UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
201 Rouse Boulevard
Philadelphia, Pennsylvania 19112
21, 2020
2020.
21, 2020
This proxy statement is furnished in connection with the solicitation of proxies by the board of trustees (the "Board"“Board”) of FS Energy and Power Fund, a Delaware statutory trust (the "Company"“Company”), for use at the Annual Meeting of Shareholders of the Company to be held at the offices of the Company, located at 201 Rouse Boulevard, Philadelphia, Pennsylvania 19112, on December 13, 201810, 2020 at 10:30 a.m., Eastern Time, and any adjournments or postponements thereof (the "Annual Meeting"“Annual Meeting”). This proxy statement and the accompanying materials, or a Notice of Internet Availability of Proxy Materials containing instructions on how to access the proxy statement and annual report and how to submit proxies over the Internet, are being mailed on or about October 26, 20182020 to shareholders of record described below and are available atwww.proxyvote.com.
the original record date without notice other than the announcement at the Annual Meeting to permit further solicitation of proxies. The persons named as proxies will vote those proxies for such adjournment, unless marked to be voted against any proposal for which an adjournment is sought. Any business that might have been transacted at the Annual Meeting as originally called may be transacted at any such adjourned session(s) at which a quorum is present.
communications, please contact the Company'sCompany’s transfer agent, DST Systems, Inc. by telephone at (877) 628-8575 or by mail to FS Energy and Power Fund, c/o DST Systems, Inc., 430 W. 7th7
10, 2020.
Notice of Internet Availability of Proxy Materials
persons who beneficially own 5% or more of the Common Shares is based upon information furnished by the Company'sCompany’s transfer agent and other information provided by such persons, if available.
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Common Shares Beneficially Owned as of October | | |||||||||||||
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Name and Address of Beneficial Owner(1) | | | Number of Common Shares | |||||||||||
| | | Percentage(2) | | ||||||||||
Interested Trustees: | | | | | | | | | | | | | | |
Michael C. Forman(3) | | | | 446,321.858 | | | | | | * | | | ||
| | | | | — | | | | | | * | |||
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Independent Trustees: | | | | | | | | | | | | | | |
Sidney R. Brown(4) | | | | 64,870.090 | | | | | | * | | | ||
Gregory P. Chandler(5) | | | | 28,235.982 | | | | | | | | | ||
Richard I. Goldstein | | | | 43,992.788 | | | | | | * | | | ||
Kathleen A. McGinty | | | | | — | | | | | | | | | |
Charles P. Pizzi | | | | 22,003.792 | | | | | | * | ||||
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| | — | | | | | | * | | | ||||
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Eric Long | | | | | — | | | | | | * | |||
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Sean Coleman | | | | 7,993.605 | | | | | | * | | | ||
Edward T. Gallivan, Jr. | | | | 5,171.140 | | | | | | * | ||||
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Stephen S. Sypherd(6) | | | | 7,920.475 | | | | | | * | | | ||
James E. Volk | | | | 2,120.721 | | | | | | * | | | ||
All Executive Officers and Trustees as a group (13 persons) | | | | 628,630.451 | | | | | | * | | |
Name of Trustee | | | Dollar Range of Equity Securities Beneficially Owned in the Company(1)(2) | ||
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Interested Trustees: | | | | | |
Michael C. Forman | | | Over $100,000 | | |
| | | — | | |
Independent Trustees: | | | | | |
Sidney R. Brown | | | Over $100,000 | ||
| | ||||
| | | $50,001 - $100,000 | | |
Richard I. Goldstein | | | Over $100,000 | ||
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Charles P. Pizzi | | $50,001-$100,000 | | ||
| | — | | ||
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Pedro A. Ramos | | | — | |
In considering each trustee and the composition of the Board as a whole, the Board seeks a diverse group of experiences, characteristics, attributes and skills, including diversity in gender, ethnicity and race, that the Board believes enables a trustee to make a significant contribution to the Board, the Company and its shareholders. These experiences, characteristics, attributes and skills, which are more fully described below, include, but are not limited to, management experience, independence, financial expertise and experience serving as directors or trustees of other entities. The Board may also consider such other experiences, characteristics, attributes and skills as it deems appropriate, given the then-current needs of the Board and the Company.
the experience, characteristics, attributes and skills of each trustee nominee that led the Board to conclude that each such person should serve as a trustee.
