Goldman Sachs BDC(GSBD) - 2024 Q4 - Annual Report

Incentive Fees - For the years ended December 31, 2024 and 2023, Incentive Fees based on income amounted to $17.21 million and$49.42 million respectively, with the Investment Adviser waiving $1.99 million of Incentive Fees for 2023[105] - As of December 31, 2024,$6.33 million remained payable in Incentive Fees[105] - The Incentive Fee based on capital gains is calculated as 20% of the positive difference between aggregate realized capital gains and losses, excluding unrealized capital appreciation[106] - No Incentive Fees based on capital gains were accrued for the years ended December 31, 2024 and 2023[108] - In Quarter 1, the Incentive Fee based on income payable was $1.2 million, calculated from an Ordinary Income of$6.0 million exceeding the Hurdle Amount of $1.75 million[111] - In Quarter 2, the Incentive Fee based on income payable was$300,000, as the aggregate Ordinary Income for the Trailing Twelve Quarters exceeded the aggregate Hurdle Amount[112] - In Quarter 3, due to an aggregate Net Capital Loss of ($4.0) million, no Incentive Fee based on income was payable[113] - In Quarter 4, the Incentive Fee based on income payable was capped at$900,000 due to an aggregate Net Capital Loss of ($1.0) million[114] - The calculation of the Incentive Fee based on capital gains for Year 1 resulted in a fee of$1.0 million[118] Management Fees and Investment Management Agreement - The Board of Directors approved the continuation of the Investment Management Agreement, focusing on the quality of advisory services and comparative fee structures[120] - For the year ended December 31, 2024, the company paid a total of $59.08 million in fees to its Investment Adviser, a decrease from$70.22 million in 2023, representing a reduction of approximately 15%[122] - Management Fees for 2024 amounted to $35.16 million, while Incentive Fees were$23.92 million, compared to $35.83 million and$34.39 million respectively in 2023[122] - The Investment Management Agreement is set to continue until August 31, 2025, subject to annual approval by a majority of Independent Directors and the Board of Directors[123] Regulatory Compliance and Risk Management - The Investment Adviser is not liable for losses except in cases of willful misfeasance, bad faith, or gross negligence, which may lead to riskier investment behavior[124] - The company is subject to regulatory requirements under the Investment Company Act, including restrictions on transactions with affiliates and the need for majority approval for certain changes[132] - The company is required to adopt and implement written policies and procedures to prevent violations of federal securities laws and designate a chief compliance officer[158] - The Sarbanes-Oxley Act mandates that the principal executive officer and principal financial officer certify the accuracy of financial statements in periodic reports[159] - Compliance with the Bank Holding Company Act may impose restrictions on the company's investments and operations, potentially affecting its investment strategies[161] - The company is subject to supervision and regulation by the Federal Reserve, which may limit its ability to make certain investments[161] - There is a risk that regulatory requirements applicable to the company may change, potentially having a material adverse effect on its operations[161] Investment Strategy and Asset Management - The company may invest up to 100% of its assets in privately negotiated transactions, with specific limitations on investments in registered investment companies[134][135] - The company must maintain at least 70% of its total assets in qualifying assets as defined by the Investment Company Act[137] - The principal categories of qualifying assets include securities purchased in private transactions from eligible portfolio companies[137] - The company may invest in temporary investments such as cash equivalents and U.S. government securities to ensure that 70% of its assets are qualifying assets[142] - The company may borrow amounts up to 5% of the value of its total assets for temporary or emergency purposes without regard to asset coverage[143] - The company is permitted to issue multiple classes of indebtedness and one class of shares senior to common stock if the asset coverage ratio is at least 150% after issuance[143] - The Small Business Credit Availability Act allows the company to borrow amounts such that the asset coverage ratio is at least 150%, reduced from the previous requirement of 200%[143] Interest Rate Sensitivity - As of December 31, 2024, approximately 99.4% of the company's performing debt investments bore interest at a floating rate, while only 0.6% bore interest at a fixed rate[462] - The company expects that changes in interest rates will significantly impact its net investment income, particularly due to its reliance on borrowings for funding investments[461] - A 300 basis point increase in interest rates is projected to result in a net income increase of $60.31 million, while a 300 basis point decrease would lead to a net income decrease of$60.14 million[464] - The company regularly measures its exposure to interest rate risk and manages this exposure by comparing interest rate sensitive assets to liabilities[463] - The company may utilize hedging instruments such as futures, options, and forward contracts to mitigate interest rate fluctuations in the future[464] - The company’s borrowings under its Revolving Credit Facility bear interest at a floating rate, which adds to its interest rate sensitivity[462] Corporate Governance - The company’s common stock is listed on the NYSE under the symbol "GSBD" and is subject to various corporate governance listing standards[160] - The company has adopted a Code of Ethics to establish procedures for personal investments and restrict certain personal securities transactions[144] - The company has delegated the voting of portfolio securities to its Investment Adviser, which has adopted a Proxy Voting Policy to maximize stockholder value[146]