DEF: FS Credit Income Fund Seeks Shareholder Approval for New Independent Trustee and Re-election of Incumbent

Sentiment:

Definitive Proxy Statement 20 June 2025 5:16 PM

FS Credit Income Fund is calling a special shareholder meeting on August 4, 2025, to vote on the election of two individuals, Jack Markell and Tyson A. Pratcher, to its Board of Trustees, both of whom are proposed as Independent Trustees.

Summary

A special meeting of shareholders for FS Credit Income Fund (the Fund) is scheduled for August 4, 2025, at 11:00 a.m. Eastern Time, at the Fund's offices in Philadelphia, PA.
The primary purpose of the meeting is for shareholders to vote on the election of two individuals to the Board of Trustees: Jack Markell and Tyson A. Pratcher.
Tyson A. Pratcher is an incumbent Independent Trustee who has served since March 9, 2021, and is standing for re-election.
Jack Markell is a new nominee who, if elected, will also serve as an Independent Trustee.
The Board of Trustees unanimously recommends that shareholders vote FOR the proposal to elect both proposed individuals.
The election is necessary to comply with the Investment Company Act of 1940, which requires a certain percentage of trustees to be elected by shareholders before the Board can appoint new trustees or expand its size.
Shareholders of record as of June 18, 2025, are eligible to vote.
Voting can be done in-person, by mail, telephone, or over the Internet, with a deadline of August 3, 2025, at 11:59 p.m. ET for proxy submissions.
A plurality of votes cast is sufficient for approval, meaning the two nominees receiving the highest number of affirmative votes will be elected.
The Fund will bear the costs of proxy solicitation, including an estimated $20,000 for Broadridge Investor Communication Solutions, Inc. as the proxy soliciting and tabulation agent.

Sentiment

Score: 7

Explanation: The document conveys a positive sentiment, primarily due to the unanimous board recommendation for the trustee nominees, the strong qualifications of the proposed new independent trustee, and the emphasis on enhancing corporate governance and regulatory compliance. While there are minor costs associated with the proxy, the overall tone is one of routine, well-managed corporate action aimed at strengthening the board.

Positives

The Board of Trustees unanimously recommends the election of both proposed Trustee Nominees, indicating strong internal support.
The election of Jack Markell, a new nominee, will add another Independent Trustee to the Board, enhancing independent oversight.
Both nominees, Jack Markell and Tyson A. Pratcher, bring extensive and diverse professional experience, including backgrounds in investment management, public service (former Governor and U.S. Ambassador), and corporate leadership.
The election facilitates the Fund's compliance with the Investment Company Act of 1940 requirements regarding shareholder-elected trustees, ensuring regulatory adherence.
The Fund has established robust corporate governance structures, including an Audit Committee and a Nominating and Corporate Governance Committee, with clearly defined charters and oversight responsibilities.

Negatives

The Fund will incur costs for the proxy solicitation, including an estimated $20,000 for the proxy soliciting agent, plus additional expenses for printing, mailing, and intermediary reimbursements.
There is a risk that the Fund might not receive enough votes to reach a quorum, which would necessitate additional mailings or solicitations, incurring further expense and delay.
Abstentions and broker non-votes will effectively count as 'no' votes for the purpose of obtaining the requisite approval for the trustee election, potentially making it harder to achieve the plurality required if there were significant opposition.

Risks

Failure to achieve a quorum at the Special Meeting could lead to the need for additional solicitations and potential delays, incurring further costs for the Fund.
While not currently anticipated, there is a risk that a Trustee Nominee may be unable to serve, which would require shareholders to vote for a replacement designated by the Board.
The Audit Committee's oversight does not guarantee that financial statements are accurate or prepared in accordance with U.S. GAAP, as they rely on information provided by management and independent auditors.
Not all risks that may affect the Fund can be identified, and processes and controls may not eliminate or mitigate all occurrences or effects of risks, with some risks being beyond the Fund's control.
Cybersecurity matters are identified as an area of oversight for the Audit Committee, indicating a recognition of associated risks.

