Erik Herzfeld
About Erik Herzfeld
Erik M. Herzfeld is President of The Herzfeld Caribbean Basin Fund, Inc. (NASDAQ: CUBA) and a Portfolio Manager; he is 51 years old per the 2024 proxy and has served as Portfolio Manager since 2007 and President since 2016 . He is also an officer/employee of Thomas J. Herzfeld Advisors, Inc., the Fund’s external adviser, and is named as President of the Fund in 2025 special meeting materials . Under his ongoing leadership, stockholders approved a strategic conversion to a CLO Equity Strategy on June 17, 2025 with ~96% votes cast in favor, effective July 1, 2025 . The amended advisory economics now include a 1.25% fee on managed assets and a 10% quarterly incentive fee on pre-incentive net investment income above a 9% annualized hurdle (2.25%/quarter) with a catch-up, directly linking adviser revenues to distributable income outcomes .
Past Roles
| Organization | Role | Years | Strategic Impact / Notes |
|---|---|---|---|
| The Herzfeld Caribbean Basin Fund, Inc. | President; Portfolio Manager | President: 2016–present; Portfolio Manager: 2007–present | Serves as Fund President and signatory in the 2025 special proxy and meeting materials . Officers (incl. Herzfeld) are also employees of the external Adviser . |
| Thomas J. Herzfeld Advisors, Inc. | President; Portfolio Manager | President: 2016–present; Portfolio Manager: 2007–present | External adviser to CUBA; advisory agreement governs fees; officers overlap with Fund . |
External Roles
| Organization | Role | Years | Strategic Impact / Notes |
|---|---|---|---|
| Strategic Incubation Partners, Inc. | Other directorship listed in proxy | As of Sept 28, 2023 | Listed under “Other Directorships Held”; no further details disclosed in proxy . |
Fixed Compensation
- The Fund does not disclose salary, target/actual bonus, or perquisites for executive officers; officers (including Erik M. Herzfeld) are employees of the external Adviser rather than compensated directly by the Fund .
- Fund proxies reviewed provide director fee tables but no officer compensation tables; directors and executive officers of the Fund also do not receive pension or retirement benefits from the Fund .
Performance Compensation
Adviser economics that indirectly influence executive incentives (as President of the Adviser and Fund officer):
| Component | Basis/Metric | Hurdle | Rate/Payout | Period | Notes |
|---|---|---|---|---|---|
| Base Management Fee | 1.25% of “Managed Assets” (gross assets less non-investment liabilities) | N/A | 1.25% annual | Calculated quarterly | Paying on managed assets (not net assets) can incentivize leverage via borrowings or senior securities . |
| Incentive Fee | Pre-incentive fee net investment income | 9% annualized (2.25%/quarter) | 10% above hurdle; 100% catch-up between 2.25%–2.5%/quarter | Quarterly | Annex A illustrates catch-up and total fee computations . |
| Pro Forma (FY2024) | Advisory fees under old vs. amended structure | N/A | Old: $642,194 earned, with waivers; net 1.19%/avg daily net assets; Amended estimate: $553,003; net 1.25%/avg daily net assets | FY 2024; 1H FY2025 | No incentive fee would have been earned as performance did not exceed hurdle; no leverage used in these periods . |
Equity Ownership & Alignment
| As-of Date | Shares Owned Directly | % of Class | Shared Voting/Dispositive Power (as PM of advisory accounts) | Exec + Directors as Group | Shares Outstanding |
|---|---|---|---|---|---|
| Sep 14, 2023 | 220,080 | 3.1% | 464,962 | 1,729,470 (17.7%) | 7,150,673 |
| Jul 17, 2024 (Form 4 ref.) / Record Date | 442,270 | N/A | 2,621,880 | N/A | N/A |
| Apr 30, 2025 | 584,930 | 3.7% | 5,725,475 (shared with T.J. Herzfeld as PMs of client accounts) | 6,571,085 (41.8%) | 15,720,897 |
- Section 16 reporting: For FY2024, all reporting persons complied with Section 16(a) per 2024 proxy; in 2025 special proxy the only exception cited was a late Form 3 for a director, not Erik .
- Pledging/hedging policy and stock ownership guidelines for officers were not located in the 2024 and 2025 proxy materials reviewed .
Employment Terms
| Term | Disclosure |
|---|---|
| Employment start/tenure | Portfolio Manager since 2007; President since 2016 (as shown in “Current Directors and Officers”) . |
| Employer | Officer of the Fund and employee/officer of the external Adviser (Thomas J. Herzfeld Advisors, Inc.) . |
| Contract term, severance, change-of-control | Not disclosed in Fund proxy materials; no employment agreement, severance, or CoC terms for Mr. Herzfeld are presented . |
| Non-compete / non-solicit / garden leave | Not disclosed in Fund proxy materials . |
| Post-termination consulting | Not disclosed in Fund proxy materials . |
Investment Implications
- Strong ownership alignment: Direct beneficial ownership increased across filings (220,080 in 2023 → 442,270 in 2024 → 584,930 in 2025; 3.7% of shares), and significant shared voting/dispositive power via advisory accounts (to 5.7M by April 2025); insiders as a group hold ~41.8%, indicating substantial insider exposure and influence .
- Incentive design favors income and scale: The amended advisory agreement ties economics to managed assets and pre-incentive net investment income above a hurdle, potentially encouraging leverage and higher-yielding assets—beneficial if distributable income expands but elevating risk if spreads compress or credit costs rise .
- Strategy transition as catalyst: The June 2025 stockholder-approved pivot to a CLO Equity Strategy (96% support) creates a more income-centric profile; execution through cycle and credit selection discipline will be critical to sustaining incentive-fee-eligible NII and distributions .
- Limited near-term selling pressure from vesting: No RSU/option grants or vesting schedules are disclosed for officers at the Fund level; insider activity is reported via Forms 3/4, with compliance noted, but no pledging/hedging disclosures were identified in the proxies reviewed .
Notes: CUBA intends to change its name to “Herzfeld Credit Income Fund, Inc.” in connection with the new strategy and advisory agreement, underscoring the strategic shift toward CLO equity and income generation .