David Gladstone
About David Gladstone
David Gladstone (age 83) is the Founder, Chairman, and Chief Executive Officer of Gladstone Investment Corporation (GAIN) and has served in these roles since the company’s inception in 2005; he also founded and leads affiliated public companies Gladstone Capital (2001), Gladstone Commercial (2003), Gladstone Land (1997), and the newer Gladstone Alternative Income Fund (2024) . As an externally managed BDC, GAIN does not pay executive compensation; instead, economics flow through an Advisory Agreement with a base management fee (2.0% of average gross assets) and incentive fees linked to pre-incentive fee net investment income and realized capital gains—aligning leadership remuneration with portfolio income and value realization . The Adviser and Administrator are 100% indirectly owned by Mr. Gladstone, creating both alignment and potential conflict considerations that the board mitigates through oversight and fee credits .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Gladstone Acquisition Corporation (SPAC) | Chief Executive Officer, President, Chief Investment Officer, Director | Jan 2021 – Oct 2022 | Led a SPAC within the Gladstone ecosystem; tenure concluded in Oct 2022 . |
External Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Gladstone Capital Corporation (GLAD) | Founder; Chairman & CEO | Since 2001 | Extends private credit platform; shared governance/oversight synergies across the complex . |
| Gladstone Commercial Corporation (GOOD) | Founder; Chairman & CEO | Since 2003 | REIT platform adds real asset expertise and capital markets access . |
| Gladstone Land Corporation (LAND) | Founder; Chairman & CEO | Since 1997 | REIT platform in farmland; complementary to the broader Gladstone brand . |
| Gladstone Alternative Income Fund | Founder; Chairman & CEO | Since 2024 | Newer public vehicle broadening product set and fee base . |
| The Adviser (GAIN’s external manager) | Chairman & CEO; 100% indirectly owned by Mr. Gladstone | Ongoing | Ownership aligns economics; board oversight and credits mitigate conflicts . |
| Gladstone Securities, LLC (affiliated broker-dealer) | Board of Managers | Since 2010 | Affiliated services; fees paid by portfolio companies, not GAIN; does not increase Adviser fees . |
Fixed Compensation
As an externally managed BDC, GAIN pays no executive salaries/bonuses; officers are employed and compensated by the Adviser/Administrator. There is no equity incentive plan at GAIN level.
| Item | FY 2025 | Notes |
|---|---|---|
| Base salary | N/A | GAIN pays no salaries; executives are paid by the Adviser/Administrator . |
| Target/Actual bonus | N/A | No company-paid bonuses to executives . |
| Director pay to executives | $0 | Officers receive no compensation for director service at GAIN . |
Performance Compensation
Economics accrue via the Advisory Agreement; these are the practical “pay-for-performance” levers affecting Mr. Gladstone’s economics through the Adviser.
| Metric | Weighting | Target/Hurdle | Payout Formula | Frequency | Vesting |
|---|---|---|---|---|---|
| Pre-incentive fee Net Investment Income (NII) | N/A | 1.75% of prior-quarter net assets per quarter (7% annualized) | 0% below hurdle; 100% “catch-up” between 1.75% and 2.1875% (8.75% annualized); 20% of NII above 2.1875% per quarter | Quarterly | N/A . |
| Realized Capital Gains (net of losses and unrealized depreciation) | N/A | Positive cumulative net gains since inception | 20% of cumulative net realized gains less prior capital gains fees paid | Annual/in arrears | N/A . |
Notes:
- GAIN incurred ~$23.7m (net of credits) in Adviser fees and ~$1.9m under the Administration Agreement in FY 2025, framing the scale of external compensation tied to performance and asset base .
- Loan servicing fees (~$9.6m in FY 2025) are 100% credited against the base management fee, reducing effective costs to shareholders .
- The Adviser credits 100% of certain portfolio company service fees against the base fee (retained reimbursements at cost were ~$0.4m in FY 2025; ~$0.3m in FY 2024) .
Equity Ownership & Alignment
| As-Of Date | Shares Beneficially Owned | % of Shares Outstanding | Indirect Holdings | Pledged Shares |
|---|---|---|---|---|
| May 29, 2024 | 667,630 | 1.82% (36,688,667 SO) | 11,018 via The Gladstone Companies, Ltd. | Not disclosed for Mr. Gladstone (pledge disclosure applies to another director) . |
| June 4, 2025 | 667,630 | 1.81% (36,897,283 SO) | 11,018 via The Gladstone Companies, Ltd. | Not disclosed for Mr. Gladstone (pledge disclosure applies to another director) . |
Additional alignment/constraints:
- Insider policy prohibits short sales and options/derivative transactions in GAIN (and other Fund) securities, reducing hedging/leverage behavior risk among insiders .