| | INDEPENDENT TRUSTEE NOMINEES | | | ||||||||||||||||||||||||||||||||
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Name, Address, Age and Position(s) with Company(1) | | | | Term of Office and Length of Time Served(2) | | | | Principal Occupation(s) During Past Five Years | | | | Number of Companies in Fund Complex Overseen by Trustee | | | | Other Public Directorships Held by Trustee During the Past Five Years† | | | ||||||||||||||||||
| | Sidney Brown Age: 63 Trustee | | | | Since 2011 | | | | Mr. Brown has served as the chief executive officer of NFI, Inc. Mr. Brown has served as a member of various boards for publicly-traded companies. In addition, his service as chief executive officer of NFI has provided him, in the opinion of the Board, with experience and insight which is beneficial to the Company. | | | | One | | | | Sun National Bank; J & J Snack Foods Corp.; Cooper Health System | | |
| | INDEPENDENT TRUSTEE NOMINEES | | | ||||||||||||||||||||||||||||||||
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Name, Address, Age and Position(s) with Company(1) | | | | Term of Office and Length of Time Served(2) | | | | Principal Occupation(s) During Past Five Years | | | | Number of Companies in Fund Complex Overseen by Trustee | | | | Other Public Directorships Held by Trustee During the Past Five Years† | | | ||||||||||||||||||
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Gregory P. Chandler Age: 53 Trustee | | | | Since 2010 | | | | Mr. Chandler has been chief financial officer of Emtec, Inc. |
Since April 2020 Mr. Chandler has served as an outsourced chief financial officer to Avocado Systems Inc., a cybersecurity provider. Mr. Chandler also presently serves as Mr. Chandler began his career as an officer in the United States Army. After business school he spent four years with PricewaterhouseCoopers LLP (“PwC”), and its predecessor, Coopers and Lybrand, where he assisted companies in the “Office of the CFO Practice” and also worked as a certified public accountant. During his tenure at PwC he spent the majority of his time in the investment company practice. Mr. Chandler followed his experience at PwC with a ten year career as an investment banker, followed by eleven years as the chief financial officer of Emtec, Inc. (“Emtec”), a global information technology provider. He spent fifteen years on Emtec’s board of directors. Mr. Chandler has extensive experience in valuations and in negotiating debt, equity and mergers and acquisitions transactions in a variety of industries with both public and private companies. In addition, Mr. Chandler has experience managing the audits of mutual funds, hedge funds and venture capital funds. This experience has provided Mr. Chandler, in the opinion of the Board, with experience and insight which is beneficial to the Company. | | | | One | | | | Emtec, Inc.; RBB Funds overseeing thirty two portfolios; Wilmington Funds overseeing twelve portfolios; FS KKR Capital Corp. (formerly FS Investment | | |
| | INDEPENDENT TRUSTEE NOMINEES | | | ||||||||||||||||||||||||||||||||
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Name, Address, Age and Position(s) with Company(1) | | | | Term of Office and Length of Time Served(2) | | | | Principal Occupation(s) During Past Five Years | | | | Number of Companies in Fund Complex Overseen by Trustee | | | | Other Public Directorships Held by Trustee During the Past Five Years† | | | ||||||||||||||||||
| | Richard I. Goldstein Age: 59 Trustee and Lead Independent Trustee | | | | Trustee since 2011 Lead Independent Trustee since March 2015 | | | | Mr. Goldstein has served as the Mr. Goldstein has extensive experience as a senior executive and in negotiating investment transactions in a variety of industries, including in the energy industry. This experience has provided Mr. Goldstein, in the opinion of the Board, with experience and insight which is beneficial to the Company. | | | | One | | | | FS | | |
| | INDEPENDENT TRUSTEE NOMINEES | | | ||||||||||||||||
| | Name, Address, Age and Position(s) with Company(1) | | | | Term of Office and Length of Time Served(2) | | | | Principal Occupation(s) During Past Five Years | | | | Number of Companies in Fund Complex Overseen by Trustee | | | | Other Public Directorships Held by Trustee During the Past Five Years† | | |
| | Kathleen A. McGinty Age: 57 Trustee | | | | Since March 2020 | | | | Kathleen A. McGinty has been Vice President and Chief Sustainability, Government and Regulatory Affairs for Johnson Controls, a leading energy efficiency and buildings technology company, since April 2019. Prior to joining Johnson Controls, she served as Chair of the Pennsylvania Energy Development Authority from 2004 to 2008 and Pennsylvania Secretary of Environmental Protection from 2003 to 2008. Prior to this she was Chair of the White House Council on Environmental Quality and Deputy Assistant to the President from 1993 to 1998. Ms. McGinty has also served as an operating partner with a private equity fund, where she helped build successful growth strategies for mid-stage clean energy, water and efficiency companies, as well as served as a director of publicly traded and privately held businesses in the energy sector. Currently, Ms. McGinty serves on the boards of the Scott Institute for Energy Innovation at Carnegie Mellon University, the Energy Futures Initiative, the Alliance to Save Energy, the Keystone Policy Center, the American Council on Renewable Energy, and the Delaware River Port Authority. Ms. McGinty received a B.S. in chemistry from St. Joseph’s University and J.D. from Columbia University. She has also received honorary doctorates from Muhlenberg University, Dickinson College, and Clarion State University. Ms. McGinty’s extensive service in the private and public sectors has provided her, in the opinion of the Board, with experience and insight which is beneficial to the Company. | | | | One | | | | None | | |
| | Charles P. Pizzi Age: 70 Trustee | | | | Since 2012 | | | | Mr. Pizzi is the retired president, director and chief executive officer of Tasty Baking Company, manufacturer of Tastykake branded snack cakes. He served in these positions from 2002 to May 2011. Prior to leading Tasty Baking Company, Mr. Pizzi served as president and chief executive officer of the Greater Philadelphia Chamber of Commerce, vice-chairman of the American Chamber of Commerce Executives and chairman of the Metro Council of Presidents. | | | | One | | | | Brandywine Realty Trust; Corporation; Pennsylvania Real Estate Investment Trust | | |
