DEF: WhiteHorse Finance Schedules 2025 Annual Stockholder Meeting, Proposes Director Elections and Auditor Ratification

Sentiment:

Definitive Proxy Statement 20 June 2025 9:16 AM

📋All filings for Whitehorse Finance, INC

WhiteHorse Finance, Inc. has announced its 2025 Annual Meeting of Stockholders will be held virtually on July 30, 2025, to elect two Class I directors and ratify Crowe LLP as its independent registered public accounting firm.

Summary

The 2025 Annual Meeting of Stockholders for WhiteHorse Finance, Inc. will be held virtually on July 30, 2025, at 1:00 p.m. Eastern Time, accessible via www.virtualshareholdermeeting.com/WHF2025.
Stockholders will vote on two key proposals: the election of two Class I directors (G. Stacy Smith and John P. Volpe) to serve until the 2028 annual meeting, and the ratification of Crowe LLP as the company's independent registered public accounting firm for the fiscal year ending December 31, 2025.
The Board of Directors, including all independent directors, unanimously recommends voting FOR both proposals.
As of the Record Date, June 6, 2025, there were 23,243,088 shares of common stock outstanding, with each share entitled to one vote.
The company's base management fee rate was reduced from 2.00% to 1.75% effective January 1, 2024.
For the fiscal year ended December 31, 2024, WhiteHorse Advisers earned a base management fee of $12.1 million and a performance-based incentive fee of $9.3 million.
Independent Directors' annual fees increased from $102,000 to $107,500 effective October 30, 2024, with additional fees for committee chairmanships ($15,000 for Audit Committee Chair, $10,000 for other committee chairs).

Sentiment

Score: 7

Explanation: The document conveys a positive sentiment, primarily due to the emphasis on strong corporate governance, the unanimous board recommendations, and the proactive reduction in the base management fee rate. It outlines routine, well-managed corporate affairs without any apparent negative surprises or significant challenges.

Positives

The Board of Directors, including independent directors, unanimously recommends voting for all proposals, indicating strong internal alignment.
The company maintains a majority of independent directors (four out of seven), aligning with Nasdaq corporate governance requirements and the 1940 Act.
The base management fee rate paid to WhiteHorse Advisers was reduced from 2.00% to 1.75% effective January 1, 2024, potentially benefiting stockholders.
The company has established robust corporate governance practices, including an Audit Committee, Nominating and Corporate Governance Committee, and Compensation Committee, all composed solely of independent directors.
The Audit Committee has determined that Mr. Puckett is an audit committee financial expert and all members meet independence and experience requirements.
The company has policies and procedures in place to manage potential conflicts of interest and facilitate co-investment opportunities with affiliates, subject to SEC exemptive relief and Board oversight.

Risks

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 incentive fee structure for WhiteHorse Advisers may create incentives not fully aligned with stockholder interests and could induce investments in certain security types.
There may be a conflict of interest when WhiteHorse Advisers personnel are involved in the valuation process for portfolio investments, as their fees are based on investment value.
Not all conflicts of interest can be expected to be resolved in the company's favor, particularly when WhiteHorse Advisers manages other investment vehicles with similar or overlapping strategies.
There is no assurance that WhiteHorse Advisers' efforts to allocate investment opportunities fairly among all clients will result in an allocation of all or part of such opportunity to the company.
Senior management and investment professionals may obtain material non-public information through their roles with portfolio companies, which might restrict the company's ability to buy or sell securities of such companies.

Future Outlook

The document primarily focuses on the upcoming annual meeting and corporate governance matters. It does not provide specific forward-looking financial guidance or strategic outlook beyond the routine operations and the Board's commitment to effective oversight and compliance.

Management Comments

"You are cordially invited to participate in the 2025 Annual Meeting of Stockholders... It is very important that your shares be represented at the Meeting. Even if you plan to participate in the virtual Meeting, I urge you to follow the instructions on the Notice of Internet Availability of Proxy Materials to vote your proxy on the Internet. We encourage you to vote via the Internet, if possible, as it saves the Company significant time and processing costs." Stuart Aronson, Chief Executive Officer.
"Your vote and participation in the governance of the Company are very important to us." Stuart Aronson, Chief Executive Officer.
"The Board of Directors of the Company, including each of the Independent Directors, unanimously recommends that you vote FOR each of the proposals."

Industry Context

As a Business Development Company (BDC) operating in the direct lending space, WhiteHorse Finance's corporate governance practices, particularly its emphasis on independent directors and robust committee structures, align with best practices for publicly traded investment vehicles. The virtual meeting format is a common adaptation in the current corporate landscape, reflecting a broader industry trend towards digital engagement. The fee structure and related party transactions are typical for BDCs managed by external investment advisers, where managing potential conflicts of interest is a key regulatory and governance focus.