Future Outlook

If elected by shareholders, Jack Markell is expected to assume the role of Trustee of the Fund shortly after the August 4, 2025 meeting. Both Trustee Nominees, if elected, will serve for a term of indefinite duration until their successors are duly elected and qualified. The Fund expects to hold shareholder meetings only as required by the Investment Company Act of 1940 or pursuant to special meetings called by the Board or a majority of shareholders, and will comply with any future listing requirements if shares are listed on an exchange.

Management Comments

Michael C. Forman, President, Chief Executive Officer and Trustee, stated: "I encourage you to exercise your rights in governing the Fund by voting on the Proposal. The Board unanimously recommends that you cast your vote FOR the Proposal to elect each proposed individual as a Trustee of the Fund, as described in the Proxy Statement."
The Board believes that the Trustee Nominees have the qualifications, experience, attributes and skills appropriate to serve as Trustees of the Fund in view of the Fund's business and structure.
The Board believes that its leadership structure is the optimal structure for the Fund at this time given the Fund's current size and complexity.

Industry Context

Management Changes

Role	Previous Person	New Person	Effective Date	Reason
Trustee	Daniel J. Hilferty III	NA	June 10, 2025	Resignation
Trustee Nominee (New)	NA	Jack Markell	Shortly after August 4, 2025 (if elected)	Proposed for election to fill a vacancy and facilitate 1940 Act compliance
Trustee Nominee (Re-election)	Tyson A. Pratcher	Tyson A. Pratcher	NA (currently serving, proposed for re-election)	Proposed for re-election to facilitate 1940 Act compliance

Corporate Governance

Change Type	Description	Effective Date	Impact Assessment
Board Composition	Proposal to elect two trustees, Jack Markell and Tyson A. Pratcher, to the Board to ensure compliance with the Investment Company Act of 1940, which requires a certain percentage of trustees to be elected by shareholders.	August 4, 2025 (if elected)	Enhances compliance with regulatory requirements and strengthens board independence by adding a new independent trustee.
Board Leadership Structure	The Board currently consists of four members, with Michael C. Forman serving as Chairman (an interested person). The Board does not currently have a lead independent trustee, but independent trustees meet separately in executive session.	Ongoing	The Board believes this structure is optimal for the Fund's current size and complexity, enabling effective oversight.
Audit Committee Charter	The Board adopted a written charter for the Audit Committee in December 2024, outlining its responsibilities for financial reporting oversight, independent auditor engagement, internal controls, and cybersecurity.	December 2024	Formalizes and strengthens the oversight responsibilities of the Audit Committee, ensuring robust financial and operational controls.
Nominating and Corporate Governance Committee Charter	The Board adopted a written charter for the Nominating and Corporate Governance Committee on April 8, 2025, detailing its role in identifying and nominating trustees, reviewing board composition, and overseeing board and management evaluations.	April 8, 2025	Establishes clear guidelines for board recruitment, composition, and ongoing evaluation, promoting effective corporate governance.
Policy on Pre-Approval of Audit and Non-Audit Services	The Audit Committee adopted a policy to pre-approve all audit and permitted non-audit services performed by the independent accountants to ensure auditor independence.	Ongoing (adopted prior to fiscal year ended Oct 31, 2024)	Ensures the independence and objectivity of the Fund's independent registered public accounting firm.
Whistleblower Policy	The Company encourages employees to report concerns regarding accounting, internal accounting controls, or auditing matters on a confidential, anonymous basis.	Ongoing	Provides a mechanism for employees to raise concerns without fear of retaliation, enhancing internal controls and ethical conduct.

Related Party Transactions

Michael C. Forman, Chairman and CEO, is deemed an 'interested person' of the Fund due to his role as a controlling person of FS Credit Income Advisor, LLC, the Fund's investment adviser.
FS Credit Income Advisor, an affiliate of FS Investments, serves as the Fund's investment adviser and administrator.
Compensation for Independent Trustees is determined based on the net assets of the Fund and other funds in the Interval Fund Complex, with annual cash retainers and meeting fees.
Aggregate non-audit fees billed by Ernst & Young for services rendered to the Fund, FS Credit Income Advisor, and any controlling affiliates were $0 for the fiscal years ended October 31, 2024, and 2023, indicating no significant related-party non-audit services.

