder

     Beneficial        5,000        *  

Jonathan Lamm

     Beneficial        5,000        *  

Maya Teufel

     —          —          —    

Caroline Kraus

     —          —          —    

Salvatore Lentini (2)

     Beneficial        30,810        *  

David Yu

     Beneficial        8,000        *  

Jordan Walter

     —          —          —    

Carmine Rossetti

     —          —          —    

All executive officers and directors as a group (13 persons) (3)

     Beneficial        119,550        *  

 

* Less than 1%.
(1) Based on a Schedule 13G/A filed with the SEC on February 14, 2018. The address of The Goldman Sachs Group, Inc. (“Group Inc.”), a Delaware corporation, is 200 West Street, New York, New York 10282. The shares of the Company’s common stock shown in the above table as being owned by Group Inc. include 652,354 shares held directly by Goldman, Sachs & Co. LLC (“Goldman Sachs”), a wholly owned subsidiary of Group Inc. Group Inc. disclaims beneficial ownership of such shares except to the extent of its pecuniary interest therein. Each of Group Inc. and Goldman Sachs has indicated its intention to vote the Company’s shares over which it has voting discretion in the same manner and proportion as shares of the Company over which Group Inc. or Goldman Sachs does not have voting discretion.
(2) 2,031 of the shares in the table above are held in trust for the benefit of Mr. Lentini’s children, and Mr. Lentini disclaims beneficial ownership of such shares except to the extent of his pecuniary interest therein.
(3) The address for the nominee and each of the Company’s directors and executive officers is c/o Goldman Sachs Asset Management, L.P., 200 West Street, New York, New York 10282.
(4) Beneficial ownership has been determined in accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

 

3


Section 16(a) Beneficial Ownership Reporting Compliance

Pursuant to Section 16(a) of the Exchange Act, the Company’s directors and executive officers and any persons holding more than 10% of the Company’s common stock are required to report their beneficial ownership and any changes therein to the SEC and the Company. Specific due dates for those reports have been established, and the Company is required to report in this proxy statement any failure to file such reports by those due dates. Based on the Company’s review of Forms 3, 4 and 5 filed by such persons and information provided by the Company’s directors and executive officers, the Company believes that, with respect to the fiscal year ended December 31, 2017, all Section 16(a) filing requirements applicable to such persons were met in a timely manner.

Dollar Range of Equity Securities Beneficially Owned by Directors

The following table sets out the dollar range of the Company’s equity securities beneficially owned by the nominee and each of the Company’s directors as of May 21, 2018. Beneficial ownership is determined in accordance with Rule 16a-1(a)(2) under the Exchange Act. The Company is not part of a “family of investment companies,” as that term is defined in the 1940 Act.

 

Name of Director

   Dollar Range of
Equity Securities
in the Company  (1)(2)

Interested Director

  

Kaysie Uniacke

   over $100,000

Nominee for Independent Director

  

Susan B. McGee

   None

Independent Directors

  

Jaime Ardila

   over $100,000

Ross J. Kari

   over $100,000

Ann B. Lane

   over $100,000

 

(1) Dollar ranges are as follows: none, $1 – $10,000, $10,001 – $50,000, $50,001 – $100,000, or over $100,000.
(2) Dollar ranges were determined using the number of shares beneficially owned as of May 21, 2018 multiplied by the closing sales price of the Company’s common stock as reported on the New York Stock Exchange (the “NYSE”) on May 21, 2018.

 

4


PROPOSAL 1

ELECTION OF DIRECTOR

The Board is divided into three classes with staggered three-year terms. At each annual meeting of Stockholders, the successors to the class of directors whose term expires at such meeting will be elected to hold office for a term expiring at the annual meeting of Stockholders held in the third year following the year of their election. At the Meeting, you will be asked to elect one Class I director to serve until the 2021 annual meeting of stockholders or until her successor is duly elected and qualified or until her earlier death, resignation, removal or disqualification. In addition, the Board has adopted polices which provide that (a) no director shall hold office for more than 15 years and (b) a director shall retire as of December 31st of the calendar year in which he or she reaches his or her 74th birthday, unless a waiver of such requirement has been adopted by a majority of the other directors. These policies may be changed by the directors without a stockholder vote.

Information concerning the nominee and other relevant factors is provided below. Using the enclosed proxy card or voting by the Internet or by telephone, a Stockholder may vote his or her shares for or against, or abstain from voting with respect to, the election of the nominee. If the enclosed proxy card is properly executed and received prior to the Meeting (and has not been revoked) but no instructions are marked, the proxies will vote “FOR” the nominee.

Ms. Susan B. McGee has consented to her nomination and has agreed to serve if elected. If, at the time of the Meeting, for any reason, Ms. McGee is not available for election or is not able to serve as a director, the persons named as proxies intend to exercise their voting power in favor of such person as is nominated by the Board as a substitute.

ON MAY 1, 2018, THE BOARD, INCLUDING EACH OF THE INDEPENDENT DIRECTORS, UNANIMOUSLY RECOMMENDED THAT YOU VOTE “FOR” THE NOMINEE LISTED ABOVE.

Information about the Nominee and Directors

Set forth below is the name of the nominee for Class I director, as well as each of the continuing directors, and their addresses, ages, terms of office, principal occupations for at least the past five years and any other directorships they hold in companies which are subject to the reporting requirements of the Exchange Act or are registered as investment companies under the 1940 Act. Directors who (1) are not deemed to be “interested persons,” as defined in the 1940 Act, of the Company, (2) meet the definition of “independent directors” under the corporate governance standards of the NYSE and (3) meet the independence requirements of Section 10A(m)(3) of the Exchange Act are referred to as “Independent Directors.” Ms. Uniacke is deemed to be an “interested person” of the Company and is referred to as the “Interested Director.”

Ms. McGee has been nominated for election as a Class I director to serve until the 2021 annual meeting of stockholders. The nominee is not being proposed for election pursuant to any agreement or understanding between Ms. McGee and the Company.

 

5


Class I Director Nominee

 

Name, Age and

Address (1)

  Position with the
Company
  Term of Office and
Length of Service
  Principal Occupation(s)
During Past 5 Years
  Other
Directorships

Nominee for Independent Director

     

Susan B. McGee (59)

  Class I Director   Director effective June 1, 2018; term expires 2021 if elected   To date, Ms. McGee has held senior management positions with U.S. Global Investors, Inc. (an investment management firm), including Chief Compliance Officer (2016–Present), President (1998–Present) and General Counsel (1997–Present). She has also been Vice President of the U.S. Global Investors Funds (2016–Present). She plans to retire from U.S. Global Investors, Inc. and the U.S. Global Investors Funds on or about June 1, 2018.   None

 

Continuing Directors not up for re-election at the Meeting

 

Name, Age and

Address (1)

  Position with the
Company
  Term of Office and
Length of Service
  Principal Occupation(s)
During Past 5 Years
  Other
Directorships

Independent Directors

     

Jaime Ardila (62)

  Class II Director   Chairman of the Board of Directors since January 2018; Director since February 2016; term expires 2019  

Mr. Ardila is retired. He is Director, Accenture plc (2013–Present) and Director, Ecopetrol (2016–Present); and formerly held senior management positions with General Motors Company (an automobile manufacturer) (1984–1996 and 1998–2016), most recently as Executive Vice President, and President of General Motors’ South America region (2010–2016).

 

Chairman of the Board—the Company and Goldman Sachs Private Middle Market Credit LLC, a privately offered business development company (“GS PMMC”).

  Accenture plc (a management consulting services company); Ecopetrol (an integrated oil company)

 

6


Name, Age and

Address (1)

  Position with the
Company
  Term of Office and
Length of Service
  Principal Occupation(s)
During Past 5 Years
  Other
Directorships

Ross J. Kari (59)

  Class III Director   Director since August 2015; term expires 2020  

Mr. Kari is retired. He is Director, Summit Bank (2014–Present). Formerly, he was Executive Vice President and Chief Financial Officer, Federal Home Loan Mortgage Corporation (Freddie Mac) (2009–2013); and was a Member of the Board of Directors of KKR Financial Holdings, LLC (2007–2014).

 

Director—the Company and GS PMMC.

  None

Ann B. Lane (63)

  Class III Director   Director since February 2016; term expires 2020  

Ms. Lane is retired. Formerly, she was Director, Dealertrack Technologies, Inc. (an automotive software solutions and services company) (2007–2015); and Managing Director, Co-Head of Syndicated & Leveraged Finance and Head of Loan Syndications Capital Markets, JPMorgan Chase & Co. (a financial services company) (2000–2005).

 

Director—the Company and GS PMMC.

  None

 

7


Name, Age and

Address (1)

  Position with the
Company
  Term of Office and
Length of Service
  Principal Occupation(s)
During Past 5 Years
  Other
Directorships

Interested Director*

       

Kaysie Uniacke (57)

  Class II Director   Director since January 2014; term expires 2019  

Chair of the Board—Goldman Sachs Asset Management International (2013–Present); Director—Goldman Sachs Funds, plc (2013–Present); Advisory Director—Group Inc. (2013–Present); Global Chief Operating Officer—GSAM (2007–2012); Partner, Goldman Sachs (2002–2012); and Managing Director—Goldman Sachs (1997–2002).

 

Director—the Company, GS PMMC and Goldman Sachs Middle Market Lending Corp., a privately offered business development company (“GS MMLC”).

  None

 

* Ms. Uniacke is considered to be an “Interested Director” because she holds positions with Goldman Sachs and owns securities issued by Group Inc. Ms. Uniacke holds comparable positions with certain other companies of which Goldman Sachs, GSAM or an affiliate thereof is the investment adviser, administrator and/or distributor.
(1) Each nominee and director may be contacted by writing to the nominee or director, c/o Goldman Sachs Asset Management, L.P., 200 West Street, New York, New York 10282.