| | INDEPENDENT TRUSTEE NOMINEES | | | ||||||||||||||||||||||||||||||||
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Name, Address, Age and Position(s) with Company(1) | | | | Term of Office and Length of Time Served(2) | | | | Principal Occupation(s) During Past Five Years | | | | Number of Companies in Fund Complex Overseen by Trustee | | | | Other Public Directorships Held by Trustee During the Past Five Years† | | | ||||||||||||||||||
| | | | | | | | | | His career also includes work with the transition teams for the former Pennsylvania Governor Tom Ridge and the former Philadelphia Mayor Ed Rendell. Mr. Pizzi has also served as commerce director for the City of Philadelphia. He has been a trustee of Brandywine Realty Trust since 1996, serving on the audit committee and as a chair of the compensation committee, Mr. Pizzi has significant experience as an executive and director at various companies and governmental organizations. This experience has provided Mr. Pizzi, in the opinion of the Board, with experience and insight which is beneficial to the Company. | | | | | | | | | | |
| | INDEPENDENT TRUSTEE NOMINEES | | | ||||||||||||||||||||||||||||||||
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Name, Address, Age and Position(s) with Company(1) | | | | Term of Office and Length of Time Served(2) | | | | Principal Occupation(s) During Past Five Years | | | | Number of Companies in Fund Complex Overseen by Trustee | | | | Other Public Directorships Held by Trustee During the Past Five Years† | | | ||||||||||||||||||
| | Pedro Ramos Age: 55 Trustee | | | | | | | Pedro A. Ramos has served as the president and chief executive officer of The Philadelphia Foundation, or Mr. | | | | One | | | | AmeriGas Propane, Inc.; FS KKR Capital Corp. (formerly FS Investment | | |
| | INTERESTED TRUSTEE(3) | | | ||||||||||||||||||||||||||||||||
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Name, Address, Age and Position(s) with Company(1) | | | | Term of Office and Length of Time Served(2) | | | | Principal Occupation(s) During Past Five Years | | | | Number of Companies in Fund Complex Overseen by Trustee | | | | Other Public Directorships Held by During the Past Five Years† | | | ||||||||||||||||||
| | Michael C. Forman Age: 59 Chairman of the Board and Chief Executive Officer | | | | Since 2010 | | | | Mr. Forman has served as the Mr. Forman has extensive experience in corporate and securities law and has founded and served in a leadership role of various companies, including FS/EIG Advisor. The Board believes Mr. Forman’s experience and his positions as the Company and FS/EIG Advisor’s chief executive officer make him a significant asset to the Company. | | | | One | | | | FS | | |||||||||||||||||
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| | INTERESTED TRUSTEE(3) | | | ||||||||||||||||||||||||||||||||
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Name, Address, Age and Position(s) with Company(1) | | | | Term of Office and Length of Time Served(2) | | | | Principal Occupation(s) During Past Five Years | | | | Number of Companies in Fund Complex Overseen by Trustee | | | | Other Public Directorships Held by During the Past Five Years† | | | ||||||||||||||||||
| | Robert Blair Thomas, 58 Trustee | | | | Since | | | | Mr. |
West, where Mr. | ||||||||||||||||||||
Mr. Thomas has significant experience as an executive, director and advisor at various | | | ||||||||||||||||||
| One | | | | | |
Board meeting and in determining the need for special meetings of the Board, chairs any meeting of the Independent Trustees in executive session, facilitates communications between other members of the Board and the chairman of the Board and/or the chief executive officer and otherwise consults with the chairman of the board and/or the chief executive officer on matters relating to corporate governance and Board performance.
2019.
year ended December 31, 2017.2019. Each member of the Valuation Committee who served on such committee during the 20172019 fiscal year attended over 75% of the aggregate of all the meetings held during 2017.
2019.
2019.
Information about Executive Officers Who Are Not Trustees
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Name, Address, | ||||||||||||
Age and Position(s) with Company(1) | | | | Length of | ||||||||
Time | ||||||||||||
Served | | | | Principal Occupation(s) During Past Five Years | | | ||||||
| | Eric Long Age: 50 President | | | | Since 2019 | | | | Mr. Long has served as the Company’s president since September 2019 and as its portfolio manager since April 2018. Mr. Long has served as a managing director of EIG since 2014. Prior to joining EIG in 2014, Mr. Long was a senior investment banker with Goldman Sachs. During his tenure, Mr. Long advised companies on a broad range of transactions including mergers, acquisitions, divestitures, debt and equity financings and other corporate finance functions. Prior to joining Goldman Sachs, Mr. Long was a director in the Transaction Services Group of PricewaterhouseCoopers. Mr. Long is a Chartered Financial Analyst (CFA). He holds a B.A. from the University of Vermont and an M.B.A. from the Wharton School at the University of Pennsylvania. | | |
| | Name, Address, Age and Position(s) with Company(1) | | | | Length of Time Served | | | | Principal Occupation(s) During Past Five Years | | |
| | Sean Coleman Age: 50 Chief Investment Officer | | | | Since 2018 | | | | Sean Coleman has served as the | | |
| | Edward T. Gallivan, Jr. Age: 58 Chief Financial Officer | | | | |||||||
Since 2012 | | | Mr. Gallivan has served as the | |||||||||
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| | James Beach Age: 34 Chief Operating Officer | | | |
2020 | | | ||||||||||
| Mr. | |||||||||||
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| | Name, Address, Age and Position(s) with Company(1) | | | | Length of Time Served | | | | Principal Occupation(s) During Past Five Years | | | ||||
| | Stephen S. Sypherd Age: 43 General Counsel and Secretary | | | | Since 2013 | | | | Mr. Sypherd serves as the | | | ||||
| | James F. Volk Age: 58 Chief Compliance Officer | | | |
April 2015 | | | ||||||||||
| Mr. Volk has served as the | |||||||||||
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Trustee Compensation
Advisor or its affiliates.
