R. Eric Chadwick
About R. Eric Chadwick
R. Eric Chadwick is Director, Chairman of the Board, Chief Executive Officer, and President of Flaherty & Crumrine Preferred and Income Opportunity Fund (PFO). He is age 50 and has served as Director and Chair since January 2016; he became President in April 2015 after serving as Chief Financial Officer from 2004–2015, and has been a portfolio manager for PFO since 1999; he is also President and a Director of the adviser, Flaherty & Crumrine Incorporated . The Adviser manages approximately $4.07 billion in assets as of January 31, 2025, with Chadwick among the owners; day-to-day fund objectives and strategies are not changing under the adviser’s 2025 internal restructuring and new advisory agreements, and advisory fees remain identical to prior terms . Long-term performance context cited to the Board shows PFO’s 10-year NAV performance equal or greater than the peer median; 1-year also equal or greater; 3-year below median; 5-year slightly below median for PFO (while other complex funds were at/above), informing pay-for-performance evaluation at the Board level . PFO had 13,077,326 shares outstanding at the January 16, 2025 record date .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Flaherty & Crumrine Preferred and Income Opportunity Fund (PFO) | Portfolio Manager | 1999–present | Long-tenured PM across preferreds strategy and fund complex; continuity of portfolio oversight |
| Flaherty & Crumrine Funds (PFD/FFC/FLC/DFP) | Portfolio Manager | Since each fund’s inception | Broadened leadership across complex; cross-fund consistency in investment approach |
| Flaherty & Crumrine Funds | Chief Financial Officer | 2004–Apr 2015 | Built finance and control infrastructure before ascension to President |
| Flaherty & Crumrine Funds | President | Apr 2015–present | Executive leadership of fund operations and governance |
| Flaherty & Crumrine Funds | Director & Chair | Jan 2016–present | Board leadership across complex; oversight of adviser engagement |
External Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Flaherty & Crumrine Incorporated (Adviser) | President & Director | Current | Executive leadership of the adviser; owner alongside other principals; adviser AUM ~$4.07B |
| Other public company boards | None | — | No public board interlocks disclosed |
Fixed Compensation
| Component | Amount | Reference |
|---|---|---|
| Fund-paid compensation to R. Eric Chadwick (PFO) | $0 aggregate compensation in FY ended Nov 30, 2024 | |
| Independent Director fee schedule (for context; Chadwick is “interested” and does not receive these) | $9,000 per annum per fund; $750 per in-person Board/Audit meeting; $500 per in-person Nominating meeting; $250 per telephonic meeting; Audit Chair $3,000 per fund; travel reimbursed | |
| Meeting attendance (FY 2024) | Board held 6 meetings (4 telephonic); all Directors attended 100% of Board and committee meetings |
Note: Officers affiliated with the Adviser (including Chadwick) are not compensated by the Funds; compensation from the Adviser is not disclosed in the proxy materials .
Performance Compensation
- No RSUs/PSUs, options, incentive payouts or performance metric-linked executive awards are disclosed for Chadwick at the Fund; closed-end fund officers affiliated with the Adviser do not receive Fund compensation, and adviser-level compensation frameworks are not disclosed in PFO’s proxy .
Equity Ownership & Alignment
| Holder | Fund | Beneficial Ownership Dollar Range (as of Dec 31, 2024) | Aggregate Dollar Range Across Fund Complex |
|---|---|---|---|
| R. Eric Chadwick | PFO | E (over $100,000) | E (over $100,000) |
| R. Eric Chadwick | PFD | C ($10,001–$50,000) | E (over $100,000) |
| R. Eric Chadwick | FFC | E (over $100,000) | E (over $100,000) |
| R. Eric Chadwick | FLC | C ($10,001–$50,000) | E (over $100,000) |
| R. Eric Chadwick | DFP | E (over $100,000) | E (over $100,000) |
- Directors and officers as a group owned less than 1% of each Fund’s Shares at Dec 31, 2024, indicating limited insider ownership concentration at the Fund level .
