Eagle Capital Growth Fund (GRF) DEF 14ADefinitive proxy

Notice is hereby given that the 2023 Annual Meeting of Shareholders (“Meeting”) of the Eagle Capital Growth Fund, Inc. (“Fund”) will be held at the Milwaukee Bar Association, Board Conference Room, 747 North Broadway Street, Milwaukee, Wisconsin 53202, on Thursday, April 20, 2023, at 9:00 A.M. local time for the following purposes:

The Board of Directors (“Board”) has fixed the close of business on February 24, 2023, as the record date (“Record Date”) for the determination of shareholders entitled to vote at the Meeting or any adjournment thereof.

You are cordially invited to attend the Meeting.  If you do not expect to attend the Meeting in person, please complete, date and sign the enclosed proxy form and return it promptly in the envelope provided.  The enclosed proxy is being solicited on behalf of the Board of the Fund.

This Proxy Statement is furnished in connection with the solicitation of proxies on behalf of the Board of Directors (“Board”) of Eagle Capital Growth Fund, Inc., a Maryland corporation (“Fund”), to be voted at the 2023 Annual Meeting of Shareholders (“Meeting”), to be held at the Milwaukee Bar Association, Board Conference Room, 747 North Broadway Street, Milwaukee, Wisconsin 53202, at 9:00 A.M. local time on Thursday, April 20, 2023.  The approximate mailing date of this Proxy Statement is March 13, 2023.

All properly executed proxies received prior to the Meeting will be voted at the Meeting in accordance with the instructions marked thereon or otherwise as provided therein.  Unless instructions to the contrary are marked, proxies will be voted “FOR” the election of the directors to the terms identified in this Proxy Statement (Proposal 1) and “FOR” the ratification of the independent registered public accountants (Proposal 2).   Any shareholder giving a proxy has the power to revoke it at any time before it is exercised by filing a later dated proxy with us, by attending the meeting and voting in person, or by notifying us of the revocation in writing to our Secretary at the Fund, 225 East Mason Street, Suite 802, Milwaukee, Wisconsin 53202-3657.

The Fund’s Board has fixed the close of business on February 24, 2023, as the Record Date for the determination of shareholders entitled to notice of and to vote at the Meeting, and at any adjournment thereof.  Shareholders on the Record Date will be entitled to one vote for each share held, with no shares having cumulative voting rights.  As of the Record Date, the Fund had outstanding 3,967,836 shares of common stock, par value $0.001 per share (“Common Stock”).  One-third of the outstanding shares of Common Stock, present or represented by proxy, constitutes a quorum.  For purposes of a quorum, abstentions and broker non-votes are included.  A quorum must exist to conduct business at the Meeting.  A “broker non-vote” occurs when you own shares through a bank or broker in “street” name and you fail to provide your bank or broker with voting instructions and the bank or broker does not have the discretionary authority to vote your shares on a particular proposal.  A broker non-vote may also occur if your broker fails to vote your shares for any reason.

Brokers, banks and other nominees are not permitted to vote on the election of directors without specific instructions from the beneficial owner.  Therefore, if your shares are held through a broker, bank or other nominee, they will not be voted in the election of directors unless you affirmatively vote your shares in one of the ways described below.  If you are a beneficial owner, your broker, bank or other nominee is permitted to vote your shares on the ratification of Cohen & Company, Ltd as the Fund’s independent registered public accountants even if the broker, bank or other nominee does not receive specific voting instructions from you. Under the NYSE’s Proxy Rules, NYSE member organizations may vote discretionarily on all matters to be acted upon at this Meeting.  This is based upon the assumption that no contest will arise as to any of the matters being considered and beneficial owners are advised as to this discretionary action.

The Fund will pay all the expenses of preparing, assembling, printing and mailing the material used in the solicitation of proxies by the Board.  In addition to the solicitation of proxies by use of the mails, our officers may solicit proxies on behalf of the Board, by telephone, telegram or personal interview, and the Fund will bear these expenses.  The Fund may arrange with brokerage houses and other custodians, nominees and fiduciaries to forward soliciting materials to the beneficial owners of Fund shares, and the Fund will pay or reimburse these expenses.