Stakeholder Impact

Shareholders: Are directly impacted as they are being asked to vote on the election of trustees, which is crucial for the Fund's governance and compliance. Their participation is encouraged to ensure a quorum.
Employees: The Whistleblower Policy provides a confidential channel for employees to report concerns regarding accounting or auditing matters, potentially fostering a more transparent and ethical environment.
Management: The election of new trustees and the re-election of an incumbent will shape the composition of the Board, influencing strategic direction and oversight.

Next Steps

Shareholders are requested to vote on the proposal to elect two trustees to the Board of Trustees.
The Special Meeting of Shareholders will be held on August 4, 2025, at 11:00 a.m. Eastern Time.
If elected, Jack Markell is expected to assume the role of Trustee shortly after the Meeting.
The Board will annually conduct a self-assessment to review its performance and the effectiveness of its committee structures.
The Audit Committee will review and reassess the adequacy of its charter at least annually.
The Nominating and Corporate Governance Committee will review and reassess the adequacy of its charter at least annually.

Key Dates

Date	Description
October 27, 2016	FS Credit Income Fund organized as a Delaware statutory trust.
November 1, 2017	FS Credit Income Fund commenced operations.
July 2017	Tyson A. Pratcher began serving as Co-Head of Investments at TFO USA.
February 2019	Tyson A. Pratcher concluded his role as Co-Head of Investments at TFO USA.
2019	Tyson A. Pratcher began serving as Managing Partner of Cane Wells, Inc.
2020	Tyson A. Pratcher concluded his role as Managing Partner of Cane Wells, Inc. and began serving as Managing Director of RockCreek Group.
March 9, 2021	Tyson A. Pratcher appointed as a Trustee of the Fund.
April 2021	Tyson A. Pratcher began directorship at Finance of America.
November 2021	Tyson A. Pratcher began serving as Senior Advisor at 7 Acquisition Corp.
2022	Tyson A. Pratcher concluded his role as Managing Director of RockCreek Group.
2023	Tyson A. Pratcher began serving as Senior Managing Director of Artemis Real Estate Partners and Jack Markell began serving as U.S. Ambassador to the Italian Republic and Republic of San Marino.
2024	Tyson A. Pratcher began serving as Chief Executive Officer of Artemis Strategic Capital Partners.
October 31, 2024	End of the fiscal year for the Fund. The Board met eight times, the Audit Committee met eight times, and the Nominating and Corporate Governance Committee met once during this fiscal year.
December 2024	Audit Committee Charter adopted.
December 11, 2024	Audit Committee meeting where they recommended ratifying the inclusion of audited financial statements for the fiscal year ended October 31, 2024.
December 31, 2024	Date for beneficial ownership reporting of shares by Trustees and Trustee Nominees.
April 8, 2025	Nominating and Corporate Governance Committee Charter adopted.
June 10, 2025	Daniel J. Hilferty III resigned as a Trustee of the Fund.
June 18, 2025	Record Date for shareholders entitled to notice of and to vote at the Special Meeting.
June 20, 2025	Date of the Dear Shareholder letter and the Proxy Statement.
June 23, 2025	Approximate mailing date of the Notice of Internet Availability of Proxy Materials or the Proxy Statement with accompanying proxy card.
August 3, 2025	Deadline for submitting votes by Internet, telephone, or paper proxy card (11:59 p.m. Eastern Time).
August 4, 2025	Date of the Special Meeting of Shareholders (11:00 a.m. Eastern Time).

Recommendation

hold

Keywords

FS Credit Income Fund, Proxy Statement, Trustee Election, Board of Trustees, Corporate Governance, Independent Trustee, Investment Company Act of 1940, Shareholder Meeting, DEF 14A, Closed-End Fund, Interval Fund

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