Fee | | | Amount | | |||
Annual Board Retainer | | | | $ | 100,000 | | |
Board Meeting Fees | | | | $ | 2,500 | | |
Annual Committee Chair Retainers: | | | | | | | |
Audit and Valuation Committees | | | | $ | 20,000 | | |
Nominating and Governance Committee | | | | $ | 15,000 | | |
Other Committees | | | | $ | 10,000 | | |
Committee Meeting Fees | | | | $ | 1,000 | | |
Annual Lead Independent Trustee Retainer | | | | $ | 25,000 | | |
Fee | | Amount | | |
---|---|---|---|---|
Annual Board Retainer | | $ | 100,000 | |
Board Meeting Fees | | $ | 2,500 | |
Annual Committee Chair Retainers: | | | ||
Audit and Valuation Committees | | $ | 20,000 | |
Nominating and Governance Committee | | $ | 15,000 | |
Other Committees | | $ | 10,000 | |
Committee Meeting Fees | | $ | 1,000 | |
Annual Lead Independent Trustee Retainer | | $ | 25,000 | |
The Company will also reimburse each of the above trustees for all reasonable and authorized business expenses in accordance with its policies as in effect from time to time, including reimbursement of reasonable out-of-pocket expenses incurred in connection with attending each Board meeting and each committee meeting not held concurrently with a Board meeting.
| Name of Trustee | | | Fees Earned or Paid in Cash by the Company | | | Total Compensation from the Company | | ||||||
| Sidney R. Brown | | | | $ | 110,500 | | | | | $ | 110,500 | | |
| Stephen T. Burdumy(1) | | | | $ | 110,000 | | | | | $ | 110,000 | | |
| Gregory P. Chandler | | | | $ | 138,000 | | | | | $ | 138,000 | | |
| Michael C. Forman | | | | | — | | | | | | — | | |
| Richard I. Goldstein | | | | $ | 159,000 | | | | | $ | 159,000 | | |
| Kathleen A. McGinty(2) | | | | | — | | | | | | — | | |
| Charles P. Pizzi | | | | $ | 127,125 | | | | | $ | 127,125 | | |
| Pedro A. Ramos | | | | $ | 117,000 | | | | | $ | 117,000 | | |
| William C. Sonneborn(3) | | | | | — | | | | | | — | | |
| R. Blair Thomas | | | | | — | | | | | | — | | |
Name of Trustee | | Fees Earned or Paid in Cash by the Company | | Total Compensation from the Company | | ||||||
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David J. Adelman(1) | | | — | | | | — | | | ||
Sidney R. Brown | | | $ | 110,500 | | | | $ | 110,500 | | |
Gregory P. Chandler | | | $ | 139,000 | | | | $ | 139,000 | | |
Michael C. Forman | | | — | | | | — | | | ||
Richard I. Goldstein | | | $ | 69,000 | | | | $ | 159,000 | | |
Michael J. Heller(1) | | | $ | — | | | | $ | 114,000 | | |
Charles P. Pizzi | | | $ | 113,000 | | | | $ | 113,000 | | |
William C. Sonneborn(2) | | | — | | | | — | | | ||
Richard W. Vague | | | $ | 110,500 | | | | $ | 110,500 | | |
Thomas J. Gravina(1) | | | $ | 128,000 | | | | $ | 128,000 | | |
R. Richard Williams | | | $ | 118,000 | | | | $ | 118,000 | | |
Business Conduct and Ethics generally prohibits any employee, officer or trustee from engaging in any transaction where there is a conflict between such individual'sindividual’s personal interest and the interests of the Company. Waivers to the Code of Business Conduct and Ethics for any executive officer or member of the Board must be approved by the Board and are publicly disclosed as required by applicable law and regulations. In addition, the Audit Committee is required to review and approve all transactions with related persons (as defined in Item 404 of Regulation S-K promulgated under the Exchange Act). Prior to the occurrence of a liquidity event (which we define as (1) a listing of the Company'sCompany’s Common Shares on a national securities exchange, (2) the sale of all or substantially all of the Company'sCompany’s assets either on a complete portfolio basis or individually followed by a liquidation or (3) a merger or another transaction approved by the Board in which the Company'sCompany’s shareholders likely will receive cash or shares of a publicly traded company), all future transactions with affiliates of the Company will be on terms no less favorable than could be obtained from an unaffiliated third party and must be approved by a majority of the Board, including a majority of the Independent Trustees.