Comparison to Industry Standards

The company's board composition, with four out of seven directors being independent, meets the Nasdaq Global Select Market requirement for a majority of independent directors, which is a common standard across publicly traded companies.
The establishment of an Audit Committee, Nominating and Corporate Governance Committee, and Compensation Committee, all composed solely of independent directors, aligns with leading corporate governance practices for public companies, including those in the financial services sector.
The annual evaluation of the Board's performance and the adoption of written charters for its committees demonstrate adherence to established governance frameworks, comparable to other well-governed BDCs and investment firms.
The reduction in the base management fee rate from 2.00% to 1.75% effective January 1, 2024, could be viewed favorably in comparison to some industry peers, as management fees are a significant cost for externally managed BDCs. While specific comparable companies are not named, fee structures are a competitive aspect in the BDC industry.
The company's exemptive relief from the SEC allowing co-investment with affiliates, subject to certain conditions, is a common mechanism for BDCs to access a broader range of investment opportunities, similar to other BDCs that have sought and received such relief.

Management Changes

Role	Previous Person	New Person	Effective Date	Reason
Director (Class I)	NA	John P. Volpe	April 2024	New appointment to the Board, nominated for re-election.

Corporate Governance

Change Type	Description	Effective Date	Impact Assessment
Meeting Format	The 2025 Annual Meeting will be a completely virtual meeting of stockholders, allowing attendance, voting, and question submission via live webcast.	July 30, 2025	Enhances accessibility for stockholders but eliminates physical meeting location.
Board Structure	The Board currently has seven members, divided into three classes with staggered three-year terms. Four of the seven directors are Independent Directors, meeting Nasdaq and 1940 Act requirements.	Ongoing	Ensures continuity and independent oversight, with a majority of independent directors.
Director Compensation	Annual fee for Independent Directors increased from $102,000 to $107,500, effective October 30, 2024. Additional fees for committee chairs ($15,000 for Audit, $10,000 for others).	October 30, 2024	Adjusts compensation for independent directors, potentially attracting and retaining qualified individuals.
Committee Composition	Audit, Nominating and Corporate Governance, and Compensation Committees are composed solely of Independent Directors.	Ongoing	Strengthens independent oversight of critical functions like financial reporting, director nominations, and compensation.
Risk Oversight	The Board reviews risk management processes at regular and special meetings, consulting with WhiteHorse Advisers and requesting reports.	Ongoing	Aims to ensure accurate identification and responsible addressing of risks related to investment activities.
Codes and Policies	The company has adopted a Code of Conduct, a Joint Code of Ethics (with WhiteHorse Advisers), and Insider Trading Policies and Procedures, all publicly available.	Ongoing	Establishes clear ethical and compliance standards for directors, officers, and employees, promoting integrity and preventing misuse of information.
Related Party Transactions Policy	The Audit Committee, in consultation with the CEO, CCO, and legal counsel, has a written policy for quarterly review of potential related party transactions and conflicts of interest.	Ongoing	Provides a structured approach to identify and manage potential conflicts arising from relationships with affiliates.

Related Party Transactions

**Investment Advisory Agreement**: The company pays WhiteHorse Advisers a base management fee (reduced to 1.75% effective Jan 1, 2024) and an incentive fee for investment management services. For FY2024, fees were $12.1 million (base) and $9.3 million (incentive).
**Staffing Agreement**: WhiteHorse Advisers has an agreement with an H.I.G. Capital affiliate to access experienced investment professionals and deal flow, and to ensure fair and equitable allocation of investment opportunities among managed affiliates.
**Administration Agreement**: WhiteHorse Administration provides office facilities, equipment, and administrative services, including financial records, SEC reporting, and NAV determination. For FY2024, WhiteHorse Administration received $0.7 million.
**License Agreement**: The company has a non-exclusive, royalty-free license to use the 'WhiteHorse' name from an H.I.G. Capital affiliate, contingent on WhiteHorse Advisers remaining its investment adviser.
**Co-Investment Opportunities**: The company has SEC exemptive relief (since July 8, 2014) to co-invest with affiliates, subject to certain conditions and an allocation policy designed to ensure pro rata distribution of opportunities when sufficient, or rotational allocation when not.

Stakeholder Impact

**Shareholders**: Directly impacted by voting on director elections and auditor ratification, ensuring corporate governance and financial oversight. The reduction in the base management fee could positively impact shareholder returns. Co-investment opportunities aim to provide access to a broader range of investments.
**Management/Employees**: Executive officers and directors are subject to corporate governance policies, including codes of conduct and insider trading policies. Compensation for independent directors is detailed.
**Auditors (Crowe LLP)**: Their selection for the 2025 fiscal year is subject to stockholder ratification, confirming their ongoing role in financial oversight.
**Investment Adviser (WhiteHorse Advisers)**: Continues to receive management and incentive fees, and its relationship with the company is governed by the Investment Advisory Agreement and Staffing Agreement.
**Administrator (WhiteHorse Administration)**: Continues to provide administrative services and receives fees under the Administration Agreement.

