James Dondero

About James Dondero

James Dondero (year of birth: 1962) serves as President and Principal Executive Officer of NexPoint Capital, Inc. (NXPT) and has held this role since 2014. He is Founder of NexPoint Advisors, L.P. (the Adviser), Co‑founder of Highland Capital Management, L.P. (HCMLP) and NexPoint Asset Management, L.P.; Chairman of NexPoint Residential Trust, Inc. (NYSE: NXRT) since May 2015; CEO/director of NexPoint Diversified Real Estate Trust (NXDT) since December 2018; and President/member of the investment committee of NexPoint Real Estate Strategies Fund (NRESF) since February 2020 . NXPT is an externally managed BDC with no established market for its common stock, so TSR is not disclosed; operationally, FY2024 total investment income was $2,235,486, net investment income was $607,948, and total assets were $46,576,001; the Board declared a $0.09 per share distribution on January 29, 2025 .

Past Roles

External Roles

Fixed Compensation

NXPT’s executive officers receive no direct remuneration from the Corporation. There is no compensation committee for executive pay; director cash retainers are set and reviewed by the Governance and Compliance Committee, but executives (including the President/PEO) are not paid by NXPT .

Performance Compensation

NXPT is an externally managed BDC; executives are employees of the Adviser and do not receive equity or cash incentive awards from NXPT .

Equity Ownership & Alignment

Largest holder context (alignment risk):

• Liberty CLO Holdco Ltd. beneficially owned 27.86% as of April 30, 2024 and 29.5% as of April 30, 2025, while officers/directors collectively owned 0% .

Employment Terms

Performance & Track Record

NXPT operational performance during Dondero’s tenure (latest three fiscal years):

Selected operational and strategic disclosures:

• Investment portfolio fair value was $44.5M across 26 positions at 12/31/2024, with 14.2% first-lien senior secured loans, 1.4% third-lien loans, 0.5% corporate bonds, 37.7% common stocks, 25.8% preferred stocks, and 20.4% LLC interests .
• Cash distribution of $0.09 per share declared on January 29, 2025 for holders of record on December 31, 2024 .
• No established public market for NXPT shares; the DRIP most recent issuance price was $5.58 per share (disclosed in FY2024 10-K context) .

Board Governance

• Structure: 5 Directors; 4 Independent Directors (Class I/II/III staggered terms) .
• Committees and Chairs: Audit and Qualified Legal Compliance (Chair: Bryan A. Ward), Governance and Compliance (Chair: Dr. Bob Froehlich), Administration and Operations (Chair: John Honis) .
• Meetings and attendance:
  • FY2023: Board met 6 times; each Director attended ≥75% of meetings .
  • FY2024: Board met 8 times; each Director attended ≥75% of meetings .

Additional governance points:

• No executive compensation committee (executives not paid by NXPT) .
• Codes of Ethics: SOX and Rule 17j‑1 codes adopted; proxy voting and compliance procedures set via Adviser .

Related Party & Fee Economics

• Advisory structure: Base management fee paid to the Adviser of $942,612 (FY2023) and $945,241 (FY2024); no incentive fee earned in either year; Adviser may recoup certain voluntarily waived fees within 3 years post‑June 10, 2016 subject to caps .
• Administration agreement: Reimbursement to Adviser for allocable overhead capped at 0.4% of gross assets; certain functions may be outsourced without profit to the Adviser .
• Co‑investment: SEC exemptive order (April 19, 2016) permits co‑investments under specified conditions .
• Section 16 filings: Company reports no known failures to file timely during the past fiscal year .

Risk Indicators & Red Flags

• Alignment risk: Officers/directors collectively own 0% of NXPT; largest holder (Liberty CLO Holdco Ltd.) controls ~29.5% (2025) .
• External management conflicts: Adviser receives base fees; incentive fees may apply in future; potential conflicts mitigated via policies but present structurally .
• Market transparency: No established public market limits TSR and market signaling; valuation and liquidity constraints typical of externally managed BDCs .
• Regulatory/operational risks: RIC/BDC constraints, portfolio leverage limits, and macro volatility highlighted in risk factors .
• Section 16 compliance: No late filings reported; reduces regulatory red flags .

Say‑on‑Pay & Compensation Peer Group

• Say‑on‑pay: Not applicable; NXPT executives are not compensated by the Corporation .
• Compensation peer group/targets: Not disclosed for executives .

Expertise & Qualifications

• Core credentials: Founder of the Adviser; leadership across multiple listed/non-listed NexPoint vehicles; portfolio manager across several strategies .
• Education: Not disclosed in NXPT filings .
• Tenure: President/PEO since 2014 .

Work History & Career Trajectory

Investment Implications

• Alignment: Executive compensation occurs at the Adviser, and officers/directors report 0% NXPT ownership—limiting direct pay‑for‑performance alignment at the corporate level. The presence of a 29.5% external holder concentrates influence and may reduce insider selling pressure but raises governance concentration concerns .
• Performance/Execution: FY2024 net investment income declined materially vs FY2023 alongside lower total investment income, though net assets from operations improved; the portfolio is heavily in equities/preferreds with selective senior secured debt, suggesting volatility exposure and equity beta in performance drivers .
• Trading Signals: Absence of executive equity grants/options at NXPT and lack of insider ownership reduces traditional insider buying/selling signals; monitoring Adviser-level disclosures and related party fee dynamics (base fee trends, any incentive accruals) is more relevant for assessing near‑term earnings leverage .
• Retention Risk: As an externally managed vehicle, key man/Adviser stability is central; no NXPT-disclosed non‑compete or severance terms at the corporate level implies retention and incentives are housed at the Adviser, requiring cross‑entity diligence for full assessment .