The significance or relevance of a nominee’s or director’s particular experience, qualifications, attributes and/or skills is considered by the Board on an individual basis. Experience, qualifications, attributes and/or skills common to all nominees and directors include the ability to critically review, evaluate and discuss information provided to them and to interact effectively with the other directors and with representatives of GSAM and its affiliates, other service providers, legal counsel and the Company’s independent registered public accounting firm, the capacity to address financial and legal issues and exercise reasonable business judgment, and a commitment to the representation of the interests of the Company and the Stockholders. The Governance and Nominating Committee’s charter contains certain other factors that are considered by the Governance and Nominating Committee in identifying and evaluating potential nominees to serve as Independent Directors. Based on Ms. McGee’s experience, qualifications, attributes and/or skills, considered individually and with respect to the experience, qualifications, attributes and/or skills of the other directors, the Board has concluded that she should serve as, and be nominated for election by the Stockholders as, a Class I director. Below is a brief discussion of the experience, qualifications, attributes and/or skills of the nominee, as well as of the continuing directors, that led the Board to conclude that such individual should serve as a director.

 

8


Class I Director Nominee

Nominee for Independent Director

Susan B. McGee . Ms. McGee was elected to the Board on May 1, 2018, with such election to be effective as of June 1, 2018. She is also expected to serve on the Board of Directors of GS PMMC. To date, Ms. McGee has worked for 26 years at U.S. Global Investors, Inc., an investment management firm, where she held several senior management positions, including President, General Counsel and Chief Compliance Officer. She has also been involved in the governance of the U.S. Global Investors Funds, serving as Vice President. She plans to retire from U.S. Global Investors, Inc. and the U.S. Global Investors Funds on or about June 1, 2018. In addition, Ms. McGee serves on the Board of Governors of the Investment Company Institute and as Chairperson of the Investment Company Institute Small Funds Committee. She is also a member of the Board of Directors of the San Antonio Sports Foundation, a not-for-profit organization. Based on the foregoing, Ms. McGee is experienced with financial and investment matters.

Continuing Directors not up for re-election at the Meeting

Independent Directors

Jaime Ardila . Mr. Ardila was elected as one of the Company’s directors in February 2016 and as Chairman of the Board in January 2018. Mr. Ardila is retired. He also serves as director and as Chairman of the Board of Directors of GS PMMC. Mr. Ardila is a member of the Board of Directors of Accenture plc, a management consulting services company, where he serves as Chair of the Finance Committee and a member of the Audit Committee, and as a member of the Board of Directors of Ecopetrol, an integrated oil company, where he serves as Chair of the Audit Committee and a member of the Business Committee and the Corporate Governance and Sustainability Committee. Previously, Mr. Ardila worked for 29 years at General Motors Company, an automobile manufacturer, where he held several senior management positions, most recently as Executive Vice President of the company and President of General Motors’ South America region. Mr. Ardila joined General Motors in 1984. From 1996 to 1998, Mr. Ardila served as the managing director, Colombian Operations, of N M Rothschild & Sons Ltd, before rejoining General Motors in 1998. Based on the foregoing, Mr. Ardila is experienced with financial and investment matters.

Ross J. Kari . Mr. Kari was elected as one of the Company’s directors in August 2015. Mr. Kari is retired. He also serves on the Board of Directors of GS PMMC. Previously, Mr. Kari was Executive Vice President and Chief Financial Officer of Federal Home Loan Mortgage Corporation (Freddie Mac), where he worked for four years. Previously, he held senior management positions at SAFECO Corporation, a personal insurance company, Federal Home Loan Bank of San Francisco, and Wells Fargo & Company, where he began his career and worked for 19 years. Mr. Kari also serves as a Director and a member of the Audit Committee and ALCO Chairman of Summit Bank. Based on the foregoing, Mr. Kari is experienced with financial and investment matters.

Ann B. Lane . Ms. Lane was elected as one of the Company’s directors in February 2016. Ms. Lane is retired. She also serves on the Board of Directors of GS PMMC. Ms. Lane was a Director of Dealertrack Technologies, Inc., an automotive software solutions and services company, from 2007 to 2015. Previously, she worked for five years at JPMorgan Chase & Co., a financial services company, as a Managing Director and Co-Head of Syndicated & Leveraged Finance and Head of Loan Syndications Capital Markets. Prior to joining JPMorgan Chase & Co., Ms. Lane held several senior management positions at Citigroup, Inc., a financial services company, where she worked for 18 years. Based on the foregoing, Ms. Lane is experienced with financial and investment matters.

 

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Interested Director

Kaysie Uniacke . Ms. Uniacke was elected as one of the Company’s directors in January 2014. Ms. Uniacke is the chair of the board of Goldman Sachs Asset Management International, serves on the boards of the Goldman Sachs Luxembourg and Dublin family of funds, several GSAM-managed pooled vehicles organized in the Cayman Islands, GS PMMC and GS MMLC and is an advisory director to Group Inc. Previously, she was global chief operating officer of GSAM’s portfolio management business until 2012 and served on the Investment Management Division Client and Business Standards Committee. Prior to this, she was president of Goldman Sachs Trust, the GS mutual fund family, and was head of the Fiduciary Management business within Global Manager Strategies, responsible for business development and client service globally. Earlier in her career, Ms. Uniacke managed GSAM’s U.S. and Canadian Distribution groups. In that capacity, she was responsible for overseeing all North American institutional and third-party sales channels, marketing and client service functions, for which client assets exceeded $200 billion. Before that, Ms. Uniacke was head of GSAM’s Global Cash Services business, where she was responsible for overseeing the management of assets exceeding $100 billion. Ms. Uniacke worked at Goldman Sachs from 1983 to 2012, where she was named managing director in 1997 and partner in 2002. Ms. Uniacke serves on the board of Person-to-Person, a non-profit organization that supports the working poor in lower Fairfield County, CT. Based on the foregoing, Ms. Uniacke is experienced with financial and investment matters.

Compensation of Directors

From January 1, 2017 to December 31, 2017, each Independent Director was compensated with a $130,000 annual fee for his or her services as director. In addition, the Chairman of the Board earned an annual fee of $40,000 and the director designated as the “audit committee financial expert,” as defined in Item 407 of Regulation S-K, earned an annual fee of $10,000 for their additional services in these capacities.

Effective January 1, 2018, each of the Independent Directors receives an annual fee as compensation for his or her services as a director of $100,000. In addition, the Chairman of the Board earns an additional annual fee of $33,000 and the director designated as the “audit committee financial expert,” as defined in Item 407 of Regulation S-K, earns an additional annual fee of $11,000 for their additional services in these capacities. The Independent Directors are reimbursed for travel and other expenses incurred in connection with attending Board and committee meetings. The Company may also pay the incidental costs of a director to attend training or other types of conferences relating to the business development company (“BDC”) industry. In addition, the Company purchases directors’ and officers’ liability insurance on behalf of the directors.

It is the responsibility of the Independent Directors to review their own compensation and recommend to all of the directors the appropriate level of compensation. This level of compensation may be adjusted from time to time. In conducting their review, the Independent Directors use such information as they deem relevant, including compensation paid to directors of other BDCs of similar size and the time and effort required of the directors in fulfilling their responsibilities to the Company.

 

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The following table shows information regarding the compensation earned by the Independent Directors for the fiscal year ended December 31, 2017. No compensation is paid by the Company to any Interested Director or executive officer of the Company.

 

     Total Compensation
From the Company  (1)(2)
     Total Compensation
From the Goldman Sachs
Fund Complex (1)
 

Interested Director

     

Kaysie Uniacke (3)

     —          —    

Independent Directors

     

Jaime Ardila

   $ 130,000      $ 150,000  

Ross Kari (4)

   $ 140,000      $ 165,000  

Ann B. Lane

   $ 130,000      $ 150,000  

Former Independent Director

     

Ashok N. Bakhru (5)

   $ 170,000      $ 678,000  

Janet F. Clark (6)

   $ 130,000      $ 150,000  

 

(1) Reflects compensation earned during the year ended December 31, 2017. For the Independent Directors, the Goldman Sachs Fund Complex includes the Company and GS PMMC.
(2) The Company did not award any portion of the fees earned by its directors in stock or options during the year ended December 31, 2017. The Company does not have a profit-sharing plan, and directors do not receive any pension or retirement benefits from us.
(3) Ms. Uniacke is an Interested Director and, as such, receives no compensation from the Company or the Goldman Sachs Fund Complex for her service as director or trustee.
(4) Includes compensation as “audit committee financial expert.”
(5) Pursuant to the Company’s corporate governance guidelines, Mr. Bakhru retired from the Board as of December 31, 2017. Prior to his retirement, Mr. Bakhru was an Independent Director and served as a member of the Audit Committee, Governance and Nominating Committee, Compensation Committee, Compliance Committee and Contract Review Committee. “Total Compensation From the Company” includes compensation for past services as Chairman of the Board. For Mr. Bakhru, “Total Compensation From the Goldman Sachs Fund Complex” includes compensation for past services on behalf of Goldman Sachs Trust and Goldman Sachs Variable Insurance Trust, each an open-end management investment company (as well as GS PMMC).
(6) Ms. Clark resigned from the Board effective as of the conclusion of the meeting of the Board held on May 1, 2018. Prior to her resignation, Ms. Clark was an Independent Director and was a member of the Audit Committee, the Governance and Nominating Committee, the Compensation Committee, the Compliance Committee and the Contract Review Committee.

Board Composition and Leadership Structure

The Company’s business and affairs are managed under the direction of the Board. Pending the effectiveness of Ms. McGee’s election to the Board on June 1, 2018, the Board consists of four members, three of whom are Independent Directors. The Board elects the Company’s officers, who serve at the discretion of the Board. The responsibilities of the Board include quarterly valuation of the Company’s assets, corporate governance activities, oversight of the Company’s financing arrangements and oversight of its investment activities.

The Board’s role in the management of the Company is one of oversight. Oversight of the Company’s investment activities extends to oversight of the risk management processes employed by GSAM as part of its day-to-day management of the Company’s investment activities. The Board reviews risk management processes at both regular and special Board meetings throughout the year, consulting with appropriate representatives of GSAM as necessary and periodically requesting the production of risk management reports or presentations. The

 

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goal of the Board’s risk oversight function is to ensure that the risks associated with the Company’s investment activities are accurately identified, thoroughly investigated and responsibly addressed. Stockholders should note, however, that the Board’s oversight function cannot eliminate all risks or ensure that particular events do not adversely affect the value of the Company’s investments. The Board also has primary responsibility for the valuation of the Company’s assets.

