R. Eric Chadwick

About R. Eric Chadwick

R. Eric Chadwick, age 50, is Director, Chairman of the Board, Chief Executive Officer, and President of Flaherty & Crumrine Preferred and Income Fund (PFD); he has served as a Director and Chair since January 2016, President since April 2015, and previously served as Chief Financial Officer from 2004 to April 2015 . He is also President and a Director of the adviser, Flaherty & Crumrine Incorporated, and a portfolio manager for PFD and PFO since 1999 and for FFC, FLC, and DFP since each fund’s inception . Board oversight materials note long-term performance is at or above peer medians over 10 years, with mixed nearer-term relative results (PFD slightly below median at 1-year; below median at 3-year; ≥ median at 5- and 10-year), while advisory fees are below peers and unchanged under a 2025 advisory agreement renewal tied to an internal restructuring of the adviser .

Governance and dual-role context: Chadwick is an “interested person” due to his affiliation with the adviser and serves as Board Chair; 75% of the Board are Independent Directors, with a designated Lead Independent Director (David Gale) and independent committee chairs (Audit: Karen H. Hogan; Nominating: Nicholas Dalmaso) . Attendance was strong: directors attended 100% of board and committee meetings in FY2024 (six board meetings, four telephonic) .

Past Roles

External Roles

Fixed Compensation

Chadwick’s compensation as a fund officer/director is not paid by PFD; he receives $0 in aggregate compensation from PFD and the fund complex. Compensation is paid by the adviser (amounts and structure not disclosed in the fund proxy).

Board meeting fee framework (for Independent Directors) is included here to contextualize governance economics; Chadwick, as an affiliated director/officer, does not receive these fees: $9,000 annual retainer per fund; $750 per in-person Board/Audit meeting; $500 per in-person Nominating meeting; $250 per telephonic meeting; plus $3,000 per fund to the Audit Chair .

Performance Compensation

• Not disclosed at the fund level. As is typical for closed-end funds, officer/director compensation for affiliated management is paid by the external adviser; the proxy does not disclose Chadwick’s base salary, bonus targets, equity grants, or performance metrics at the adviser level. No fund-linked vesting schedules, PSUs/RSUs, or option awards are disclosed for Chadwick .

Implication: Pay-for-performance linkages, vesting, clawbacks, severance, and CoC terms—if any—would be governed by his employment with Flaherty & Crumrine Incorporated and are not disclosed in PFD’s proxy .

Equity Ownership & Alignment

• Beneficial ownership dollar ranges (as of Dec 31, 2024): PFD: C ($10,001–$50,000); PFO: E (over $100,000); FFC: E; FLC: C; DFP: E; Aggregate across complex: E (over $100,000) .
• Insider ownership concentration: Directors and executive officers as a group owned less than 1% of each fund’s outstanding shares as of the latest disclosed dates, indicating low insider concentration .
• Shares outstanding (record date Jan 16, 2025) for PFD were 12,852,556 .
• Pledging/hedging: No pledging or hedging policy disclosures found in the proxy materials (no mention of pledging/hedging policies).
• Ownership guidelines: No director/officer stock ownership guidelines disclosed for the funds .

Note: Historical SEC Form 4 filings exist but are dated (e.g., 2006–2008) and reference indirect holdings via ownership in the adviser; they do not inform current holdings or selling pressure .

Employment Terms

• Contract terms, severance, non-compete, and CoC economics for Chadwick are not disclosed in the fund proxy (these pertain to employment with the adviser) .
• Advisory agreement change (2025): The adviser is repurchasing and reallocating shares from retired shareholders to current management during July–December 2025, which could constitute a change of control requiring new advisory agreements; Boards and shareholders are asked to approve new agreements with identical fees and services. Day-to-day management is expected to be unchanged .
• Advisory fee schedule for PFD: 0.525% on first $200mm of average weekly total managed assets; 0.45% on next $300mm; 0.40% above $500mm . PFD advisory fees paid in FY2024: $1,343,520 . Total managed assets at FY-end: $251,182,137 .