Historically, the Company received investment advisory and administrative services from FS Investment Advisor, LLC ("FS Advisor") pursuant to an investment advisory and administrative services agreement, dated as of August 10, 2012 (the "FSIA Investment Advisory and Administrative Services Agreement"). The FSIA Investment Advisory and Administrative Services Agreement was replaced by the FS/EIG Investment Advisory and Administrative Services Agreement with FS/EIG Advisor, which is a newly-formed entity that is jointly owned by FS Advisor and EIG Global Energy Partners. FS Advisor previously engaged GSO Capital Partners, L.P. ("GSO") to act as the Company's investment sub-adviser pursuant to the investment sub-advisory agreement between FS Advisor and GSO, dated April 28, 2011 (the "GSO Investment Sub-Advisory Agreement"). GSO resigned as the Company's investment sub-adviser and terminated the GSO Investment Sub-Advisory Agreement effective April 9, 2018.
The incentive fee on capital gains payable under the FS/EIG Investment Advisory Agreement is determined and payable in arrears as of the end of each calendar year (or upon termination of such agreement). Such fee equals 20.0% of the Company's "incentiveCompany’s “incentive fee capital gains,"” which are the Company'sCompany’s realized capital gains on a cumulative basis from inception, calculated as of the end of the applicable period, computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis, less the aggregate amount of any previously paid incentive fees on capital gains. The Company will accrue for the incentive fee on capital gains, which, if earned, will be paid annually. The Company will accrue the incentive fee on capital gains based on net realized and unrealized gains; however, the fee payable to FS/EIG Advisor will be based on realized gains and no such fee will be payable with respect to unrealized gains unless and until such gains are actually realized. The
payable quarterly in arrears and equals 20.0% of the Company’s “pre-incentive fee net investment income” for the immediately preceding quarter subject to a hurdle rate, expressed as a rate of return on adjusted capital, equal to 1.625% per quarter, or an annualized hurdle rate of 6.5%. As a result, FS/EIG Advisor will not earn this incentive fee for any quarter until the Company’s pre-incentive fee net investment income for such quarter exceeds the hurdle rate of 1.625%. For purposes of this fee, “adjusted capital” means cumulative gross proceeds generated from sales of the Company’s common shares (including proceeds from its distribution reinvestment plan) reduced for distributions from non-liquidating dispositions of the Company’s investments paid to shareholders and amounts paid for share repurchases pursuant to the Company’s share repurchase program. Once the Company’s pre-incentive fee net investment income in any quarter exceeds the hurdle rate, FS/EIG Advisor will be entitled to a “catch-up” fee equal to the amount of the Company’s pre-incentive fee net investment income in excess of the hurdle rate, until the Company’s pre-incentive fee net investment income for such quarter equals 2.031%, or 8.125% annually, of adjusted capital. This “catch-up” feature will allow FS/EIG Advisor to recoup the fees foregone as a result of the existence of the hurdle rate. Thereafter, FS/EIG Advisor will be entitled to receive 20.0% of the Company’s pre-incentive fee net investment income.
Pursuant to the investment sub-advisory agreement, GSO was entitled to receive 50% of all management and incentive fees payable to FS Advisor under the FS Advisor investment advisory agreement with respect to each year.
Historically, pursuant The FS/EIG investment advisory agreement is substantially similar to the FSIA Investment Advisory and Administrative Services Agreement, FS Advisor was entitled to an annual base management fee of 2.0% of the average weekly value of the Company's gross assets and an incentive fee based on the Company's performance. Pursuant to the GSO Sub-Advisory Agreement, GSO received 50% of all management and incentive fees payable to FS Advisor under the FSIA Investment Advisory and Administrative Services Agreement with respect to each year. Effective January 1, 2018 FS Advisor contractually agreed to permanently waive 0.25% of its base management fee to which it was entitled under the FSIA Investment Advisory and Administrative Services Agreement, so that the fee received equaled 1.75% of the average weekly value of the Company's gross assets.
The Company also reimbursed FS Advisor for expenses necessary to perform services related to the Company's administration and operations, including FS Advisor's allocable portion of the compensation and related expenses of certain personnel of FS Investments, the Company's sponsor and an affiliate of FS Advisor, providing administrative services to the Company on behalf of FS Advisor. The amount of this reimbursement for FS Advisor was set at the lesser of (1) FS Advisor's actual costs incurred in providing such services and (2) the amount that the Company estimated it would be required to pay alternative service providers for comparable services in the same geographic location. FS Advisor allocated the cost of such services to the Company based on factors such as assets, revenues, time allocations and/or other reasonable metrics.