The Board knows of no business, other than as identified in Proposals 1 and 2 of the Notice of Meeting, which will be presented for consideration at the Meeting.  If any other matter is properly presented, the persons named in the enclosed proxy intend to vote in their discretion.

To the knowledge of the Fund, as of the Record Date, set forth below are the number of shares of the Common Stock, beneficially owned by each officer, director and nominee, and by all directors, nominees and officers of the Fund as a group.  The address of each is the address of the Fund.

To the knowledge of the Fund, as of the Record Date, the only person owning more than five percent (5%) of the class of Common Stock was Luke E. Sims, a director and the President and Chief Executive Officer of the Fund.  Mr. Luke E. Sims’ beneficial ownership is described in the table immediately prior.

Three (3) directors will be elected at the Meeting for 3-year terms, and until their successors are elected and qualified.  The Board is divided into three classes (Class I, Class II, and Class III).   The Class I directors, Mr. Jason W. Allen, Mr. Robert M Bilkie, Jr., and Mr. Phillip J. Hanrahan, are up for reelection at the Meeting.

Unless authorization to do so is withheld, proxies will be voted for the election of the nominees named below.  Each nominee has consented to being named in this Proxy Statement and to continue to serve as a director if elected.  Directors will be elected by a plurality of votes cast at the Meeting.  Thus, assuming the presence of a quorum, those nominees for election as director receiving the highest number of votes will be elected, regardless of the number of votes which for any reason, including abstentions, broker non-votes or withholding of authority to vote, are not cast for the election of such nominee.  If any nominee becomes unavailable for election, an event not now anticipated by the Board, the proxies may be voted for such other nominee as may be designated by the Board.

Listed below are all nominees and their backgrounds. An “interested person” of the Fund (“Interested Person”) is a person who is an Interested Person of the Fund within the meaning of Section 2(a) (19) of the Investment Company Act of 1940.

The following tables set forth the dollar range of the Fund’s Common Stock which is the Fund’s only equity security, beneficially owned by each director and nominee, valued at a price per share of $8.29, the closing price on the NYSE American exchange on the Record Date.

No Fund officer receives compensation from the Fund for service as an officer.   David C. Sims, the Fund's Chief Financial Officer, Chief Compliance Officer, Treasurer and Secretary, is compensated for his services to the Fund by Sims Capital Management LLC (the "Advisor"), the Fund's investment advisor.  Luke E. Sims, the Fund’s President and Chief Executive Officer, receives no compensation from the Fund for his service as an officer.

The following tables identify the aggregate compensation paid to all directors and nominees in 2022. Directors’ fees are only payable to directors who are not officers of the Fund or affiliated with the Advisor. For 2022, Fund directors who are entitled to receive directors’ fees, received an annual retainer of $12,000, paid quarterly, together with $1,250, paid quarterly, for service on the Audit Committee.  The Audit Committee Chairman received an additional $750 annual retainer, paid quarterly.  The fees for 2023 will be unchanged from 2022.

Shareholders may send communications to the Board (to the attention of the Fund’s Secretary) at the Fund’s principal executive office.  All shareholder communications shall be compiled by the Secretary and forwarded directly to the Board or the director as indicated in the letter.  The Board reserves the right to revise this procedure in the event that it is abused or becomes unworkable.

The Board does not have a standing nominating committee or committee performing similar functions as the Board has determined, given its relatively small size, to perform this function as a whole.  The Board does not currently have a charter or other written policy with regard to the nomination process, or a formal policy with respect to the consideration of director candidates.  The nominations of the directors standing for reelection at the Meeting were approved by the Board. Messrs. Allen, Bilkie, Hanrahan, Holth, Tyler and Zalenko and Ms. Nichols are independent directors under the rules of the NYSE American LLC.   Mr. Luke E. Sims, who is the Fund’s President and Chief Executive Officer, is an Interested Person and is not an independent director under the rules of the NYSE American LLC.  Mr. David C. Sims, who is an officer of the Fund and a director of the Fund, is an Interested Person and is not an independent director under the rules of the NYSE American LLC.