The Board has established an Audit Committee, Governance and Nominating Committee, Compensation Committee, Compliance Committee and Contract Review Committee. The scope of each committee’s responsibilities is discussed in greater detail below. Ms. McGee has been appointed to serve on each of the above committees effective as of June 1, 2018.

Jaime Ardila, an Independent Director, serves as Chairman of the Board. The Board believes that it is in the best interests of the Stockholders for Mr. Ardila to lead the Board because of his familiarity with the Company’s portfolio companies, his broad corporate background and experience with financial and investment matters and his significant senior management experience, as described above. Mr. Ardila generally acts as a liaison between management, officers and attorneys between meetings of the Board and presides over all executive sessions of the Independent Directors without management. The Board believes that its leadership structure is appropriate because the structure allocates areas of responsibility among the individual directors and the committees in a manner that enhances effective oversight. The Board also believes that its size creates an efficient corporate governance structure that provides opportunity for direct communication and interaction between management and the Board.

The Board had 10 formal meetings in 2017. Each continuing director that was a member of the Board during the fiscal year ended December 31, 2017 attended at least 75% of the aggregate number of meetings of the Board and of the respective committees on which he or she served. To promote effectiveness of the Board, directors are strongly encouraged to attend regularly scheduled Board meetings in person.

One of the Company’s directors attended the 2017 Annual Meeting of Stockholders.

Committees of the Board

Audit Committee

The current members of the Audit Committee are Mr. Ardila, Mr. Kari and Ms. Lane, each of whom is an Independent Director. Mr. Ardila simultaneously serves on the audit committees of more than three public companies, and the Board has determined that his simultaneous service on the audit committees of other public companies does not impair his ability to effectively serve on the Audit Committee. Mr. Kari serves as Chairman of the Audit Committee. The Board and the Audit Committee have determined that Mr. Kari is an “audit committee financial expert,” as defined in Item 407 of Regulation S-K.

The Audit Committee is responsible for overseeing matters relating to the appointment and activities of the Company’s auditors, audit plans and procedures, various accounting and financial reporting issues and changes in accounting policies, and reviewing the results and scope of the audit and other services provided by the independent public accountants. The Audit Committee is also responsible for aiding the Board in fair value pricing debt and equity securities that are not publicly traded or for which current market values are not readily available. The Audit Committee’s charter is available on the Company’s website ( https://www.goldmansachsbdc.com ).

The Audit Committee held five formal meetings in 2017.

 

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Governance and Nominating Committee

The current members of the Governance and Nominating Committee are Mr. Ardila, Mr. Kari and Ms. Lane, each of whom is an Independent Director. Mr. Ardila serves as the Chairman of the Governance and Nominating Committee. The Governance and Nominating Committee is responsible for identifying, researching and nominating Independent Directors for election by the Stockholders, selecting nominees to fill vacancies on the Board or a committee of the Board, developing and recommending to the Board a set of corporate governance principles and overseeing the evaluation of the Board and management.

All candidates nominated for an Independent Director position must meet applicable independence requirements and have the capacity to address financial and legal issues and exercise reasonable business judgment. The Governance and Nominating Committee considers a variety of criteria in evaluating candidates (including candidates nominated by a Stockholder), including (1) experience in business, financial or investment matters or in other fields of endeavor; (2) financial literacy and/or whether he or she is an “audit committee financial expert,” as defined in Item 407 of Regulation S-K; (3) reputation; (4) ability to attend scheduled Board and committee meetings; (5) general availability to attend to Board business on short notice; (6) actual or potential business, family or other conflicts bearing on either the candidate’s independence or the business of the Company; (7) length of potential service; (8) commitment to the representation of the interests of the Company and the Stockholders; (9) commitment to maintaining and improving his or her skills and education; (10) experience in corporate governance and best business practices; and (11) the diversity that he or she would bring to the Board’s composition.

The Governance and Nominating Committee considers nominees properly recommended by a Stockholder. The Company’s bylaws provide that for any nomination to be properly brought by a Stockholder for a meeting, such Stockholder must comply with advance notice requirements and provide the Company with certain information. Generally, to be timely, a Stockholder’s notice must be received at the Company’s principal executive offices not less than 90 days nor more than 120 days prior to the first anniversary date of the immediately preceding annual meeting of Stockholders. The Company’s bylaws further provide that nominations of persons for election to the Board at a special meeting may be made only by or at the direction of the Board and, provided that the Board has determined that directors will be elected at the meeting, by a Stockholder who is entitled to vote at the meeting and who has complied with the advance notice provisions of the bylaws. The Governance and Nominating Committee’s charter is available on the Company’s website ( https://www.goldmansachsbdc.com ).

The Governance and Nominating Committee held three formal meetings in 2017.

Compensation Committee

The current members of the Compensation Committee are Mr. Ardila, Mr. Kari and Ms. Lane, each of whom is an Independent Director. The Compensation Committee is responsible for determining, or recommending to the Board for determination, the compensation, if any, of the Company’s chief executive officer and all other executive officers. The Compensation Committee also assists the Board with matters related to compensation generally, except with respect to compensation of the directors. As discussed in “Compensation of Directors,” below, it is the responsibility of the Independent Directors to review their own compensation and recommend to all of the directors the appropriate level of compensation. As none of the Company’s executive officers currently is compensated by the Company, the Compensation Committee does not produce and/or review a report on executive compensation practices. The Compensation Committee’s charter is available on the Company’s website ( https://www.goldmansachsbdc.com ).

The Compensation Committee did not hold any formal meetings in 2017.

 

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Compliance Committee

The current members of the Compliance Committee are Mr. Ardila, Mr. Kari and Ms. Lane, each of whom is an Independent Director. Mr. Ardila serves as Chairman of the Compliance Committee. The Compliance Committee is responsible for overseeing the Company’s compliance processes, and insofar as they relate to services provided to us, the compliance processes of the investment adviser, underwriters (if any), administrator and transfer agent, except that compliance processes relating to the accounting and financial reporting processes and certain related matters are overseen by the Audit Committee. In addition, the Compliance Committee provides assistance to the full Board with respect to compliance matters. The Compliance Committee’s charter is available on the Company’s website ( https://www.goldmansachsbdc.com ).

The Compliance Committee held five formal meetings in 2017.

Contract Review Committee

The current members of the Contract Review Committee are Mr. Ardila, Mr. Kari and Ms. Lane, each of whom is an Independent Director. Mr. Ardila serves as Chairman of the Contract Review Committee. The Contract Review Committee is responsible for overseeing the processes of the Board for reviewing and monitoring performance under the Company’s investment management, placement agent (if any), principal underwriting (if any) and certain other agreements with GSAM and its affiliates. The Contract Review Committee also provides appropriate assistance to the Board in connection with the Board’s approval, oversight and review of the Company’s other service providers, including the Company’s custodian/accounting agent, transfer agent, printing firms, and professional firms (other than the Company’s independent auditor, which is the responsibility of the Audit Committee). The Contract Review Committee’s charter is available on the Company’s website ( https://www.goldmansachsbdc.com ).

The Contract Review Committee had one formal meeting in 2017.

Information about Executive Officers who are not Directors

Set forth below is certain information about the Company’s executive officers who are not directors:

 

Name

   Age     

Positions with the Company

Brendan McGovern

     47      Chief Executive Officer and President

Jon Yoder

     44      Chief Operating Officer

Jonathan Lamm

     44      Chief Financial Officer and Treasurer

Maya Teufel

     45      Chief Compliance Officer

Salvatore Lentini

     45      Executive Vice President

David Yu

     36      Executive Vice President and Head of Research

Jordan Walter

     37      Executive Vice President

Carmine Rossetti

     39      Principal Accounting Officer

The address for each executive officer is c/o Goldman Sachs Asset Management, L.P., 200 West Street, New York, New York 10282. Each officer holds office at the pleasure of the Board until the next election of officers or until his or her successor is duly elected and qualifies.

Brendan McGovern . Mr. McGovern was appointed as the Company’s chief executive officer and president in March 2013. Mr. McGovern heads GSAM’s Private Credit Group, is the chief executive officer and president of GS PMMC and GS MMLC and also serves as co-head and senior portfolio manager of the GSAM Credit Alternatives portfolio management team. He is also the Chair and a voting member of the Private Credit Group’s Investment Committee, which is responsible for evaluating and approving all of the Company’s investments. Mr. McGovern joined the firm in 2006. Prior to joining the firm, Mr. McGovern served as a managing director in

 

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the Global Investment Group at Amaranth Advisors, where he co-headed the fund’s private placement efforts for both debt and equity linked products in the United States. He is also on the board of directors for the Oxalosis and Hyperoxaluria Foundation.

Jon Yoder . Mr. Yoder was appointed as the Company’s chief operating officer in March 2013. Mr. Yoder is the chief operating officer of GS PMMC and GS MMLC and a member of GSAM’s Private Credit Group with a focus on sourcing, structuring and executing privately negotiated debt financings. He is also a voting member of the Private Credit Group’s Investment Committee, which is responsible for evaluating and approving all of the Company’s investments. Mr. Yoder joined the firm in 2005. Prior to joining the firm, he was a member of the mergers and acquisitions and private equity groups at Paul, Weiss, Rifkind, Wharton & Garrison, LLP.

Jonathan Lamm . Mr. Lamm was appointed as the Company’s chief financial officer and treasurer in March 2013. Mr. Lamm is also the chief financial officer and treasurer of GS PMMC and GS MMLC and chief operating officer of the GSAM Credit Alternatives portfolio management team, responsible for the operations of the business, including business financials, infrastructure support, and IT project management, as well as the continuous improvement of the control environment. Mr. Lamm is secretary and a non-voting member of the Private Credit Group’s Investment Committee, which is responsible for evaluating and approving all of the Company’s investments. He joined the firm in 2002. Prior to joining the firm, Mr. Lamm worked in the securities audit practice at Deloitte & Touche LLP.