- Historical snapshot: As of FY ended Nov 30, 2015, Chadwick reported 11,713.336 PFO common shares directly, plus an indirect interest in 8,603 shares held by Flaherty & Crumrine Incorporated tied to his 17.5% ownership of the adviser (Form 5) .
Employment Terms
| Topic | Disclosure | Reference |
|---|---|---|
| Employer of day-to-day management | Flaherty & Crumrine Incorporated (Adviser) manages PFO; Boards oversee; Adviser’s restructuring in 2025 triggers new advisory agreements but no change to day-to-day management, objectives, strategies, or fees | |
| Advisory agreement term | New advisory agreement becomes effective upon Transaction completion; initial two-year term; annual renewal thereafter subject to Board and Independent Director approvals; terminable on 60 days’ notice; auto-terminates upon assignment | |
| Indemnification & liability | Adviser not liable except for willful misfeasance, bad faith, gross negligence, or reckless disregard; indemnification and advancement provisions detailed | |
| Fee schedule (PFO) | 0.625% on average monthly total managed assets up to $100MM; 0.50% on $100MM or more; “managed assets” defined inclusive of leverage | |
| Advisory fees paid FY 2024 | PFO paid $1,161,433 to the Adviser |
No personal employment contract, severance, change-of-control, non-compete, or clawback terms for Chadwick are disclosed at the Fund level; governance and economics are set via the investment advisory agreements between the Funds and the Adviser .
Board Governance and Director Service
- Roles: Chadwick is Director, Chairman of the Board, CEO and President; designated an “interested person” due to Adviser affiliation .
- Composition: 3 of 4 directors are Independent; Chair is an interested person; David Gale is Lead Independent Director; Audit and Nominating Committees are composed entirely of Independent Directors, chaired by Karen H. Hogan (Audit) and Nicholas Dalmaso (Nominating) .
- Attendance: All Directors attended 100% of Board and committee meetings in FY 2024 .
- Board service history: Chadwick appointed Director and Chair in Jan 2016; elected by shareholders in Apr 2016; continues to be nominated for multi-year terms across the complex .
Dual-role implications: Combining Chair and CEO can raise independence concerns; mitigants include a Lead Independent Director, majority independent board (75%), and Independent-chaired key committees per the 1940 Act and NYSE closed-end fund standards .
Performance Context
- The Board reviewed peer-relative NAV total return performance: for the 10-year period, each Fund had performance equal or greater than the peer median; for the 1-year period, PFO equal or greater than median; for the 3-year period, all Funds were below median; for the 5-year period, PFO slightly underperformed the median while other complex funds were at/above .
- The Board noted advisory fees and combined advisory/administration fees were below average versus peers, with index and fee comparisons considered during agreement approvals .
Investment Implications
- Compensation alignment: Chadwick receives no Fund-level compensation ($0); any pay is at the Adviser and not disclosed, reducing direct Fund pay-for-performance concerns but shifting alignment assessment to ownership and adviser incentives; advisory fees are tied to managed assets, creating potential leverage/asset-base incentives .
- Ownership alignment: Chadwick’s beneficial Fund holdings exceed $100,000 across the complex, with historical direct and indirect PFO ownership; however, overall insider ownership at the Fund is under 1%, limiting insider-driven float constraints or pledging considerations; no pledging/hedging disclosures are provided .
- Governance checks: Dual-role Chair/CEO structure is balanced by an empowered Lead Independent Director and Independent committees; attendance and oversight are robust, with compliance and audit processes detailed, reducing governance risk in a closed-end fund context .
- Execution risk: Long-tenured PM and officer across the complex supports continuity; Board’s performance review indicates strong long-term relative returns but recent 3-year underperformance, which the Board weighed alongside below-average fee levels in renewing advisory agreements; investors should monitor sustained peer-relative performance to assess adviser incentive quality .
- Trading signals: Limited insider ownership and lack of disclosed insider selling trends at the Fund dampen ownership-based trading signals; structural advisory fee stability and unchanged day-to-day management post-restructuring imply low near-term operational change risk for PFO .