Qualifications for consideration as a Board nominee may vary according to the particular areas of expertise being sought as a complement to the existing Board composition.  In making its nominations, the Board considers relevant factors, including an individual’s business experience, breadth of knowledge about issues and matters affecting the Fund, time availability for meetings and consultation regarding Fund matters, and other particular skills and experience.  The Board desires candidates who possess the background, skills and expertise to make a significant contribution to the Board, the Fund and its shareholders.  In the event of a need for a new or additional director, the Board will evaluate potential nominees by reviewing their qualifications, results of personal interviews and such other information as the Board may deem relevant.

The Fund does not employ an executive search, firm, or pay a fee to any other third party, to assist in identifying or evaluating potential qualified candidates for director.  Since the Fund’s 2013 Annual Meeting, directors have been nominated and elected to staggered terms.  Mr. Holth has served as a director since 1989.   Mr. Luke E. Sims has served as a director since 2002.  Mr. Bilkie has served as a director since 2006, and previously served as a Fund director from 1990 through 1996.  Messrs. Hanrahan and Zalenko have each served as directors since 2008.  Mr. Tyler has served as director since 2010.  Mr. David C. Sims has served as a director since 2015.  Ms. Nichols and Mr. Jason W. Allen have served as directors since 2021.

The Board has not established special procedures for shareholders to submit director recommendations.  If the Secretary were to receive a recommendation of a candidate from a Fund shareholder, he would submit it to the Board, and the Board would consider such recommendations in the same manner as all other candidates.

The Fund has an Audit Committee, established in accordance with the Securities Exchange Act of 1934, comprised of Messrs. Zalenko (Chairman), Hanrahan, Holth and Tyler.

The Audit Committee is responsible for the appointment, compensation, retention and oversight of the work of the Fund’s independent accountants.  Each of Messrs. Zalenko, Hanrahan, Holth and Tyler meets the requirements for independence set forth in the rules of the NYSE American LLC.  The Fund’s Board has adopted a written charter for the Audit Committee.  The charter can be found on the Fund’s website at http://eaglecapitalgrowthfund.com under “Corporate Governance”.  The Audit Committee reviews and considered the Audit Committee charter at least annually.

The Audit Committee met twice during 2022. The current members of the Audit Committee, Messrs. Zalenko, Hanrahan, Holth and Tyler meet the requirements for independence set forth in the rules of the NYSE American exchange.  They are not Interested Persons of the Fund as defined in the Investment Company Act of 1940.  Under the Fund’s By-laws, the Chairman is a non-executive, non-officer position.  Each of Messrs. Zalenko, Hanrahan, Holth and Tyler has been determined to be an “audit committee financial expert” as such term is defined in SEC rules.  A copy of the report of the Audit Committee is attached hereto as Exhibit A.

Investment funds generally face a number of risks, including investment risk, compliance risk, and valuation risk.  The Fund, as a diversified regulated investment company, doesn’t have any unique or unusual risks that it needs to manage.  The Fund attempts to minimize risks.  All of the Fund’s cash and securities are held by its independent custodian.  Moreover, the Fund’s investments consist solely of marketable securities, and primarily large capitalization companies.   The Board as a whole receives reports about the Fund’s transactions and discusses such transactions with management and its investment advisor.  At such meetings the Chief Compliance Officer reports to the Board about the Fund’s compliance status.

The Fund’s investment advisor is Sims Capital Management LLC.  Luke E. Sims, a director, President and Chief Executive Officer of the Fund, and David C. Sims, a director, Chief Financial Officer, Chief Compliance Officer, Treasurer and Secretary of the Fund, are the managers of the Advisor.  See the earlier discussion in this Proxy Statement for further information about Luke E. Sims and David C. Sims, respectively.  At the Fund’s 2007 annual meeting of shareholders, the shareholders approved the investment advisory agreement (“Advisory Agreement”) between the Fund and the Advisor.  The Advisory Agreement has been mutually extended by the Fund and the Advisor through February 2024.

The Advisor’s address is the same as that of the principal executive office of the Fund.  The Fund is the Advisor’s only institutional advisory client.  No other person provided any significant administrative or business affairs management services to the Fund during 2022.  No continuing director or nominee for election as director, who is not an Interested Person, nor any of their immediate family members, is the record or beneficial owner of any securities in the Advisor or any of its affiliates.