Maya Teufel . Ms. Teufel was appointed as the Company’s chief compliance officer in December 2016. Ms. Teufel is also the chief compliance officer of GS PMMC, GS MMLC and Goldman Sachs Trust II. Prior to joining GSAM in September 2016, she was, from November 2013 to August 2016, the General Counsel and Chief Compliance Officer of Emerging Global Advisors, LLC (currently part of Ameriprise Financial). While at Emerging Global Advisors, Ms. Teufel also held the position of fund chief compliance officer from October 2015 to August 2016. Prior to joining Emerging Global Advisors, she was, from July 2005 to November 2013, Vice President, Corporate Counsel at Prudential Insurance Company of America, a subsidiary of Prudential Financial Inc., an insurance and financial services company. Prior to Prudential, Ms. Teufel was an associate in the mergers and acquisitions groups of Sullivan & Cromwell LLP and Gibson, Dunn & Crutcher LLP.

Salvatore Lentini . Mr. Lentini was appointed as an executive vice president of the Company in March 2013. Mr. Lentini is executive vice president of GS PMMC and GS MMLC and co-head and senior portfolio manager of the GSAM Credit Alternatives portfolio management team and also serves as its head of liquid credit and trading. Mr. Lentini is also a voting member of Private Credit Group’s Investment Committee, which is responsible for evaluating and approving all of the Company’s investments. Mr. Lentini joined the firm in 2006. Prior to joining the firm, Mr. Lentini was a managing director in the Global Investments Group at Amaranth Advisors, where he was responsible for trading all credit products within the United States. Before joining Amaranth, he was responsible for trading high yield and crossover debt at the Royal Bank of Scotland (RBS). Earlier, Mr. Lentini traded high yield fixed income for PaineWebber.

David Yu . Mr. Yu was appointed as an executive vice president and Head of Research of the Company in March 2013. Mr. Yu is executive vice president and Head of Research of GS PMMC and GS MMLC and a member of the GSAM Private Credit Group with a focus on sourcing, structuring and executing privately negotiated debt financings and serves as its Head of Research. Mr. Yu is a voting member of the Private Credit Group’s Investment Committee, which is responsible for evaluating and approving all of the Company’s investments. Mr. Yu joined the firm in 2006. Prior to joining the firm, Mr. Yu was an associate in the Global Investments Group at Amaranth Advisors, where he similarly worked with public and private issuers to structure and execute debt and equity financings. Prior to joining Amaranth, he worked in the Leveraged Finance and Sponsor Coverage Group at CIBC World Markets.

Jordan Walter . Mr. Walter was appointed as an executive vice president of the Company in February 2018. Mr. Walter is executive vice president of GS PMMC and GS MMLC and a member of the GSAM Credit

 

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Alternatives team with a focus on sourcing, structuring and executing privately negotiated debt financings. He is also a voting member of the Private Credit Group’s Investment Committee, which is responsible for evaluating and approving all of the Company’s investments. Mr. Walter joined the firm in 2014. Prior to joining the firm, Mr. Walter was a vice president at MCG Capital where he originated and managed middle market debt and equity investments. Prior to joining MCG Capital, Mr. Walter was in the Financial Management Program at General Electric.

Carmine Rossetti . Mr. Rossetti was appointed as principal accounting officer of the Company in May 2017. Mr. Rossetti is also the principal accounting officer of GS PMMC and GS MMLC and head of the GSAM Hedge Fund and BDC Fund Controller teams. Mr. Rossetti is responsible for fund accounting and financial reporting oversight as well as the continuous improvement of the control environment. Mr. Rossetti joined Goldman Sachs in 2004. Prior to joining Goldman Sachs, he worked in the audit practice at Ernst & Young LLP.

Certain Relationships and Related Party Transactions

Investment Management Agreement

The Company is party to the Investment Management Agreement, pursuant to which the Company pays GSAM, a wholly owned subsidiary of Group Inc., a fee for investment management services consisting of a management fee based on the Company’s gross assets (excluding cash and cash equivalents but including assets purchased with borrowed amounts) and an incentive fee based on the performance of the Company’s investments. Certain of the Company’s officers are also officers and employees of GSAM.

For the year ended December 31, 2017, the Company paid GSAM a total of $28.66 million in fees (excluding fees that are accrued but not paid) pursuant to the Investment Management Agreement, which consisted of $17.59 million in management fees and $11.07 million in incentive fees.

License Agreement

The Company is party to a license agreement with an affiliate of Goldman Sachs pursuant to which the Company has been granted a non-exclusive, royalty-free license to use the “Goldman Sachs” name. Under this agreement, the Company does not have a right to use the Goldman Sachs name if GSAM or another affiliate of Goldman Sachs is not the Company’s investment adviser or if the Company’s continued use of such license results in a violation of applicable law, results in a regulatory burden or has adverse regulatory consequences. Other than with respect to this limited license, the Company has no legal right to the “Goldman Sachs” name.

Co-Investment Opportunities

The Company has in the past co-invested, and in the future may co-invest, on a concurrent basis with other funds managed by GSAM and its affiliates, but not if such co-investment is impermissible under existing regulatory guidance, applicable regulations or GSAM’s allocation procedures. Certain types of negotiated co-investments may be made only if the Company receives an order from the SEC permitting the Company to do so. On January 4, 2017, the SEC granted the Company, GS PMMC and GS MMLC, as well as certain other funds managed by GSAM in the future, the exemptive relief to make negotiated co-investments, subject to certain terms and conditions in the exemptive relief.

Related Party Transaction Review Policy

The Audit Committee conducts quarterly reviews of any potential related party transactions brought to its attention and, during these reviews, it also considers any conflicts of interest brought to its attention pursuant to the Company’s Code of Ethics. Each of the Company’s directors and executive officers is instructed and periodically reminded to inform GSAM Compliance of any potential related party transactions. In addition, each such director and executive officer completes a questionnaire on an annual basis designed to elicit information about any potential related party transactions.

 

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PROPOSAL 2

RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

At a meeting of the Board held on December 4, 2017, the Audit Committee selected and recommended, and the Board, including a majority of the Independent Directors notified the selection of PricewaterhouseCoopers LLP to act as the independent registered public accounting firm for the Company for the fiscal year ending December 31, 2018. This selection is presented for ratification by the Stockholders. If the Stockholders fail to ratify the selection of PricewaterhouseCoopers LLP to serve as the independent registered public accounting firm for the year ending December 31, 2018, the Audit Committee and the Board will reconsider the continued retention of PricewaterhouseCoopers LLP.

Representatives of PricewaterhouseCoopers LLP are expected to be present at the Meeting and will be available to respond to appropriate questions from Stockholders if necessary. Representatives of PricewaterhouseCoopers LLP will be given the opportunity to make statements at the Meeting, if they so desire.

Audit Fees

The aggregate audit fees billed by PricewaterhouseCoopers LLP for the years ended December 31, 2017 and December 31, 2016 were $761,500 and $570,000, respectively.

Fees included in the audit fees category are those associated with the annual audits of financial statements, review of the financial statements included in the Company’s Form 10-Qs and services that are normally provided in connection with statutory and regulatory filings.

Audit-Related Fees

No audit-related fees were billed by PricewaterhouseCoopers LLP for the years ended December 31, 2017 and December 31, 2016.

Audit-related fees are for any services rendered to the Company that are reasonably related to the performance of the audits or reviews of the Company’s financial statements (but not reported as audit fees above). These services include attestation services that are not required by statute or regulation and consultations concerning financial accounting and reporting standards.

The aggregate audit-related fees billed by PricewaterhouseCoopers LLP to GSAM, and any entity controlling, controlled by, or under common control with, GSAM, that provides ongoing services to the Company, for engagements directly related to the Company’s operations and financial reporting, for the years ended December 31, 2017 and December 31, 2016 were $1,133,433 and $1,157,616, respectively. These amounts represent fees PricewaterhouseCoopers LLP billed to GSAM for services related to the SSAE 16 report.

Tax Fees

The aggregate fees billed by PricewaterhouseCoopers LLP for services rendered to the Company for tax compliance, tax advice and tax planning for the years ended December 31, 2017 and December 31, 2016 were $12,500 and $12,500, respectively.

Fees included in the tax fees category comprise all services performed by professional staff in the independent registered public accountant’s tax division except those services related to the audits. This category comprises fees for tax compliance services provided in connection with the preparation and review of the Company’s tax returns.

 

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No tax fees were billed by the Company’s independent registered public accountant to GSAM, or any entity controlling, controlled by, or under common control with, GSAM, that provides ongoing services to the Company, for engagements directly related to the Company’s operations and financial reporting, for the years ended December 31, 2017 and December 31, 2016.

All Other Fees

No fees were billed by PricewaterhouseCoopers LLP for products and services provided to the Company, other than the services reported in “Audit Fees,” “Audit Related Fees,” and “Tax Fees” above, for the years ended December 31, 2017 and December 31, 2016.

No other fees were billed by the Company’s independent registered public accountant to GSAM, or any entity controlling, controlled by, or under common control with, GSAM, that provides ongoing services to the Company, for engagements directly related to the Company’s operations and financial reporting, for the years ended December 31, 2017 and December 31, 2016.

Aggregate Non-Audit Fees

No non-audit fees were billed to GSAM and service affiliates by PricewaterhouseCoopers LLP for non-audit services for the years ended December 31, 2017 and December 31, 2016. This includes any non-audit services required to be pre-approved or non-audit services that did not require pre-approval since they did not directly relate to the Company’s operations or financial reporting.

Pre-Approval of Audit and Non-Audit Services Provided to the Company

The Audit and Non-Audit Services Pre-Approval Policy (the “Policy”) adopted by the Audit Committee sets forth the procedures and the conditions pursuant to which services performed by an independent auditor for the Company may be pre-approved. Services may be pre-approved specifically by the Audit Committee as a whole or, in certain circumstances, by the Audit Committee Chairman or the person designated as the audit committee financial expert. In addition, subject to specified cost limitations, certain services may be pre-approved under the provisions of the Policy. The Policy provides that the Audit Committee will consider whether the services provided by an independent auditor are consistent with the SEC’s rules on auditor independence. The Policy provides for periodic review and pre-approval by the Audit Committee of the services that may be provided by the independent auditor.

