Thomas McDonnell
About Thomas McDonnell
Thomas Q. McDonnell, 59, was appointed to succeed Eric Lloyd as Chief Executive Officer of Barings BDC, Inc. effective January 1, 2026; he brings 30+ years of experience in global finance, investment management and strategic planning, including senior roles at Barings and leading Hampshire Holdings Corp. from 2023–2025 . He previously served nearly two decades at Barings as Managing Director and on U.S. High Yield and credit investment committees, with experience managing multi-strategy and global loan portfolios and spearheading fundraising exceeding $15 billion; he holds a B.S. in Business Management and an MBA in Accounting from SUNY Buffalo and is a retired CPA . Barings BDC is externally managed: none of the Company’s executive officers are compensated directly by BBDC, with compensation paid by Barings under advisory and administration agreements that include a base management fee and performance-contingent incentive fee structures .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Barings LLC | Managing Director; member of U.S. High Yield Investment Committee and other credit-related committees | 2005–2023 | Managed multi-strategy and global loan portfolios; navigated complex credit cycles; led fundraising efforts |
| Hampshire Holdings Corp | President & CEO | 2023–2025 | Directed investment strategy and led acquisitions of real estate assets in U.S. markets |
| Patriarch Partners | Senior roles (prior career) | N/A | Focused on deal structuring, credit risk management, portfolio strategy, financial planning |
| Bank of America | Senior roles (prior career) | N/A | Structured secured loans and supported leveraged buyouts; credit risk and portfolio strategy |
| JP Morgan Chase | Senior roles (prior career) | N/A | Credit risk management, portfolio strategy, financial planning |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| Rocade Holdings LLC | Director | N/A | Specialty finance company focused on litigation finance |
Fixed Compensation
| Component | Status | Notes |
|---|---|---|
| Base salary | Not disclosed by BBDC | Executive officers are Barings employees and receive no direct compensation from the Company |
| Target/Actual bonus | Not disclosed by BBDC | Compensation determined by Barings; Company does not report executive bonuses |
| Stock/Option grants | None by BBDC in FY2024 | Company did not grant stock options, SARs or option-like instruments in FY2024 |
| Director equity compensation | Not applicable to executives | Independent Directors do not receive stock-based compensation for Board service |
Performance Compensation
Barings BDC’s external advisory structure creates performance-linked fees paid to Barings (the investment adviser), which indirectly drive management incentives. Key terms from the FY2024 10-K:
| Metric | Description |
|---|---|
| Income-Based Incentive Fee | Paid quarterly in arrears based on aggregate Pre-Incentive Fee Net Investment Income over trailing twelve quarters vs an 8.25% annualized hurdle (2.0625% per quarter) on beginning NAV; 100% “catch-up” up to a 10.3125% annualized threshold, then 20% of Pre-Incentive Fee NII above that level |
| Incentive Fee Cap | Quarterly cap equals 20% of cumulative pre-incentive fee net return over the trailing twelve quarters less incentive fees paid in the preceding eleven quarters; fee reduced to cap if calculated fee exceeds cap |
| Capital Gains Fee | Annual fee equals 20% of cumulative realized capital gains minus cumulative realized losses and unrealized depreciation since August 2, 2018, net of capital gains fees paid in prior years; zero if net amount is negative |
For FY2024, BBDC incurred $23.8 million of income-based fees to Barings (limited by the Incentive Fee Cap), and reimbursed ~$2.0 million of administration expenses to Barings under the Administration Agreement . These advisory incentives tie pay to net investment income generation and realized gains, shaping underwriting, portfolio rotation, and leverage decisions at the adviser level .
Equity Ownership & Alignment
| Holder | Shares Beneficially Owned | % of Class | Notes |
|---|---|---|---|
| Barings LLC | 13,639,681 | 12.9% | Adviser’s ownership as of March 7, 2025; indicates platform-level alignment with shareholders |
| Thomas Q. McDonnell | — | — | As of the March 7, 2025 proxy record date, McDonnell was not listed among directors/executive officers; historical Section 16 filings show prior purchases as a BBDC officer in 2021 (see SEC Form 4 links) |
Additional alignment notes:
- The proxy states no common stock subject to options or warrants exercisable within 60 days of March 7, 2025, reducing mechanical insider selling pressure from option exercises .
- Independent Directors do not receive stock-based compensation, and executive officers (as Barings employees) do not receive equity from BBDC, concentrating equity alignment at the adviser and personal holdings level .
Employment Terms
| Term | Disclosure |
|---|---|
| Appointment & start date | Board appointed McDonnell as CEO effective January 1, 2026 |
| Arrangements/relationships | No arrangement or understanding pursuant to which appointed; no family relationships with directors or executive officers |
| Related-party transactions | No transactions since the Company’s last fiscal year requiring Item 404(a) disclosure for McDonnell |
| Compensation source | Executives are employees of Barings; no direct Company compensation; Company pays Barings base and incentive fees per Advisory Agreement and reimburses administrative costs per Administration Agreement |
| Severance/Change-of-control | Not disclosed by BBDC for executives employed by Barings; compensation, severance and CIC economics reside within Barings’ employment arrangements (not reported in Company proxy) |
Investment Implications
- External management and fee constructs concentrate incentives at the adviser: income/gain-based fees link pay to NII and realized gains, supporting disciplined underwriting and portfolio returns; advisory fee caps temper upside in weaker capital gain environments .
- McDonnell’s background in high yield credit, multi-cycle portfolio management and fundraising at Barings, plus CEO leadership at Hampshire Holdings, suggests continuity with Barings’ credit discipline and platform leverage as he assumes CEO duties .
- Direct executive equity grants/vesting from BBDC are absent; alignment rests on adviser ownership (Barings at 12.9%) and any personal holdings, which historically included McDonnell’s Form 4 purchases; near-term insider selling pressure from vesting is limited given no option grants in FY2024 and lack of stock-based pay to Independent Directors .
- Governance continuity is reinforced by Lloyd remaining Executive Chairman and no related-party transactions or arrangements tied to McDonnell’s appointment, reducing transition risk signals .