Also, under the FSIA Investment Advisory and Administrative Services Agreement, the Company, either directly or through reimbursement to FS Advisor or its affiliates, was responsible for its organization and offering costs in an amount up to 1.5% of gross proceeds raised in the Company's continuous public offering. Organization and offering costs primarily included legal, accounting, printing and other expenses relating to the Company's continuous public offering, including costs associated with technology integration between the Company's systems and those of its selected broker-dealers, marketing expenses, salaries and direct expenses of FS Advisor's personnel, employees of its affiliates and others while engaged in registering and marketing the Common Shares, which included the development of marketing materials and presentations, training and educational meetings, and generally coordinating the marketing process for the Company.
Prior to satisfaction of the minimum offering requirement and for a period of time thereafter, FS Investments funded certain of the Company's organization and offering costs. Following this period, the Company has paid certain of its organization and offering costs directly and reimbursed FS Advisor for offering costs incurred by FS Advisor on the Company's behalf, including marketing expenses, salaries and other direct expenses of FS Advisor's personnel and employees of its affiliates while engaged in registering and marketing the Common Shares. Organization and offering costs funded directly by FS Investments were recorded by the Company as a contribution to capital. The offering costs were offset against capital in excess of par value on the consolidated financial statements and the organization costs were charged to expense as incurred by the Company. All other offering costs, including costs incurred directly by the Company, amounts reimbursed to FS Advisor for ongoing offering costs and any reimbursements paid to FS Investments for organization and offering costs previously funded, are recorded as a reduction of capital. Commencing January 1, 2016, offering costs incurred by the Company were deferred and amortized to expense over twelve months. Following the closing of the Company's continuous public offering to new investors in November 2016, all deferred offering costs were expensed.
During the year ended December 31, 2017, FS Investments did not fund any of the Company's organization and offering costs. As of December 31, 2017, no amounts remain reimbursable to FS Advisor and its affiliates under this arrangement.
The dealer manager for the Company's continuous public offering was FS Investment Solutions, LLC (formerly FS2 Capital Partners, LLC) ("FS Investment Solutions"), which is one of the Company's affiliates. Under the dealer manager agreement among the Company, FS Advisor and FS Investment Solutions (the "Dealer Manager Agreement"), FS Investment Solutions was entitled to receive sales commissions and dealer manager fees in connection with the sale of the Common Shares in the Company's continuous public offering, all or a portion of which were re-allowed to selected broker-dealers and financial representatives. The Dealer Manager Agreement terminated in connection with the closing of the Company's continuous public offering in November 2016.
The following table describes the fees and expenses accrued under the FS Advisor investment advisory agreement and FS/EIG Investment Advisory and Administrative Services Agreement, the FSIA Investment Advisory and Administrative Services Agreement and the dealer managerinvestment advisory agreement during the six months ended June 30, 20182020 and
2017 2019 and the years ended December 31, 20172019 and 20162018 (dollar amounts in the table below and the related notes are presented in thousands).
| Related Party | | | Source Agreement | | | Description | | | Six Months Ended June 30, 2020 | | | Six Months Ended June 30, 2019 | | | Year Ended December 31, 2019 | | | Year Ended December 31, 2018 | | ||||||||||||
| FS Advisor and FS/EIG Advisor | | | FSIA Investment Advisory and Administrative Services Agreement and FS/EIG Investment Advisory and Administrative Services Agreement | | | Base Management Fee(1) | | | | $ | 27,543 | | | | | $ | 32,577 | | | | | $ | 62,534 | | | | | $ | 68,799 | | |
| FS Advisor and FS/EIG Advisor | | | FSIA Investment Advisory and Administrative Services Agreement and FS/EIG Investment Advisory and Administrative Services Agreement | | | Administrative Services Expenses(2) | | | | $ | 2,309 | | | | | $ | 2,045 | | | | | $ | 4,760 | | | | | $ | 3,717 | | |
Related Party | | Source Agreement | | Description | | Six Months Ended June 30, 2018 | | Six Months Ended June 30, 2017 | | Year Ended December 31, 2017 | | Year Ended December 31, 2016 | | ||||||||||||
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FS Advisor and FS/EIG Advisor | | FSIA Investment Advisory and Administrative Services Agreement and FS/EIG Investment Advisory and Administrative Services Agreement | | Base Management Fee(1) | | | $ | 35,416 | | | | $ | 45,073 | | | | $ | 88,938 | | | | $ | 76,580 | | |
FS Advisor | | FSIA Investment Advisory and Administrative Services Agreement | | Subordinated Incentive Fee on Income(2) | | | — | | | | $ | 10,499 | | | | $ | 10,499 | | | | $ | 5,774 | | | |
FS Advisor and FS/EIG Advisor | | FSIA Investment Advisory and Administrative Services Agreement and FS/EIG Investment Advisory and Administrative Services Agreement | | Administrative Services Expenses(3) | | | $ | 1,595 | | | | $ | 1,607 | | | | $ | 2,829 | | | | $ | 3,870 | | |
FS Advisor | | Expense Support and Conditional Reimbursement Agreement | | Expense Recoupment(4) | | | — | | | | $ | 2,858 | | | | $ | 2,858 | | | | — | | | ||
FS Investment Solutions | | Dealer Manager Agreement | | Dealer Manager Fee(5) | | | — | | | | — | | | | — | | | | $ | 6,545 | | |
$3,580, respectively, in administrative services expenses to FS Advisor and/or FS/EIG Advisor, or its affiliates, during the years ended December 31, 20172019 and 2016.