Next Steps

Stockholders are urged to vote their proxy via the Internet or by returning a proxy card before the July 29, 2025, 11:59 p.m. ET deadline.
The 2025 Annual Meeting of Stockholders will be held virtually on July 30, 2025, at 1:00 p.m. ET.
The company will elect two Class I directors (G. Stacy Smith and John P. Volpe) at the meeting.
The company will ratify the selection of Crowe LLP as its independent registered public accounting firm for the fiscal year ending December 31, 2025.
The Meeting may be adjourned if there are not sufficient votes for a quorum or to approve the proposals.
Stockholders wishing to present a proposal for the 2026 annual meeting must submit it by February 20, 2026 (Rule 14a-8) or between February 20, 2026, and March 22, 2026 (Bylaws advance notice).

Key Dates

Date	Description
2003	Jay Carvell co-founded WhiteHorse Capital Partners L.P.
February 2007	Rick D. Puckett became chairman and director of Blumenthal Performing Arts.
March 2011	Marco Collazos served as Chief Compliance Officer in the Americas for EFG International.
December 4, 2012	Investment advisory agreement became effective upon initial public offering pricing.
2012	Rick D. Puckett became a director; Jay Carvell became a director; John Bolduc became Chairman of the Board.
2012	Rick D. Puckett joined Board of Advisors of Wake Forest University.
February 2013	G. Stacy Smith co-founded Trinity Investment Group.
May 2013	Marco Collazos became Deputy Chief Compliance Officer for H.I.G. Capital.
April 2013	Rick P. Frier became Executive Vice President and Chief Financial Officer of Chiquita Brands International, Inc.
January 2014	Joyson C. Thomas was Principal and Controller for MatlinPattersons Asset Management (MPAM) platform.
May 2014	Compensation Committee was established.
July 8, 2014	Received exemptive relief from the SEC to co-invest with affiliates.
November 2014	Marco Collazos became Chief Compliance Officer.
January 2015	Rick P. Frier left Chiquita Brands International, Inc.
2015	G. Stacy Smith became a director.
October 2015	G. Stacy Smith served on the board of directors of USD Partners LP.
November 2015	Rick P. Frier elected to the Board of Affinion Group, Inc.
December 2015	Stuart Aronson left General Electric Company.
January 2016	Rick D. Puckett served as Executive Vice President, Chief Financial Officer and Administrative Officer of Snyders-Lance, Inc.
February 2016	Stuart Aronson became Group Head of the U.S. direct lending platform of H.I.G. Capital.
2016	Rick P. Frier became a director.
December 2016	Rick P. Frier elected to the Board of Exal Corporation.
2016	Rick D. Puckett became a director and chair of the Audit Committee of Driven Brands, Inc. and a director and chair of the Compensation Committee of SPX Corporation.
2017	Rick D. Puckett served as a consultant of Snyders-Lance, Inc.
2017	Stuart Aronson became a director.
December 2017	Rick D. Puckett retired from Snyders-Lance, Inc.
2018	Rick D. Puckett left Board of Advisors of Wake Forest University.
August 2019	Joyson C. Thomas became Chief Financial Officer.
November 2019	Rick P. Frier elected Vice Chairman of the Board and Chairman of the Audit Committee for Trivium Corporation.
2019	Rick D. Puckett became a director and member of the Audit Committee of Pet Valu Holdings LTD.
June 2022	Jay Carvell left his position as Managing Director at an H.I.G. Capital-affiliated investment adviser.
February 2023	Rick P. Frier became Chairman of the Board of CoolSys, Inc.
2023	Rick D. Puckett left Pet Valu Holdings LTD. board.
January 1, 2024	Base management fee rate reduced from 2.00% to 1.75%.
February 22, 2024	Entered into a second amended and restated investment advisory agreement.
April 2024	John P. Volpe became a director.
October 30, 2024	Investment Advisory Agreement re-approved by the Board; Independent Directors' annual fee increased to $107,500.
December 2024	G. Stacy Smith left the board of directors of USD Partners LP and Independent Bank Group.
December 31, 2024	Fiscal year end for which financial statements were audited and fees reported.
January 2025	G. Stacy Smith elected to the board of directors of SouthState Bank.
June 6, 2025	Record Date for stockholders entitled to vote at the Annual Meeting.
June 20, 2025	Date of the Dear Stockholder letter, Notice of Virtual 2025 Annual Meeting of Stockholders, and Proxy Statement.
July 16, 2025	Deadline to request a free paper or email copy of proxy materials.
July 29, 2025	Proxy voting deadline (11:59 PM ET) for the 2025 Annual Meeting.
July 30, 2025	Date of the 2025 Annual Meeting of Stockholders (1:00 p.m. ET).
2026	Term expiration for Class II directors (if not re-elected).
February 20, 2026	Deadline for stockholder proposals for the 2026 annual meeting under Rule 14a-8.
March 22, 2026	Deadline (5:00 p.m. ET) for advance notice of proposals/nominations for the 2026 annual meeting.
2027	Term expiration for Class III directors (if not re-elected).
2028	Term expiration for Class I directors (if re-elected).

Recommendation

hold

Keywords

WhiteHorse Finance, SEC filing, proxy statement, annual meeting, corporate governance, director election, auditor ratification, investment advisory agreement, related party transactions, Crowe LLP, Nasdaq, 1940 Act, financial reporting

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