Cohen & Company, Ltd (“Cohen”), independent registered public accountants, have been selected by the Audit Committee to examine the Fund’s financial statements for the year ending December 31, 2023.  Unless a contrary specification is made, the accompanying proxy will be voted in favor of ratifying the selection of such accountants.  A majority vote of the shares cast is required to approve the ratification of the selection of accountants.  Under Maryland law, abstentions do not constitute a vote “FOR” or “AGAINST” a matter and will be disregarded in determining the votes cast.  Broker non-votes with respect to shares entitled to vote will have no effect on the vote on this proposal.  Representatives of Cohen are not expected to be available at the Meeting.  If any Fund shareholder wishes to pose a question to Cohen & Company, Ltd (“Cohen”), we recommend that you put it in writing and direct it to the Fund’s Secretary at: dave@simscapital.com. We will see that you receive an appropriate written response.

The Fund initially engaged Plante & Moran, PLLC (“Plante”) to examine the Fund’s financial statements for the year ending December 31, 2022.  Due to personnel changes at Plante, a mandatory partner turnover, and other items, Plante sought to disengage with the Fund during 2022.  The Fund acknowledged the request and, once a successor of high caliber had been retained, the Fund ended the relationship with Plante.  The departure of Plante had nothing to do with any disagreement about the Fund’s financial statements.  Ultimately, the Fund retained Cohen for the 2022 audit and tax.

Audit Fees.  The Fund paid Cohen $27,500 for the calendar year ended December 31, 2022, and Plante $25,000 for the calendar year ended December 31, 2021, for audit fees.

Audit-Related Fees.  The Fund neither paid Cohen nor Plante any audit-related fees in either of the last two calendar years.

Tax Fees.  The Fund paid Cohen $5,000 for the calendar year ended December 31, 2022, and Plante $5,000 for the calendar year ended December 31, 2021, for tax fees in connection with the preparation of the Fund’s tax returns and assistance with Internal Revenue Service notice and tax matters.

All Other Fees.  The Fund neither paid Cohen nor Plante any other amounts in either of the last two calendar years.

“Audit fees” are fees paid by the Fund to Cohen or Plante for professional services for the audit of our financial statements, or for services that are usually provided by an auditor in connection with statutory and regulatory filings and engagements. “Audit-related fees” are fees for assurance and related services that are reasonably related to the performance of the audit or review of financial statements. “Tax fees” are fees for tax compliance, tax advice and tax planning. All other Fund fees are fees billed for any services not included in the first three categories.

None of the services covered under the captions “Audit-Related Fees,” “Tax Fees,” and “All Other Fees” with respect to Cohen or Plante were provided under the de minimis exception to Audit Committee approval of 17 CFR 210.2-01(c) 7(i)(C) and (ii) neither Cohen nor Plante was engaged during the last two calendar years to provide non-audit services to the Fund or to the Advisor or any of its affiliates that provide ongoing services to the Fund (“Other Non-Audit Services”).  Under the Audit Committee charter, the Audit Committee must approve in advance all non-audit services of the Fund and all Other Non-Audit Services.  The Audit Committee has not adopted “pre-approval policies and procedures” as such term is used in 17 CFR 210.2-01(c)(7)(i)(B) and (ii).

Directors and officers of the Fund and certain of its affiliates and beneficial owners of more than 10% of the Common Stock are required to file initial reports of ownership and reports of changes in ownership of the Common Stock pursuant to Section 16(a) of the Securities Exchange Act of 1934, as amended.  The Fund has reviewed such reports received by it and written representations of such persons who are known by the Fund and, based solely upon such review, the Fund believes that, during the year ended December 31, 2022, all filings were timely made.  As of the mailing date, to the best of the Fund’s knowledge, all such filings are current.

Shareholder proposals for the 2024 annual meeting of shareholders must comply with applicable rules of the Securities and Exchange Commission (including Rule 14a-8) and be received by the Fund at 225 East Mason Street, Suite 802, Milwaukee, Wisconsin 53202-3657 before the close of business on November 14, 2023, for consideration for inclusion in the Fund’s proxy statement.  Shareholder proposals should be addressed to the attention of the Fund’s Secretary.

The Board is not aware of any other business that will be presented for action at the Meeting.  If any other business properly comes before the Meeting, proxies received from shareholders will be voted at the discretion of the named individuals.