De Minimis Waiver . The pre-approval requirements of the Policy may be waived with respect to the provision of non-audit services that are permissible for an independent auditor to perform, provided (1) the aggregate amount of all such services provided constitutes no more than five percent of the total amount of revenues subject to pre-approval that was paid to the independent auditors during the fiscal year in which the services are provided; (2) such services were not recognized by the Company at the time of the engagement to be non-audit services; and (3) such services are promptly brought to the attention of the Audit Committee and approved prior to the completion of the audit by the Audit Committee or by one or more members of the Audit Committee to whom authority to grant such approvals has been delegated by the Audit Committee, pursuant to the pre-approval provisions of the Policy.

Pre-Approval of Non-Audit Services Provided to GSAM. The Policy provides that, in addition to requiring pre-approval of audit and non-audit services provided to the Company, the Audit Committee will pre-approve those non-audit services provided to GSAM (and entities controlling, controlled by or under common control with GSAM that provide ongoing services to the Company) where the engagement relates directly to the operations or financial reporting of the Company.

 

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The Audit Committee has considered these fees and the nature of the services rendered, and has concluded that they are compatible with maintaining the independence of PricewaterhouseCoopers LLP. The Audit Committee did not approve any of the audit-related, tax, or other non-audit fees described above pursuant to the “ de minimis exceptions” set forth in Rule 2-01(c)(7)(i)(C) and Rule 2-01(c)(7)(ii) of Regulation S-X. PricewaterhouseCoopers LLP did not provide any audit-related services, tax services or other non-audit services to GSAM or any entity controlling, controlled by or under common control with GSAM that provides ongoing services to the Company that the Audit Committee was required to approve pursuant to Rule 2-01(c)(7)(ii) of Regulation S-X. The Audit Committee considered whether the provision of non-audit services rendered to GSAM or any entity controlling, controlled by, or under common control with GSAM that provides ongoing services to the Company that were not pre-approved by the Audit Committee because the engagement did not relate directly to the operations and financial reporting of the Company is compatible with maintaining PricewaterhouseCoopers LLP’s independence.

ON MAY 1, 2018, THE BOARD, INCLUDING EACH OF THE INDEPENDENT DIRECTORS, UNANIMOUSLY RECOMMENDED THAT YOU VOTE “FOR” THE RATIFICATION OF PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM TO THE COMPANY FOR THE FISCAL YEAR ENDING DECEMBER 31, 2018.

 

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Audit Committee Report (1)

The following is the report of the Audit Committee of Goldman Sachs BDC, Inc. (the “Company”) with respect to the Company’s audited financial statements for the fiscal year ended December 31, 2017 (the “Audited Financial Statements”).

The Audit Committee has: (a) reviewed and discussed the Audited Financial Statements with the management of the Company; (b) discussed with the independent auditor the matters required to be discussed by Auditing Standard 1301 (Communications with Audit Committees), as adopted by the Public Company Accounting Oversight Board (“PCAOB”); and (c) received the written disclosures and the letter from the independent auditor required by applicable requirements of the PCAOB Ethics and Independence Rule 3526 regarding the independent auditor’s communications with the Audit Committee concerning independence, and has discussed with the independent auditor the auditor’s independence.

The members of the Audit Committee are not, and do not represent themselves to be, professionally engaged in the practice of auditing or accounting and are not employed by the Company for accounting, financial management or internal control purposes. Moreover, the Audit Committee relies on and makes no independent verification of the facts presented to it or representations made by management or the Company’s independent auditor. Accordingly, the Audit Committee’s oversight does not provide an independent basis to determine that management has maintained appropriate accounting and/or financial reporting principles and policies, or internal controls and procedures designed to assure compliance with accounting standards and applicable laws and regulations. Furthermore, the Audit Committee’s considerations and discussions referred to above do not provide assurance that the audit of the Company’s financial statements has been carried out in accordance with the standards of the PCAOB or that the financial statements are presented in accordance with generally accepted accounting principles.

Based on its consideration of the Audited Financial Statements and the discussions referred to above with management and the Company’s independent auditor, and subject to the limitations on the responsibilities and role of the Audit Committee set forth in the charter and those discussed above, the Audit Committee recommended to the Board of Directors that the Audited Financial Statements be accepted by the Board of Directors and included in the Company’s Annual Report on Form 10-K for the last fiscal year for filing with the SEC.

February 28, 2018

The Audit Committee

Ross J. Kari, Chairman

Jaime Ardila

Janet F. Clark

Ann B. Lane

 

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(1) The material in this report is not “soliciting material,” is not deemed “filed” with the SEC, and is not to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.


PROPOSAL 3

APPROVAL OF APPLICATION OF REDUCED ASSET COVERAGE

REQUIREMENTS TO THE COMPANY

Background and 1940 Act Requirements

The Company is a closed-end management investment company that has elected to be regulated as a BDC under the 1940 Act. Section 61(a) of the 1940 Act applies asset coverage requirements which limit the ability of BDCs to incur leverage. Prior to the passage of the Small Business Credit Availability Act (the “SBCA Act”) on March 23, 2018, these asset coverage requirements prohibited a BDC from issuing debt securities or preferred stock (collectively referred to as “senior securities”) unless, immediately after such issuance, the BDC had “asset coverage” of at least 200%. For purposes of the 1940 Act, “asset coverage” means the ratio of (1) the total assets of a BDC, less all liabilities and indebtedness not represented by senior securities, to (2) the aggregate amount of senior securities representing indebtedness (plus, in the case of senior securities represented by preferred stock, the aggregate involuntary liquidation preference of such BDC’s preferred stock). As a result of these historical asset coverage requirements (which limited BDCs to a 1:1 debt to equity ratio), we believe that BDCs operate at lower levels of leverage than many private investment funds focused on similar asset classes, collateralized loan obligations, specialty finance companies and other operating companies.

The SBCA Act, among other things, amended Section 61(a) of the 1940 Act to add a new Section 61(a)(2) which reduces the asset coverage requirements applicable to BDCs from 200% to 150% (a 2:1 debt to equity ratio), so long as the BDC meets certain disclosure and approval requirements. Section 61(a)(2) provides that before the reduced asset coverage requirements are effective with respect to a BDC, the application of that section of the 1940 Act to such BDC must be approved by either (1) a “required majority,” as defined in the Section 57(o) of the 1940 Act, of such BDC’s board of directors or (2) a majority of votes cast at a special or annual meeting of such BDC’s stockholders at which a quorum is present.

The Board has decided to seek the approval of Stockholders at the Meeting to reduce the Company’s asset coverage requirements so that the reduced asset coverage requirements for senior securities in Section 61(a)(2) of the 1940 Act will apply to the Company. If this Proposal 3 is approved by the Stockholders at the Meeting, commencing on the first date after such approval, the Company will be required to maintain asset coverage for its senior securities of 150% rather than 200%, which would permit the Company to double the maximum amount of leverage that it is permitted to incur.

Recommendation and Rationale

On May 1, 2018, the Board unanimously recommended that the Stockholders vote in favor of the application of the reduced asset coverage requirements in Section 61(a)(2) of the 1940 Act to the Company. The Board concluded that Proposal 3 is in the best interests of the Company and the Stockholders. In doing so, the Board considered and evaluated various factors, including the following (each, as discussed more fully below):

 

    the additional flexibility to manage capital to take advantage of attractive investment opportunities;

 

    the potential impact (both positive and negative) on net investment income, return to stockholders and net asset value;

 

    the additional flexibility to make required regulated investment company distributions without violating the 1940 Act; and

 

    the impact on advisory fees payable by the Company to the Adviser and the related conflicts of interest.

 

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Flexibility to manage capital to take advantage of attractive investment opportunities

The Company cannot predict when attractive investment opportunities will present themselves, and attractive opportunities may arise at a time when market conditions are not favorable to raising additional equity capital. If the Company is not able to access additional capital (either at all or on favorable terms) when attractive investment opportunities arise, the Company’s ability to grow over time and to continue to pay distributions to Stockholders could be adversely affected. Based on the Company’s balance sheet as of March 31, 2018, reducing the asset coverage requirements applicable to the Company from 200% to 150% would allow the Company to borrow nearly $727 million in additional capital. This amount would provide additional flexibility to pursue attractive investment opportunities. The Board believes that the greater deal flow that may be achieved with this additional capital would enable the Company to participate more meaningfully in the private debt markets and to make larger loans to its portfolio companies with no loss of diversification of the overall portfolio. With more capital, the Company expects that it would, over time, be a more meaningful capital provider to the middle market and be able to better compete for high-quality investment opportunities with other companies having greater resources than the Company currently has.

In addition, the Board believes that the capital made available by incurring additional leverage would allow the Company to better manage its capital and to only undertake equity capital raises when market conditions are optimal for doing so.

The Board noted that over 50% of the Company’s total assets at fair value were invested in first-lien senior secured or first-lien, last-out unitranche debt as of March 31, 2018, and that a portfolio comprised of such assets is well suited to take advantage of additional leverage. As a result, with additional leverage, the Company may continue to seek investments in lower risk, lower yielding loans.

The Board further noted that the increase in total assets available for investment as a result of incurring additional leverage would increase the assets available for investment in assets considered “non-qualifying assets” for purposes of Section 55 of the 1940 Act, which will also give the Company greater flexibility when evaluating investment opportunities.

Potential impact on net investment income, return to stockholders and net asset value

The Board also considered the potential impact of additional leverage on the Company’s net investment income, noting that any increases would be magnified if the Company employed additional leverage. Thus, the Board noted that additional leverage may allow the Company to maintain its historical distribution rate while investing in lower risk, lower yielding loans than the Company’s current portfolio. Similarly, the Board considered that, if the value of the Company’s assets increases, additional leverage could cause net asset value to increase more rapidly than it otherwise would have if the Company did not employ such additional leverage.