Board Governance (service history, committees, independence)

• Board composition: Four directors; three are Independent Directors (75%). Chadwick is an “interested person” and Chair. David Gale serves as Lead Independent Director .
• Committees: All-Independent Audit Committee (Chair: Karen H. Hogan) and Nominating and Governance Committee (Chair: Nicholas Dalmaso). Audit Committee met four times in FY2024; Nominating Committee met twice .
• Attendance: Each director attended 100% of board and relevant committee meetings in FY2024 (six board meetings, four telephonic) .
• Independence safeguards: Use of independent legal counsel for Independent Directors; majority-Independent structure; lead independent role; committee leadership by independents .

Performance & Track Record

• Relative performance (Board review): For the 1-year period, PFO/FFC/FLC/DFP were ≥ median peers while PFD slightly underperformed; for 3-year, all funds below median; for 5-year, PFD/FFC/FLC/DFP were ≥ median while PFO slightly underperformed; for 10-year, all funds were ≥ median peers .
• Fees and expenses: Advisory fees for the funds are below-average vs peers; overall expense ratios vary with some funds below average (e.g., FFC, DFP) .
• Continuity: The Board concluded services and quality from the adviser remain high; economies of scale are shared via breakpoints; New advisory agreements maintain identical terms and fees .

Director Compensation (for Board service)

• Independent Directors receive per-fund retainers and meeting fees; aggregate FY2024 remuneration (per fund) included $27,000 annual director fees, $25,500 meeting fees, and ~$1,789.90 expenses; Chadwick receives $0 as an affiliated director .

Risk Indicators & Red Flags

• Say-on-pay: Not applicable; not disclosed in CEF proxies.
• Related-party transactions: Not indicated beyond standard adviser relationship oversight; advisory reapproval includes analysis of nature/quality of services, fees, profitability, and economies of scale .
• Governance structure: Dual role (CEO/President and Board Chair) is mitigated by a 75% Independent board, a Lead Independent Director, and independent committees .
• Insider ownership concentration: <1% owned by directors/officers as a group suggests low insider selling/buying pressure impact on trading dynamics .

Compensation Structure Analysis

• Cash vs equity mix: Not disclosed for Chadwick (paid by adviser), no fund-level equity awards or options reported .
• Performance metrics, clawbacks, tax gross-ups: Not disclosed at fund level .
• Advisory fee continuity: No fee increases; new advisory agreements retain identical fee schedules .

Equity Ownership & Alignment Summary (Key Takeaways)

• Personal exposure: >$100k aggregate ownership across the fund complex; for PFD specifically, dollar range C ($10,001–$50,000), indicating meaningful but not concentrated exposure to PFD .
• Policies: No disclosed pledging/hedging or ownership guideline policies for fund directors/officers .

Investment Implications

• Alignment: Because Chadwick is compensated by the adviser (not the fund), direct pay-for-performance linkages at the fund level are not disclosed. Alignment for PFD shareholders comes primarily via (a) his personal holdings (C range in PFD; E aggregate across funds) and (b) the advisory contract’s fee structure and oversight by an Independent-majority Board .
• Retention risk: Low—Chadwick is long-tenured (PM since 1999; executive roles since 2004). The adviser’s 2025 internal restructuring is expected not to change day-to-day management or fees; Boards and shareholders pre-approved identical new advisory agreements to avoid disruption .
• Trading signals: Insider ownership is diffuse (<1% as a group), limiting insider-driven technicals. No recent proxy disclosure of insider selling programs; historical Forms 4 are dated and not indicative of current pressure .
• Governance quality: Dual-role Chair/CEO is balanced by Independent-majority structure, Lead Independent Director, independent committees, strong attendance, and use of independent counsel—mitigating independence concerns typical of externally managed funds . Long-term relative performance support and below-average advisory fees bolster the case for continuity .