John F. Barry III
PROSPECT CAPITALAbout John F. Barry III
John F. Barry III, age 73, serves as Director, Chairman of the Board, and Chief Executive Officer of Prospect Capital Corporation (PSEC); he has been a Class III director since April 2004, with his current term expiring in 2028 . He holds a J.D. cum laude from Harvard Law School (officer of the Harvard Law Review) and a B.A. magna cum laude from Princeton University (University Scholar) . He is an “interested” director under the 1940 Act due to his officer/control roles at the external adviser Prospect Capital Management L.P. (PCM) and Prospect Administration LLC . Barry beneficially owns 127,715,060 PSEC common shares (27.5% of outstanding), with sole voting/dispositive power over most of these shares (including holdings via the John and Daria Barry Foundation) and shared power over 366,432 shares—indicating significant economic alignment and potential influence .
Recent company profitability has been volatile: Net Income was -$101.6M (FY2023), +$262.8M (FY2024), and -$469.9M (FY2025) .
Past Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| Davis Polk & Wardwell | Corporate securities lawyer | 1979–1983 | Advised energy and finance clients and their bankers on corporate/securities matters . |
| L.F. Rothschild & Co. | Managed Corporate Finance Dept. | 1988–1989 | Led private equity and debt financing for energy and other companies . |
| Merrill Lynch & Co. | Founding member, project finance group | N/D | Project finance origination; broadened capital markets expertise (years not disclosed) . |
| U.S. Court of Appeals, 2nd Cir. | Law clerk to Chief Judge J.E. Lumbard | N/D | Appellate clerkship; legal training at highest levels (years not disclosed) . |
External Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| Prospect Capital Management L.P. (PCM) | Managing Director | Since July 2004 | External adviser to PSEC; Barry’s control of PCM creates potential related-party dynamics with PSEC . |
| Prospect Administration LLC | Managing Director | Since July 2004 | Provides office facilities/administrative services to PSEC under administration agreement; PCM controls Prospect Administration . |
Fixed Compensation
| Component | PSEC-paid (Yes/No) | 2025 value | Notes |
|---|---|---|---|
| Base salary (CEO) | No | None | PSEC pays no annual cash compensation to executive officers; Barry is compensated by PCM from advisory fees . |
| Target bonus % | No | None | No PSEC-paid bonus program for executive officers . |
| Actual bonus paid | No | None | No PSEC-paid bonus . |
| Director cash retainer (Barry) | No | None | Interested directors receive no director fees from PSEC . |
PSEC does not pay executive cash or equity compensation; any compensation to Barry occurs at PCM/Prospect Administration and is not disclosed in PSEC’s proxy .
Performance Compensation
Not applicable at PSEC. The Nominating, Corporate Governance and Compensation Committee would determine executive compensation only “to the extent the Company pays any executive officers’ compensation,” which it does not; therefore, no PSEC-based metrics, weightings, targets, payouts, or vesting schedules are disclosed for Barry .
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Total beneficial ownership | 127,715,060 common shares; 27.5% of outstanding . |
| Ownership structure | Sole voting/dispositive power over 127,715,060 shares (incl. via John & Daria Barry Foundation); shared voting/dispositive power over 366,432 shares . |
| Vested vs. unvested | Not disclosed (no PSEC equity grants to executive officers) . |
| Options (exercisable/unexercisable) | Not disclosed (no PSEC option awards to executive officers) . |
| Hedging policy | Hedging of PSEC securities by “Access Persons” (incl. directors/officers) is prohibited (e.g., forwards, swaps, collars, exchange funds) . |
| Pledging | Not disclosed in the proxy . |
| Ownership guidelines | Not disclosed (Corporate Governance Guidelines exist but no stated director/executive ownership multiple in proxy) . |
| Section 16 compliance | Company states all required filings were timely in FY2025 . |
Employment Terms
- Role and tenure: Chairman and CEO; Class III Director since April 2004; term to 2028 .
- Employment contract/severance/CoC: Not disclosed at PSEC; executives receive no direct PSEC compensation, and any employment terms would lie with PCM/Prospect Administration (not disclosed in PSEC proxy) .
- Non-compete/solicit; garden leave; post-termination: Not disclosed in PSEC proxy .
Board Governance
- Independence and structure: Barry and M. Grier Eliasek are “interested” directors; Cooper, Gremp, and Stark are independent under the 1940 Act/Nasdaq rules .