However, the Board noted that the converse was also true and, if the Company’s net investment income or the value of the Company’s assets decreased, additional leverage would cause the Company’s income and/or net asset value to decline more sharply than it otherwise would have if the Company did not employ such additional leverage, increasing the risk of investing in the Company’s common stock. In addition, the Company would have to service any additional debt that it incurs, including interest expense on debt and dividends on preferred stock, that the Company may issue, as well as the fees and costs related to the entry into or amendments to debt facilities. These expenses (which may be higher than the expenses on the Company’s current borrowings due to the rising interest rate environment) would decrease net investment income, and the Company’s ability to pay such expenses will depend largely on the Company’s financial performance and will be subject to prevailing economic conditions and competitive pressures. Additionally, the Company’s credit facility currently contains a covenant limiting the Company’s asset coverage to 200%. The Company may not be able to amend its credit facility to change this covenant and if the Company is successful in amending the credit facility, it will incur

 

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costs to do so and the other terms of such amended facility, such as interest rate, may not be as favorable to the Company as the current terms.

Effect of Leverage on Return to Stockholders

The following table illustrates the effect of leverage on returns from an investment in the Company’s common stock assuming that the Company employs (1) its actual asset coverage ratio as of March 31, 2018, (2) a hypothetical asset coverage ratio of 200% and (3) a hypothetical asset coverage ratio of 150%, each at various annual returns on the Company’s portfolio as of March 31, 2018, net of expenses. The calculations in the table below are hypothetical, and actual returns may be higher or lower than those appearing in the table below.

 

Assumed Return on the Company’s Portfolio
(Net of Expenses)

     (10.00 )%       (5.00 )%       0.00      5.00      10.00 %

Corresponding return to common stockholder assuming actual asset coverage as of March 31, 2018 (237%) (1)

     (20.54 )%       (11.67 )%       (2.79 )%       6.08      14.95

Corresponding return to common stockholder assuming 200% asset coverage (2)

     (24.28 )%       (14.06 )%       (3.83 )%       6.40      16.62

Corresponding return to common stockholder assuming 150% asset coverage (3)

     (38.11 )%       (22.89 )%       (7.66 )%       7.57      22.79

 

(1) Based on (i) $1,289.74 million in total assets including debt issuance costs as of March 31, 2018, (ii) $530 million in outstanding indebtedness as of March 31, 2018, (iii) $726.71 million in net assets as of March 31, 2018, and (iv) an annualized average interest rate on the Company’s indebtedness, as of March 31, 2018, excluding fees (such as fees on undrawn amounts and amortization of financing costs), of 3.83%.
(2) Based on (i) $1,486.45 million in total assets including debt issuance costs on a pro forma basis as of March 31, 2018, after giving effect of a hypothetical asset coverage ratio of 200%, (ii) $726.71 million in outstanding indebtedness on a pro forma basis as of March 31, 2018, after giving effect of a hypothetical asset coverage ratio of 200%, (iii) $726.71 million in net assets as of March 31, 2018, and (iv) an annualized average interest rate on the Company’s indebtedness, as of March 31, 2018, excluding fees (such as fees on undrawn amounts and amortization of financing costs), of 3.83%.
(3) Based on (i) $2,213.16 million in total assets including debt issuance costs on a pro forma basis as of March 31, 2018, after giving effect of a hypothetical asset coverage ratio of 150%, (ii) $1,453.42 million in outstanding indebtedness on a pro forma basis as of March 31, 2018, after giving effect of a hypothetical asset coverage ratio of 150%, (iii) $726.71 million in net assets as of March 31, 2018, and (iv) an annualized average interest rate on the Company’s indebtedness, as of March 31, 2018, excluding fees (such as fees on undrawn amounts and amortization of financing costs), of 3.83%.

Effect of Leverage on Expenses

The following table is intended to assist Stockholders in understanding the fees and expenses that an investor in the Company’s common stock will bear, directly or indirectly, assuming that the Company employs (1) its actual asset coverage ratio and actual base management fee rate as of March 31, 2018, (2) a hypothetical asset coverage ratio of 200% and the actual base management fee rate as of March 31, 2018 and (3) a hypothetical asset coverage ratio of 150% and the expected reduction in the base management fee payable to GSAM to an annual rate of 1.00% (0.25% per quarter) of the average value of the Company’s gross assets (excluding cash and cash equivalents, but including assets purchased with borrowed amounts) at the end of each of the two most recently completed calendar quarters.

The Company cautions that some of the percentages indicated in the table below are estimates and may vary. The expenses shown in the table under “annual expenses” are based on estimated amounts for the current

 

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fiscal year. The following table should not be considered a representation of the Company’s future expenses. Actual expenses may be greater or less than shown. Except where the context suggests otherwise, Stockholders will indirectly bear such fees or expenses.

 

Estimated Annual Expenses
(as percentage of net assets attributable to common stock)

   Actual asset
coverage as of
March 31, 2018
(237%)  (1)
    200% asset
coverage  (2)
    150% asset
coverage  (3)
 

Base management fees (4)

     2.68     3.10     3.08

Incentive fees payable under the Investment Management Agreement (20% of investment income and capital gains) (5)

     2.61     2.92     4.27

Interest payments on borrowed funds (6)

     2.77     3.77     7.45

Other expenses (7)

     1.19     1.23     1.29

Acquired fund fees and expenses (8)

     1.11     1.11     1.11

Total annual expenses

     10.36     12.12     17.20

 

(1) Expenses for the “Actual asset coverage as of March 31, 2018 (237%)” column are based on actual expenses incurred for the three months ended March 31, 2018, annualized for a full year.
(2) Expenses for the “200% asset coverage” column are based on annualized pro forma expenses for the three months ended March 31, 2018, which assume a hypothetical asset coverage ratio of 200%. The maximum amount of borrowings that could be incurred by the Company is presented for comparative and informational purposes only and such information is not a representation of the amount of borrowings that the Company intends to incur or that would be available to the Company to be incurred
(3) Expenses for the “150% asset coverage” column are based on annualized pro forma expenses for the three months ended March 31, 2018, which assume a hypothetical asset coverage ratio of 150% and the expected reduction in the base management fee from an annual rate of 1.50% (0.375% per quarter) to an annual rate 1.00% (0.25% per quarter) of the average value of the Company’s gross assets (excluding cash and cash equivalents, but including assets purchased with borrowed amounts) at the end of each of the two most recently completed calendar quarters. The maximum amount of borrowings that could be incurred by the Company is presented for comparative and informational purposes only and such information is not a representation of the amount of borrowings that the Company intends to incur or that would be available to the Company to be incurred.
(4) For the “200% asset coverage” and “150% asset coverage” columns, the Company’s management fee is calculated at an annual rate of 1.50% (0.375% per quarter) and 1.00% (0.25% per quarter), respectively, of the average value of the Company’s gross assets (excluding cash or cash equivalents (such as investments in money market funds), but including assets purchased with borrowed amounts) at the end of each of the two most recently completed calendar quarters. For purposes of the “200% asset coverage” and “150% asset coverage” columns, the table assumes average gross assets (excluding cash and cash equivalents) of $1,479.52 million and $2,206.23 million, respectively. See “Impact on advisory fees paid by the Company” below.
(5) For purposes of the “200% asset coverage” column, the table above assumes average gross assets (excluding cash and cash equivalents) of $1,479.52 million, total debt of $726.71 million, interest income calculated by applying the ratio of “total interest income” for the three months ended March 31, 2108 to the “total investment, at fair value” as of March 31, 2018 to the pro forma assets as of March 31, 2018 and (iv) interest expense on incremental pro forma leverage of 3.63%, which was the interest rate on the Company’s revolving credit facility as of March 31, 2018. For purposes of the “150% asset coverage” column, the table above assumes average gross assets (excluding cash and cash equivalents) of $2,206.23 million, total debt of $1,453.42 million, interest income calculated by applying the ratio of “total interest income” for the three months ended March 31, 2108 to the “total investment, at fair value” as of March 31, 2018 to the pro forma assets as of March 31, 2018 and (iv) interest expense on incremental pro forma leverage is 3.63%, which was the interest rate on the Company’s revolving credit facility as of March 31, 2018. See “Impact on advisory fees paid by the Company” below.
(6)

For the three months ended March 31, 2018, the Revolving Credit Facility bore a weighted average interest rate of 3.63% and the $115 million of 4.50% Convertible Notes due 2022 (the “Convertible Notes”) bore interest at an annual rate of 4.50%, resulting in a weighted average interest rate on the Company’s total debt of 3.83%. For purposes of the “200% asset coverage” column, the table above assumes total debt

 

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  outstanding of $726.71 million (the maximum amount of borrowings that could be incurred by the Company under the current 200% asset coverage requirement), which is comprised of $611.71 million under the Revolving Credit Facility bearing a weighted average interest rate as of March 31, 2018 of 3.63% and the $115.00 million of the Convertible Notes. For purposes of the “150% asset coverage” column, the table above assumes total debt outstanding of $1,453.42 million (the maximum amount of borrowings that could be incurred by the Company under the proposed 150% asset coverage requirement), which is comprised of $1,338.42 million under the Revolving Credit Facility bearing a weighted average interest rate as of March 31, 2018 of 3.63% and the $115.00 million of the Convertible Notes.
(7) “Other Expenses” includes overhead expenses, including payments under the administration agreement with the Company’s administrator, and is estimated to reflect the Company’s estimate of such expenses for the current fiscal year under the respective asset coverage scenario.
(8) Stockholders indirectly bear the expenses of underlying funds or other investment vehicles in which the Company invests that (1) are investment companies or (2) would be investment companies under section 3(a) of the 1940 Act but for the exceptions to that definition provided for in sections 3(c)(1) and 3(c)(7) of the 1940 Act (“Acquired Funds”). This amount includes the fees and expenses of the Senior Credit Fund, LLC (the Company’s joint venture with the Regents of the University of California) and a money market fund managed by an affiliate of Group Inc., which were the Company’s only Acquired Funds as of March 31, 2018, and assumes that such fees and expenses remain consistent with those incurred for the three months ended March 31, 2018.

