Erik Falk
About Erik A. Falk
Erik A. Falk (55) is a Class II director of Great Elm Capital Corp. (GECC), serving since 2021 with a term expiring in 2027. He is Head of Strategy at Magnetar Capital, focusing on strategic initiatives in Alternative Credit and Fixed Income, and holds a B.S. and an M.S. from Stanford University. The Board classifies Falk as an “interested person” (non‑independent) due to his ownership of Great Elm Group, Inc. (GEG) common stock and GEG senior convertible PIK notes .
Past Roles
| Organization | Role | Tenure | Committees/Impact |
|---|---|---|---|
| Magnetar Capital | Head of Strategy | Current | Strategic initiatives in Alternative Credit and Fixed Income |
| Deutsche Bank (various portfolio companies) | Director (on behalf of DB) | Not disclosed | Board service on behalf of Deutsche Bank |
External Roles
| Organization | Role | Status | Notes |
|---|---|---|---|
| Magnetar Capital | Head of Strategy | Ongoing | Alternative asset manager (~$14.8B AUM) |
| Other public company boards | None | N/A | No other public directorships in past 5 years |
Board Governance
- Independence: Not independent; classified as an “interested person” under the Investment Company Act due to ownership of GEG securities .
- Committees: Independent directors only serve on committees; Falk is not a member of the Audit, Nominating & Corporate Governance, or Compensation Committees .
- Committee leadership (for context): Audit (Chair: Richard Cohen), Nominating & Corporate Governance (Chair: Mark Kuperschmid), Compensation (Chair: Chad Perry) .
- Attendance: In 2024, the Board held 8 meetings; all directors who served during 2024 attended at least 75% of Board and applicable committee meetings .
- Lead Independent Director: Mark Kuperschmid .
Fixed Compensation
| Name | Cash Retainer ($) | Committee Chair Fees ($) | Committee Member Fees ($) | Total ($) |
|---|---|---|---|---|
| Erik A. Falk (Interested Director) | $0 | $0 | $0 | $0 |
| Mark Kuperschmid (Independent) | $45,000 | $10,000 (Nominating Chair) | $10,000 (Audit, Comp) | $65,000 |
| Richard Cohen (Independent) | $45,000 | $10,000 (Audit Chair) | $10,000 (Nom, Comp) | $65,000 |
| Chad Perry (Independent) | $45,000 | $10,000 (Comp Chair) | $10,000 (Audit, Nom) | $65,000 |
Notes:
- Independent directors receive: $45,000 annual fee; Committee Chair +$10,000; Committee member +$5,000 per committee .
- Interested directors (Falk, Drapkin) receive no director compensation from GECC .
Performance Compensation
| Component | Status |
|---|---|
| Equity plan (RSUs/PSUs/Options) | None; GECC did not maintain stock/option plans for directors in 2024 |
| Non‑equity incentives | None for directors |
| Pension/retirement benefits | None for directors |
| Performance metrics (TSR/EBITDA/ESG) tied to director pay | None disclosed |
| Clawback provisions for director awards | Not applicable; no director equity/bonus programs disclosed |
Other Directorships & Interlocks
| Category | Detail |
|---|---|
| Current public company boards | None |
| Private/non‑profit/academic boards | Not disclosed |
| Interlocks/affiliations | Falk is an “interested person” due to ownership of GEG equity and GEG PIK Notes; GEG is parent of GECC’s adviser (GECM), creating potential conflicts of interest |
Expertise & Qualifications
- Asset management and credit markets expertise; strategy leadership within Alternative Credit and Fixed Income at Magnetar .
- Education: B.S. and M.S., Stanford University .
Equity Ownership
| Holder | Shares Beneficially Owned | % of Class | Dollar Range of GECC Equity |
|---|---|---|---|
| Erik A. Falk | — | * | None |
Additional policies:
- Insider trading policy strongly discourages hedging; prohibits short sales, options transactions, and pledging/margin except limited exceptions requiring approval .
- No disclosure of any pledging or hedging by Falk; only policy framework is disclosed .
Governance Assessment
- Committee assignments and engagement: Falk does not serve on Board committees (reserved for independent directors), limiting his direct influence on audit/compensation/governance oversight. Attendance met the minimum standard, with all directors at ≥75% in 2024 .
- Independence and conflicts: Not independent; classified as an “interested person” because of GEG securities ownership. GEG is the parent of GECC’s external adviser (GECM), which receives base management fees ($4.5M in 2024) and incentive fees (income fee accrued $2.6M in 2024), as well as reimbursements under the administration agreement ($1.1M in 2024). GEG also indirectly participated in vehicles (GESP, PPH, SGP) that purchased GECC shares at NAV, and certain interested directors and GEG directors were indirectly invested—highlighting concentrated adviser/parent influence and potential related‑party exposure .
- Ownership alignment: Falk held no GECC shares as of the record date and reported “None” for dollar range—suggesting limited direct “skin‑in‑the‑game” at GECC. Directors also have no equity grants or options, and interested directors receive no cash compensation—reducing direct alignment via pay and equity at the GECC level .
- RED FLAGS:
- Interested director status tied to adviser’s parent (GEG) securities ownership .
- Extensive related‑party transactions with GECM/GEG (fees, co‑investment structure, NAV issuances to special purpose vehicles partially owned by GEG), and adviser fee arrangements reset in 2022—raising persistent conflict optics for external management governance .
- No disclosed GECC equity ownership by Falk; no director equity program—weak pay‑for‑performance alignment at the director level .
- Mitigants and controls:
- Independent directors comprise committee memberships; Lead Independent Director designated (Kuperschmid) .
- Insider trading/hedging/pledging policies with pre‑clearance and prohibitions to reduce misalignment risks .
- Co‑investment governed under an SEC Exemptive Relief Order; audit committee pre‑approval policy on auditor services .
Board Committee Snapshot (for context)
| Director | Audit | Nominating & Corporate Governance | Compensation |
|---|---|---|---|
| Erik A. Falk | — | — | — |
| Richard Cohen | Chair | Member | Member |
| Mark Kuperschmid | Member | Chair | Member |
| Chad Perry | Member | Member | Chair |
| Matthew A. Drapkin | — | — | — |
Voting Context (2025)
- 2025 annual meeting: only two proposals—election of Chad Perry and ratification of Deloitte. No say‑on‑pay on the ballot. Election results: Chad Perry received 7,225,709 For, 678,522 Withheld, 2,067,510 broker non‑votes; auditor ratification passed with 9,686,144 For, 278,967 Against, 6,630 Abstain .
Related Party Transactions Highlights
- Fees to external adviser GECM (wholly‑owned by GEG): base management fee $4.5M (2024) vs $3.5M (2023); income incentive fees accrued $2.6M (2024) vs $3.1M (2023); no capital gains incentive fees in 2023–2024; reimbursements under administration agreement $1.1M (2024 and 2023). Incentive fee framework reset in 2022 to exclude pre‑April 2022 losses and reset commencement date .
- NAV issuances: GESP (1,850,424 shares at $12.97, $24M), PPH (997,506 at $12.03, ~$12M), SGP (1,094,527 at $12.06, ~$13M); each vehicle 25% owned by GEG; voting proportional undertakings noted; certain interested directors and GEG directors indirectly invested .
- Co‑investments subject to SEC Exemptive Relief Order; allocation and conflicts policies described .
Implications: For investors focused on governance, Falk’s interested status and the adviser/parent transactions merit continued monitoring of committee independence, transparency of allocation/policies under the exemptive order, and tangible director‑level ownership to strengthen alignment. Independent committee structures and policy controls mitigate, but do not eliminate, perceived conflicts .