- Combined CEO/Chairman: Board believes combined role is efficient for PSEC’s business and has appointed a Lead Independent Director (Andrew C. Cooper) to strengthen independent oversight .
- Lead Independent Director duties: Schedules executive sessions, liaises with Chair, reviews agendas/materials, ensures sufficient discussion time .
- Committees (independent-only composition):
- Audit Committee: Cooper, Gremp, Stark (Chair; “audit committee financial expert”) .
- Nominating, Corporate Governance & Compensation Committee: Cooper, Gremp (Chair), Stark .
- Meetings and attendance: FY2025—9 Board meetings, 9 Audit Committee meetings, 1 Nominating/CG/Compensation meeting; all directors attended ≥75% of their meetings; 2 directors attended last year’s annual meeting .
Director Compensation (Context)
- Barry (interested director): Receives no director compensation from PSEC .
- Independent directors: Annual fee $262,500 per director (Aggregate Compensation from the Company shown as $200,000; total including fund complex $262,500) .
Performance & Track Record
| Metric | FY 2023 | FY 2024 | FY 2025 |
|---|---|---|---|
| Net Income - (IS) ($) | -101,641,000 | 262,834,000 | -469,924,000 |
- Auditor transition and controls: Deloitte appointed FY2024; prior auditor BDO’s 2022 material weaknesses were remediated by FY2023, as disclosed in the auditor change narrative .
- Leverage/risk framework: As a BDC, PSEC operates under 150% asset coverage since 2020 after board and shareholder approvals, permitting higher leverage subject to requirements .
- Shareholder vote context: On June 10, 2024, stockholders approved authorization (with board approval) to sell common stock below NAV under specified conditions (For 252,548,660; Against 39,829,612; Abstain 7,064,409; affiliate-adjusted For 143,849,001) .
Related Party Transactions
- Advisory and administration agreements: PSEC is externally managed by PCM (controlled by Barry); Prospect Administration provides administrative services and is controlled by PCM. These arrangements create potential conflicts managed via policies and exemptive relief .
- Co-investment exemptive order: SEC order (Jan 13, 2020; amended Aug 2, 2022) allows negotiating certain co-investment terms with other funds managed by the Manager/affiliates, subject to conditions .
Compensation Structure Analysis
- No PSEC-paid executive compensation; hence no PSEC-based pay mix shifts, metrics, vesting, or peer benchmarking for Barry are disclosed .
- Governance mitigating factors include independent-only committees and a Lead Independent Director to offset CEO/Chair dual role .
- Potential alignment/conflict: Very high beneficial ownership (27.5%) aligns Barry with common shareholders, but control of the external adviser and administration entity introduces related-party considerations .
Risk Indicators & Red Flags
- Structural conflicts: CEO/Chair dual role and control of PCM/Prospect Administration (related-party relationships) .
- Internal controls history: Prior material weaknesses (FY2022) remediated by FY2023; auditor transition to Deloitte in 2023 .
- Hedging policy: Hedging by insiders prohibited (reduces alignment risk concerns related to hedging) .
- Pledging disclosure: Not disclosed .
- Section 16 compliance: All timely in FY2025 (no delinquent insider filings noted) .
Investment Implications
- Alignment vs. conflicts: Barry’s 27.5% ownership suggests strong economic alignment, but PSEC’s external management model (PCM controlled by Barry) embeds related-party dynamics; compensation is paid by PCM, not PSEC, complicating pay-for-performance assessment at the public company level .
- Governance: Combined CEO/Chair role is counterbalanced by a Lead Independent Director and independent-only committees; investors should weigh the board’s stated efficiency rationale against concentration of authority and the adviser relationship .
- Financial volatility and controls: Net income volatility across FY2023–FY2025 underscores earnings variability typical of BDCs; internal control remediation and the 2023 auditor change reduce one governance overhang, but should continue to be monitored .
- Trading/retention signals: With no PSEC-issued equity awards and no disclosed PSEC severance or CoC economics for Barry, insider selling pressure from vesting does not apply; Section 16 filings were timely, but Form 4 trading patterns are not detailed in the proxy .
- Bottom line: High insider ownership and independent board structures are positives, while the externally managed model and dual role of CEO/Chair with control of the adviser require ongoing scrutiny of related-party transactions, fee arrangements, and realized long-term value creation .