Example. The following example demonstrates the projected dollar amount of total cumulative expenses that would be incurred over various periods with respect to a hypothetical investment in the Company’s common stock, assuming (1) actual asset coverage (237%) as of March 31, 2018, (2) a hypothetical asset coverage ratio of 200% and (3) a hypothetical asset coverage ratio of 150%, assuming that the Company’s annual operating expenses remain at the levels set forth in the table above for the respective asset coverage ratio, except for the incentive fee based on income. Transaction expenses are not included in the following example.

An investor would pay the following expenses on a $1,000 investment in the Company’s common stock:

 

     1 year      3 years      5 years      10 years  

Based on the Actual Asset Coverage (237%) as of March 31, 2018

           

Assuming a 5% annual return (none of which is subject to the incentive fee based on capital gains) (1)

   $ 76      $ 223      $ 361      $ 676  

Assuming a 5% annual return resulting entirely from net realized capital gains (all of which is subject to the incentive fee based on capital gains) (2)

   $ 86      $ 252      $ 408      $ 760  

Based on 200% Asset Coverage

           

Assuming a 5% annual return (none of which is subject to the incentive fee based on capital gains) (1)

   $ 90      $ 259      $ 414      $ 748  

Assuming a 5% annual return resulting entirely from net realized capital gains (all of which is subject to the incentive fee based on capital gains) (2)

   $ 100      $ 287      $ 459      $ 828  

Based on 150% Asset Coverage

           

Assuming a 5% annual return (none of which is subject to the incentive fee based on capital gains) (1)

   $ 124      $ 344      $ 530      $ 880  

Assuming a 5% annual return resulting entirely from net realized capital gains (all of which is subject to the incentive fee based on capital gains) (2)

   $ 134      $ 371      $ 572      $ 949  

 

(1) Assumes that we will not realize any capital gains computed net of all realized capital losses and unrealized capital depreciation.
(2) Assumes no unrealized capital depreciation and a 5% annual return resulting entirely from net realized capital gains and not otherwise deferrable under the terms of the Investment Management Agreement and therefore subject to the incentive fee based on capital gains. Because the Company’s investment strategy involves investments that generate primarily current income, the Company believes that a 5% annual return resulting entirely from net realized capital gains is unlikely.

 

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The foregoing table is to assist Stockholders in understanding the various costs and expenses that an investor in the Company’s common stock will bear directly or indirectly. While the example assumes a 5% annual return, the Company’s performance will vary and may result in a return greater or less than 5%. The incentive fee under the Investment Management Agreement, which, assuming a 5% annual return, would either not be payable or would have an insignificant impact on the expense amounts shown above, is not included in the example. The example assumes reinvestment of all distributions at net asset value. In addition, while the example assumes reinvestment of all dividends and distributions at net asset value, under certain circumstances, reinvestment of dividends and other distributions under the Company’s dividend reinvestment plan may occur at a price per share that differs from net asset value.

While the above tables assume an asset coverage ratio of 150%, management, in consultation with the Board, will determine the appropriate level of leverage for the Company based on a variety of factors. As such, even if Proposal 3 is approved, the Company may continue to operate with lower levels of leverage (i.e., higher asset coverage ratios).

Additional flexibility to make required regulated investment company distributions without violating the 1940 Act

Prior to the passage of the SBCA Act, the 1940 Act prohibited BDCs from declaring any dividend or other distribution to holders of any class of capital stock, in the case of debt securities, or common stock, in the case of preferred stock, unless the asset coverage with respect to such senior securities was at least 200%. By lowering the asset coverage requirement to 150%, the Company will have additional flexibility, subject to compliance with the covenants under any debt facilities, to continue making the distributions to Stockholders required to maintain its qualification as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended. This additional flexibility may be helpful in circumstances where the value of the Company’s assets, and thus the Company’s asset coverage, declines, but the level of the Company’s net investment income remains relatively constant (i.e., the Company continues to have cash available to make any necessary distributions to Stockholders). If the Company were to fail to make required distributions and no longer qualify as a regulated investment company, the Company would be subject to corporate-level U.S. federal income taxes.

Impact on advisory fees paid by the Company

As the base management fee payable to GSAM pursuant to the Investment Management Agreement is calculated at an annual rate of 1.50% (0.375% per quarter) of the average value of the Company’s gross assets (excluding cash and cash equivalents, but including assets purchased with borrowed amounts) at the end of each of the two most recently completed calendar quarters, incurring additional leverage would increase the management fee payable to GSAM. As such, if Proposal 3 is approved by the Stockholders, the Company and GSAM intend to reduce the base management fees payable under the Investment Management Agreement to 1.00% (0.25% per quarter) of the average value of the Company’s gross assets (excluding cash and cash equivalents, but including assets purchased with borrowed amounts) at the end of each of the two most recently completed calendar quarters beginning immediately following stockholder approval. If Proposal 3 is not approved by the Stockholders, the base management fees will not be reduced.

The Board noted that application of the lower base management fee rate during fiscal year 2017 and during the first quarter of 2018 would have resulted in a reduction of management fees and an increase of incentive fees payable by the Company with a net impact in savings to stockholders of approximately $4.76 million, or $0.12 per share, and approximately $1.28 million, or $0.03 per share, respectively, resulting in a meaningful increase in net investment income and stockholder return on equity. As a result of the expected reduction of the base management fees, in the event that Proposal 3 is approved by the Stockholders, aggregate fees payable to GSAM under the Investment Management Agreement may decrease, increase or remain unchanged depending on the amount of additional leverage incurred, irrespective of the return on the incremental assets. The Board also noted that sourcing additional investment opportunities to deploy any additional capital will require additional time and effort on the part of GSAM and its investment personnel.

 

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In addition, as additional leverage would magnify positive returns, if any, on the Company’s portfolio, as noted above, the Company’s net investment income may exceed the quarterly hurdle rate for the incentive fee on income payable to GSAM pursuant to the Investment Management Agreement at a lower average return on the Company’s portfolio. Thus, if the Company incurs additional leverage, GSAM may receive additional incentive fees without any corresponding increase (and potentially with a decrease) in the Company’s performance.

Other Considerations

The Board also noted that holders of any senior securities, including any additional senior securities that Company may be able to issue as a result of the reduced asset coverage requirements, will have fixed-dollar claims on the Company’s assets that are superior to the claims of the Stockholders. In the case of a liquidation event, holders of these senior securities would receive proceeds to the extent of their fixed claims before any distributions are made to the Stockholders, and the issuance of additional senior securities may result in fewer proceeds remaining for distribution the Stockholders if the assets purchased with the capital raise from such issuances decline in value.

The Board also considered the disclosure requirements that would apply to certain of the Company’s filings with the SEC under the Exchange Act if this Proposal 3 is approved and determined that such incremental disclosure would not impose material additional expenses on the Company.

Based on its consideration of each of the above factors and such other information as the Board deemed relevant, the Board concluded that Proposal 3 is in the best interests of the Company and the Stockholders and recommended that the Stockholders approve this Proposal.

ON MAY 1, 2018, THE BOARD, INCLUDING EACH OF THE INDEPENDENT DIRECTORS, UNANIMOUSLY RECOMMENDED THAT YOU VOTE “FOR” THE APPROVAL OF THE APPLICATION OF THE REDUCED ASSET COVERAGE REQUIREMENTS IN SECTION 61(A)(2) OF THE 1940 ACT TO THE COMPANY.

 

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OTHER BUSINESS

The management of the Company does not know of any other matters to be brought before the Meeting. If such matters are properly brought before the Meeting, proxies that do not contain specific instructions to the contrary will be voted in accordance with the judgment of Caroline Kraus and Neena Reddy, who are the persons named as proxy.

VOTE REQUIRED FOR THE ELECTION OF THE DIRECTOR AND

APPROVAL OF OTHER MATTERS AT THE MEETING

A quorum for the transaction of business at the Meeting is established by the presence, in person or by proxy, of holders representing a majority of the votes entitled to be cast at the Meeting. Stockholders of record at the close of business on the Record Date are entitled to receive notice of, and to vote at, the Meeting and at any postponements or adjournments thereof. There were 40,175,405 shares of the Company’s common stock outstanding on May 21, 2018. Each share of common stock is entitled to one vote. Cumulative voting is not permitted.

Election of Director

The election of the nominee requires a majority of the votes cast by all Stockholders present, in person or by proxy, at the Meeting, provided that if, as of the tenth (10th) day preceding the date the Company first mails the notice of such meeting to the Stockholders, the number of nominees for the directorships (or, if applicable, the directorships of a particular class of directors) exceeds the number of such directors to be elected, such directors shall be elected by the vote of a plurality of the votes cast. Under the Company’s bylaws, a majority of votes cast means that the number of votes cast “for” a director’s election exceeds the number of votes cast “against” that director’s election (with “abstentions” and “broker non-votes” not counted as a vote cast either “for” or “against” that director’s election).

Ratification of Auditor

Approval of Proposal 2, the ratification of the selection of PricewaterhouseCoopers LLP to serve as the Company’s independent registered public accounting firm, requires a majority of the votes by all Stockholders present, in person or by proxy, at the Meeting.

Approval of Reduced Asset Coverage Requirements

Approval of Proposal 3, the approval of the application of the reduced asset coverage requirements in Section 61(a)(2) of the 1940 Act to the Company, which would permit the Company to double the maximum amount of leverage that it is permitted to incur by reducing the asset coverage requirement applicable to the Company from 200% to 150%, requires a majority of the votes cast by all Stockholders present, in person or by proxy, at the Meeting.

Broker Non-Votes

Broker “non-votes” are shares held in an account with an Authorized Institution for which the broker indicates that instructions have not been received from the beneficial owners or other persons entitled to vote, and the broker does not have discretionary voting authority with respect to a non-routine proposal. As broker non-votes are entitled to vote on Proposal 2, broker non-votes will be counted as shares present for purposes of determining whether a quorum is present.