Under the Expense Reimbursement Agreement,agreement, FS Investments agreed to reimburse the Company quarterly for expenses in an amount equal to the difference between the Company'sCompany’s cumulative distributions paid to its shareholders in each quarter, less the sum of the Company'sCompany’s net investment company taxable income, net capital gains and dividends and other distributions paid to the Company on account of preferred and common equity investments in portfolio companies (to the extent such amounts are not included in net investment company taxable income or net capital gains) in each quarter.
During the six months ended June 30, 2018, the Company did not accrue any expense reimbursements from FS Investments or FS/EIG Advisor. During the six months ended June 30, 2017, the Company accrued $18,220 (expressed in thousands) for expense reimbursements that FS Investments agreed to offset against management fees and subordinated income incentive fees payable by the Company to FS Advisor. As of June 30, 2018, the Company had no reimbursements due from FS Investments or FS/EIG Advisor.
As discussed above, under the Expense Reimbursement Agreement, amounts reimbursed to the Company by FS Investments may become subject to repayment by the Company in the future. During the six months ended June 30, 2018,2020, the Company did not pay any amounts in expense recoupments to FS Investments. As of June 30, 2018, $28,104 (expressed in thousands)2020, $12,742,052 of reimbursements may become subject to repayment by the Company to FS Investments in the future.
For the Three Months Ended | | | Amount of Expense Reimbursement Payment | | | Annualized “Other Operating Expenses” Ratio as of the Date of Expense Reimbursement | | | Annualized Rate of Distributions Per Share(1) | | | Reimbursement Eligibility Expiration | | |||||||||
September 30, 2017 | | | | | 7,095 | | | | | | 0.36% | | | | | | 9.91% | | | | September 30, 2020 | |
December 31, 2017 | | | | | 5,647 | | | | | | 0.36% | | | | | | 10.57% | | | | December 31, 2020 | |
Total | | | | $ | 12,742 | | | | | | | | | | | | | | | | | |
For the Three Months Ended | Amount of Expense Reimbursement Payment | Annualized "Other Operating Expenses" Ratio as of the Date of Expense Reimbursement | Annualized Rate of Distributions Per Share(1) | Reimbursement Eligibility Expiration | |||||||
---|---|---|---|---|---|---|---|---|---|---|---|
March 31, 2017 | $ | 15,362 | (2) | 0.40 | % | 9.14 | % | March 31, 2020 | |||
September 30, 2017 | 7,095 | 0.36 | % | 9.91 | % | September 30, 2020 | |||||
December 31, 2017 | 5,647 | 0.36 | % | 10.57 | % | December 31, 2020 | |||||
| | | | | | | | | | | |
Total | $ | 28,104 | |||||||||
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FS/EIG Advisor'sAdvisor and its employees will devote only as much of its or their time to the Company’s business as FS/EIG Advisor and its employees, in their judgment, determine is reasonably required, which may be substantially less than their full time.
mitigate these conflicts, FS/EIG Advisor will seek to execute such transactions on a fair and equitable basis and in accordance with its allocation policies, taking into account various factors, which may include: the source of origination of the investment opportunity; investment objectives and strategies; tax considerations; risk, diversification or investment concentration parameters; characteristics of the security; size of available investment; available liquidity and liquidity requirements; regulatory restrictions; and/or such other factors as may be relevant to a particular transaction. As affiliates of FS Investments and EIG Global Energy Partners currently serve as the investment adviser to other entities and accounts, it is possible that some investment opportunities will be provided to such other entities and accounts rather than to the Company.
| Fiscal Year | | | Audit Fees | | | Audit-Related Fees(1) | | | Tax Fees | | | All Other Fees(2) | |
| 2019 | | | $450,625 | | | — | | | — | | | — | |
| 2018 | | | $399,700 | | | $45,215 | | | — | | | — | |
Fiscal Year | Audit Fees | Audit-Related Fees(1) | Tax Fees | All Other Fees(2) | ||||
---|---|---|---|---|---|---|---|---|
2017 | $400,000 | — | — | $54,600 | ||||
2016 | $392,500 | $46,900 | — | $74,720 |
services performed by RSM US LLP to management. All of the audit and non-audit services described above for which RSM US LLP invoiced the Company for the fiscal years ended December 31, 20172019 and 20162018 were pre-approved by the Audit Committee.
The material in this Audit Committee report is not "soliciting“soliciting material,"” is not deemed "filed"“filed” with the SEC, and is not to be incorporated by reference into any filing of the Company under the
Securities Act or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.