Employment Terms
| Topic | Key Terms |
|---|---|
| Advisory Agreement – Base Fee | 2.0% annual rate on average gross assets, excluding uninvested borrowings; computed on recent quarter-end asset values . |
| Incentive Fee – Income | Quarterly, based on pre-incentive fee NII with 7% annualized hurdle; catch-up to 8.75% annualized; 20% above 8.75% annualized threshold . |
| Incentive Fee – Capital Gains | Annual, 20% of cumulative net realized gains since inception, net of realized losses and unrealized depreciation, less prior capital gains fees . |
| Loan Servicing Fee | 2.0% on loans pledged under the credit facility, fully credited against base management fee; ~$9.6m credited in FY 2025 . |
| Administration Agreement | Reimburses allocable overhead and personnel costs (CFO, CCO, GC, etc.) to Administrator; ~$1.9m in FY 2025 . |
| Affiliated Services | Gladstone Securities received ~$2.0m from portfolio companies in FY 2025; does not increase Adviser fees to GAIN . |
| Ownership/Control | Adviser and Administrator are 100% indirectly owned by David Gladstone . |
| Renewal/Oversight | Compensation Committee reviews Advisory and Administration Agreements annually for renewal and fee reasonableness . |
| Change of Control (Adviser) | 2023 DEF 14A addressed a Voting Trust arrangement; upon the Effective Date, a “change in control” of the Adviser occurs under the 1940 Act, requiring new agreement approvals; senior management expected to continue . |
Board Governance
- Service history and roles:
- Director since 2005; Chairman & CEO; nominated for a term expiring at the 2028 annual meeting .
- Committee memberships as of FY 2025: Chair of Executive Committee and Offering Committee; not on Audit, Compensation, Ethics, or Valuation committees .
- Committee structure and independence:
- Audit, Compensation, and Ethics committees comprised entirely of independent directors; lead independent director (Walter H. Wilkinson, Jr.) provides counterbalance to combined CEO/Chair structure .
- Attendance and sessions:
- Board met five times in FY 2025; each director attended ≥75% of board/committee meetings; independent directors met in four executive sessions .
- Director compensation:
- Executives receive no director compensation from GAIN for board service .
- Dual-role implications:
- The board acknowledges combining the CEO and Chair roles and cites the lead independent director structure as mitigating governance risk and enhancing strategic coordination with the Adviser .
Additional Disclosures and Related-Party Transactions
- Fees to Adviser/Administrator: ~$23.7m (net of credits) and ~$1.9m, respectively, in FY 2025 .
- Adviser fee credits: 100% crediting of loan servicing and certain portfolio service fees against the base management fee; ~$9.6m loan servicing credit in FY 2025; ~$0.4m reimbursements retained at cost for valuation tasks .
- Affiliated broker-dealer: Gladstone Securities received ~$2.0m from portfolio companies in FY 2025; these fees do not impact Adviser fees to GAIN .
- Conflicts policy: Transactions with the Adviser/affiliates require “required majority” approval under the 1940 Act; policy restricts related-party dealings absent approval .
Investment Implications
- Pay-for-performance and trading signals: Mr. Gladstone’s economics flow through the Adviser and scale with asset growth, quarterly NII above a 7% annualized hurdle, and realized capital gains; this structure incentivizes income generation and value-realizing exits, which can drive dividend capacity and special distributions for shareholders .
- Cost discipline and offsets: Significant fee credits (loan servicing and portfolio service fee credits) partially offset the 2% base management fee, improving net shareholder economics versus headline rates .
- Alignment vs. conflicts: Material equity ownership (~1.81%) offers alignment, and no pledging is disclosed for Mr. Gladstone; however, full indirect ownership of the Adviser/Administrator and leadership of affiliated broker-dealer necessitate continued robust independent board oversight of fees and affiliate transactions .
- Governance risk mitigants: Combined CEO/Chair role is counterbalanced by a lead independent director and fully independent key committees, with regular executive sessions—reducing independence concerns common in externally managed structures .
- Contract/continuity risk: The 2023 Adviser voting trust “change of control” process required new agreement approvals but anticipated continuity of senior management; near-term retention/transition risk appears managed, but dependency on the Adviser remains structurally high .
No say-on-pay vote or executive SCT disclosure applies given the external management model; insider policy prohibits short sales and derivatives, lowering hedging/pledging red flags .