Proposals 1 and 3 are non-routine matters. As a result, if you hold shares in “street name” through a broker, bank or other nominee, your broker, bank or nominee will not be permitted to exercise voting discretion with respect to Proposal 1, the election of one Class I director, or Proposal 3, the approval of the application of the

 

28


reduced asset coverage requirements in Section 61(a)(2) of the 1940 Act to the Company. Therefore, if you do not vote and you do not give your broker or other nominee specific instructions on how to vote for you, then your shares will have no effect on Proposal 1 or Proposal 3.

Proposal 2, the ratification of the selection of PricewaterhouseCoopers LLP to serve as the Company’s independent registered public accounting firm, is a routine matter. As a result, if you beneficially own your shares and you do not provide your broker or nominee with voting instructions, then your broker, bank or nominee will be able to vote your shares for you on Proposal 2.

Abstentions

Abstentions will be counted as shares present for purposes of determining whether a quorum is present, but will not be voted for or against the Proposal for which the proxy card has been marked “Abstain”. Accordingly, abstentions will have no effect on Proposal 1 or Proposal 3, and the effect of a vote against Proposal 2.

Adjournment

If less than a quorum is present at the Meeting or if an insufficient number of votes is present for the approval of the Proposals, the chairman of the Meeting shall have the power to adjourn the Meeting from time to time without notice other than announcement at the Meeting.

A vote may be taken on any Proposal(s) prior to any such adjournment if there are sufficient votes for approval of such Proposal.

COMMUNICATIONS WITH THE BOARD

All interested parties, including Stockholders, may send communications to the Board, the Independent Directors, the Chairman or any other individual director, by addressing such communication to the Board, the Independent Directors, the Chairman or to the individual director, c/o Goldman Sachs Asset Management, L.P., 200 West Street, New York, New York 10282.

ANNUAL AND QUARTERLY REPORTS

Copies of the Company’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K are available, without charge, on its website at https://www.goldmansachsbdc.com or upon request by writing to the Company or by calling the Company toll-free at (800) 621-2550. Please direct your written request to Caroline Kraus, Secretary, at the Company, c/o Goldman Sachs Asset Management, L.P., 200 West Street, New York, New York 10282. Copies of such reports are also posted and are available without charge on the SEC’s website at www.sec.gov .

CORPORATE GOVERNANCE

Code of Ethics

The Company has adopted a Code of Ethics pursuant to Rule 17j-1 under the 1940 Act and the Company has also approved GSAM’s Code of Ethics that it adopted in accordance with Rule 17j-1 and Rule 204A-1 under the Investment Advisers Act of 1940, as amended. These Codes of Ethics establish, among other things, procedures for personal investments and restrict certain personal securities transactions, including transactions in securities that are held by the Company. Personnel subject to each code may invest in securities for their personal

 

29


investment accounts, so long as such investments are made in accordance with the code’s requirements. The Codes of Ethics can be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling the SEC at (202) 551-8090 or (800) SEC-0330. The Codes of Ethics are also available on the EDGAR Database on the SEC’s Internet site ( http://www.sec.gov ). Copies may also be obtained after paying a duplicating fee by writing the SEC’s Public Reference Section, Washington, DC 20549-0102, or by electronic request to publicinfo@sec.gov .

Code of Business Conduct and Ethics

The Company has adopted a Code of Business Conduct and Ethics which applies to, among others, the Company’s Chief Executive Officer and Chief Financial Officer. The Company intends to disclose any material amendment to or waivers of required provisions of the Code of Business Conduct and Ethics on a current report on Form 8-K or on the Company’s website. The Code of Business Conduct and Ethics can be accessed via the Company’s website ( https://www.goldmansachsbdc.com ).

Corporate Governance Guidelines and Director Charter

The Company has adopted a Corporate Governance Guidelines and Director Charter which applies to, among other things, the authority and duties of the directors, the composition of the Board and the election and role of the Chairman of the Board. The Corporate Governance Guidelines and Director Charter can be accessed via the Company’s website ( https://www.goldmansachsbdc.com ).

ADDITIONAL INFORMATION

The principal address of the Company’s investment adviser is Goldman Sachs Asset Management, L.P., 200 West Street, New York, New York 10282.

The principal address of the Company’s administrator is State Street Bank and Trust Company, One Lincoln Street, Boston, Massachusetts 02111.

STOCKHOLDER PROPOSALS

The Company expects that the 2019 Annual Meeting of Stockholders will be held in June 2019, but the exact date, time and location of such meeting have yet to be determined. A Stockholder who intends to present a proposal at that annual meeting, including nomination of a director, must submit the proposal in writing to the Secretary of the Company at the Company, c/o Goldman Sachs Asset Management, L.P., 200 West Street, New York, New York 10282. Notices of intention to present proposals, including nomination of a director, at the 2019 Annual Meeting of Stockholders must be received by the Company no earlier than February 15, 2019 and no later than March 17, 2019. In order for a proposal to be considered for inclusion in the Company’s proxy statement for the 2019 Annual Meeting of Stockholders, the Company must receive the proposal no later than January 24, 2019. The submission of a proposal does not guarantee its inclusion in the Company’s proxy statement or presentation at the meeting unless certain securities law requirements are met. The Company reserves the right to reject, rule out of order or take other appropriate action with respect to any proposal that does not comply with these and other applicable requirements.

Stockholders who do not expect to be present at the Meeting and who wish to have their shares voted are requested to vote by mail, Internet or telephone. If you choose to vote by mail, please sign and date the enclosed proxy card and return it in the enclosed envelope. No postage is required if mailed in the United States. If you choose to vote by Internet or telephone, please use the control number on the proxy card and follow the instructions on the proxy card. If you have any questions regarding the proxy materials please contact the Company at (800) 621-2550.

 

 

30


PROXYSTMTANNUAL-BDC 2018


EVERY STOCKHOLDER’S VOTE IS IMPORTANT

 

   EASY VOTING OPTIONS:                    
   LOGO   

VOTE ON THE INTERNET

Log on to:

www.proxy-direct.com

or scan the QR code

Follow the on-screen instructions

available 24 hours

  

LOGO

  

VOTE BY PHONE

Call 1-800-337-3503

Follow the recorded instructions

available 24 hours

  

LOGO

  

VOTE BY MAIL

Vote, sign and date this Proxy

Card and return in the

postage-paid envelope

  

LOGO

  

VOTE IN PERSON

Attend Stockholder Meeting

30 Hudson St,

Jersey City, NJ 07302

on June 15, 2018

Please detach at perforation before mailing.

 

PROXY   

GOLDMAN SACHS BDC, INC.

ANNUAL MEETING OF STOCKHOLDERS

TO BE HELD ON JUNE 15, 2018

  

THIS PROXY IS BEING SOLICITED BY THE BOARD OF DIRECTORS . The undersigned stockholder(s) of Goldman Sachs BDC, Inc. (the “Company”), revoking previous proxies, hereby appoints Caroline Kraus and Neena Reddy, or any one of them, true and lawful attorneys with power of substitution of each, to vote all shares of common stock, par value $0.001 per share, of Goldman Sachs BDC, Inc. which the undersigned is entitled to vote at the Annual Meeting of Stockholders (“Annual Meeting”) to be held on June 15 , 2018, at 10:00 a.m. Eastern Time, at the offices of Goldman Sachs Asset Management, L.P. (“GSAM”), located at 30 Hudson Street, Jersey City, NJ 07302 and at any postponement or any adjournment thereof as indicated on the reverse side of this card, and to otherwise represent the undersigned at the Annual Meeting with all powers possessed by the undersigned if personally present at the Annual Meeting.

Receipt of the Notice of Annual Meeting and the accompanying Proxy Statement is hereby acknowledged by the undersigned. If this Proxy is executed but no instructions are given, the votes entitled to be cast by the undersigned will be cast “FOR” each of the Proposals. Additionally, in their discretion, the proxy holders named above are authorized to vote upon such other matters as may properly come before the Annual Meeting or any adjournment or postponement thereof.

 

 

VOTE VIA THE INTERNET: www.proxy-direct.com

VOTE VIA THE TELEPHONE: 1-800-337-3503

           

 

PLEASE SIGN, DATE AND RETURN THE PROXY PROMPTLY USING THE ENCLOSED ENVELOPE.

GOL_29721_050218_A


EVERY STOCKHOLDER’S VOTE IS IMPORTANT

Important Notice Regarding the Availability of Proxy Materials for the

Annual Meeting of the Stockholders of Goldman Sachs BDC, Inc.

to Be Held on June 15, 2018, at 10:00 a.m. (Eastern Time)

The Proxy Statement for this meeting is available at: https://www.proxy-direct.com/gld-29721

IF YOU VOTE ON THE INTERNET OR BY TELEPHONE,

YOU NEED NOT RETURN THIS PROXY CARD

Please detach at perforation before mailing.

 

TO VOTE MARK BLOCKS BELOW IN BLUE OR BLACK INK AS SHOWN IN THIS EXAMPLE:     

 

  A  

  Proposals THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDED THAT YOU VOTE “FOR” EACH OF THE PROPOSALS.

 

1.

  

To elect one Class I Director of the Company:

   FOR    AGAINST    ABSTAIN
  

01 Susan B. McGee

        

2.

  

To ratify the selection of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2018.

        

3.

  

To approve the application of the reduced asset coverage requirements in Section 61(a)(2) of the Investment Company Act of 1940, as amended, to the Company, which would permit the Company to double the maximum amount of leverage that it is permitted to incur by reducing the asset coverage requirement applicable to the Company from 200% to 150%.

        

 

  B  

  Authorized Signatures — This section must be completed for your vote to be counted.— Sign and Date Below

Note : Please sign exactly as your name(s) appear(s) on this proxy card, and date it. When shares are held jointly, each holder should sign. When signing as attorney, executor, administrator, trustee, officer of corporation or other entity or in another representative capacity, please give the full title under the signature.

 

Date (mm/dd/yyyy) — Please print date below     Signature 1 — Please keep signature within the box      Signature 2 — Please keep signature within the box
        /        /                     

 

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