INVESTMENT ADVISER AND ADMINISTRATOR | | | SUB-ADMINISTRATOR | |
Philadelphia, PA 19112 | | | ||
State Street Bank and Trust | ||||
Company | ||||
One Lincoln Street | ||||
Mailstop SUM 0703 | ||||
Boston, MA 02111 | |
VIEW MATERIALS & VOTE w SCAN TO
FS ENERGY AND POWER FUND 201 ROUSE BLVD. PHILADELPHIA, PA 19112 SCAN TO VIEW MATERIALS & VOTE w VOTE BY INTERNET - www.proxyvote.com or scan the QR Barcode above Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m. Eastern Time the day before the cut-off date or meeting date. Follow the instructions to obtain your records and to create an electronic voting instruction form. ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions. GENERAL QUESTIONS 1-855-486-79041-888-777-1538 VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: E52040-P14169 KEEP THIS PORTION FOR YOUR RECORDS THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. DETACH AND RETURN THIS PORTION ONLY D25494-P45789 THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. FS ENERGY AND POWER FUND The Board of Trustees recommends you vote FOR the following: For Withhold For All AllAllExcept To withhold authority to vote for any individual nominee(s), mark "For All Except" and write the number(s) of the nominee(s) on the line below. ! !! 1. Election of Trustees Nominees: 01. Sidney R. Brown 02. Stephen T. Burdumy 03. Gregory P. Chandler 04.03. Michael C. Forman 05.04. Richard I. Goldstein 05. Kathleen A. McGinty 06. Charles P. Pizzi 07. Pedro A. Ramos 08. William C. Sonneborn The Board of Trustees recommends you vote FOR the following proposal: For Against Abstain ! ! !Robert B. Thomas 2. To ratify the appointment of RSM US LLP as the Company's independent registered public accounting firm for the fiscal year ending December 31, 2018.2020. NOTE: Such other business as may properly come before the meeting or any adjournment thereof. Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. 1. Election of Trustees Nominees: The Board of Trustees recommends you vote FOR the following proposal: Signature [PLEASE SIGN WITHIN BOX] Date For All Withhold All For All Except To withhold authority to vote for any individual nominee(s), mark "For All Except" and write the number(s) of the nominee(s) on the line below. For Against Abstain Signature (Joint Owners) Date
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Notice and Proxy Statement, Annual Report and Shareholder Letter are available at www.proxyvote.com. E52041-P14169 FS ENERGY AND POWER FUND Annual Meeting of Shareholders December 13, 201810, 2020 This proxy is solicited by the Board of Trustees The undersigned hereby appoints Michael C. Forman and Stephen S. Sypherd, and each of them, as proxies of the undersigned with full power of substitution in each of them, to attend the 20182020 Annual Meeting of Shareholders of FS Energy and Power Fund, a Delaware statutory trust (the "Company"), to be held at 10:30 a.m., Eastern Time, on December 13, 2018,10, 2020, at the offices of the Company located at 201 Rouse Boulevard, Philadelphia, Pennsylvania 19112, and any adjournments or postponements thereof (the "Annual Meeting"), and vote as designated on the reverse side of this proxy card all of the common shares of beneficial interest, par value $0.001 per share, of the Company ("Common Shares") held of record by the undersigned. The proxy statement and the accompanying materials or a Notice of Internet Availability of Proxy Materials are being mailed on or about October 26, 20182020 to shareholders of record as of October 17, 201814, 2020 and are available at www.proxyvote.com. All properly executed proxies representing Common Shares received prior to the Annual Meeting will be voted in accordance with the instructions marked thereon. If no instructions are marked, the Common Shares will be voted FOR the proposal to elect each of the trustee nominees listed in Proposal 1 and FOR the proposal to ratify the appointment of RSM US LLP as the Company's independent registered public accounting firm. If any other business is presented at the Annual Meeting, this proxy will be voted by the proxies in their best judgment, including any motion to adjourn or postpone the Annual Meeting to another time and/or place for the purpose of soliciting additional proxies. At the present time, the board of trustees of the Company knows of no other business to be presented at the Annual Meeting. Any shareholder who has given a proxy has the right to revoke it at any time prior to its exercise. Shareholders who execute proxies may revoke them with respect to a proposal by attending the Annual Meeting and voting his or her Common Shares in person or by submitting a letter of revocation or a later-dated proxy to the Company at the above address prior to the date of the Annual Meeting. Continued and to be signed on reverse side D25495-P45789
Voting Items 2. To ratify the appointment of RSM US LLP as the Company's independent registered public accounting firm for the fiscal year ending December 13, 201831, 2020. 01. Sidney R. Brown 02. Gregory P. Chandler 03. Michael C. Forman 04. Richard I. Goldstein 05. Kathleen A. McGinty 06. Charles P. Pizzi 07. Pedro A. Ramos 08. Robert B. Thomas 1. Election of Trustees The Board of Trustees recommends you vote FOR the following: Nominees: The Board of Trustees recommends you vote FOR the following proposal: NOTE: Such other business as may properly come before the meeting or any adjournment thereof. D25499-P45789FS ENERGY AND POWER FUND 201 Rouse Boulevard Philadelphia, Pennsylvania 19112ANNUAL MEETING OF SHAREHOLDERS To Be Held On December 13, 2018PROXY STATEMENTGENERALPROPOSAL 1: ELECTION OF TRUSTEESTHE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" EACH OF THE TRUSTEE NOMINEES.PROPOSAL 2: RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMSUBMISSION OF SHAREHOLDER PROPOSALSOTHER MATTERS TO COME BEFORE THE MEETINGINVESTMENT ADVISER AND ADMINISTRATOR AND SUB-ADMINISTRATOR
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