Leonard M. Tannenbaum

About Leonard M. Tannenbaum

Leonard M. Tannenbaum (age 53) is Chairman of the Board at Advanced Flower Capital Inc. (AFCG). He has served on AFCG’s board since July 2020; he transitioned from Executive Chairman and Chief Investment Officer to Chairman in October 2024 and previously served as CEO from 2020–2023 . He holds a B.S. in Economics and an MBA in Finance from The Wharton School, is a CFA charterholder, and sits on The Wharton Graduate Executive Board .

Past Roles

External Roles

Board Governance

• Independence: Not independent under Nasdaq rules due to prior executive officer service; independent directors are Harrison, Frank, Levy, and Sudnow .
• Role: Chairman of the Board; Lead Independent Director is Thomas L. Harrison .
• Committee memberships: All three standing committees comprise solely independent directors; Tannenbaum is not on any committee .
  • Audit & Valuation Committee: Frank (Chair), Harrison, Levy .
  • Compensation Committee: Harrison (Chair), Levy, Sudnow .
  • Nominating & Corporate Governance Committee: Frank (Chair), Sudnow .
• Attendance: In 2024, the Board met 10 times; Audit & Valuation met 10; Compensation met 1; Nominating & Corporate Governance met 2. Each director attended at least 80% of aggregate meetings; independent directors meet regularly in executive session .

Fixed Compensation

• Director fees: AFCG pays non-employee directors an annual cash retainer (base $50,000; Lead Independent +$15,000; Audit Chair +$25,000; Compensation Chair +$10,000; Nominating Chair +$5,000). Directors must attend ≥75% of meetings to be eligible. No director fees are paid to anyone also serving as an executive officer; Tannenbaum is not listed among non-employee directors receiving fees .
• Salary: Tannenbaum does not take a salary from the Company .

Performance Compensation

• Stock awards: Tannenbaum received equity grants; no bonus or option awards reported in the executive compensation summary for 2023–2024. Vesting is time-based (three-year schedules on specified grant dates) .

• Outstanding equity detail (as of 12/31/2024):
  • Restricted stock: 34,254 shares (vest over three years from Jan 3, 2023), market value $285,336; 111,111 shares (vest over three years from Jan 2, 2024), market value $925,555 .
  • Options (fully vested at grant; exercisable post-IPO):
    • 670,978 options at $9.53, exp. 8/12/2027
    • 105,980 options at $9.84, exp. 11/18/2027
    • 630,000 options at $12.30, exp. 3/19/2028
    • 500,000 options at $12.99, exp. 1/11/2029
• Upcoming changes with BDC conversion: AFCG will terminate its stock incentive plan, accelerate vesting of outstanding restricted stock, and repurchase outstanding options at fair market value ahead of becoming an externally managed BDC. Estimated 450,162 shares (1.99% of outstanding) would be accelerated .

Other Directorships & Interlocks

• SUNS Executive Chairman; AFCG spun off SUNS on July 9, 2024; SUNS now independent .
• SRT Director .
• Manager control and economics: AFC Management, LLC (“Manager”) is wholly owned by Castleground Holdings LLC (“Parent Manager”). Parent Manager beneficial ownership: Tannenbaum ~72.4%; Robyn Tannenbaum 9.7%; other Tannenbaum family/trusts 9.7%; Daniel Neville 2.5%; Brandon Hetzel 1.5%; Gabriel Katz 1.0% .
• AFC Agent LLC: administrative agent on most AFCG credit facilities; wholly owned by Leonard and Robyn Tannenbaum; AFCG does not pay AFC Agent, but borrowers pay agent fees under certain facilities—a potential conflict channel .
• Co-investment vehicles: ABW and AFC Institutional Fund LLC (AFCIF), affiliates beneficially owned in part by Leonard and Robyn, have participated alongside AFCG in loans (e.g., Private Company I, Subsidiary of Public Company H) .

Expertise & Qualifications

• Wharton BS and MBA (submatriculation), CFA charterholder, Wharton Graduate Executive Board .
• Extensive credit investing, origination, underwriting, and portfolio management experience; led investment committee activities at AFCG .

Equity Ownership

• Spousal holdings: Robyn Tannenbaum separately holds AFCG shares and options; her holdings are not included in Leonard’s beneficial tally .
• Pledging/Hedging: Company policy prohibits insiders from hedging and pledging AFCG stock (insider trading policy) .

Related Party Transactions and Potential Conflicts

• Management Agreement (pre-conversion): Manager receives a base fee (1.50% of “Equity,” net of certain fee rebates) and quarterly incentive compensation tied to “Core Earnings,” with a termination fee equal to 3× (last 12 months base + incentive) if AFCG terminates without cause . As controlling owner of Parent Manager, Tannenbaum benefits from fee economics .
• Proposed Investment Advisory Agreement (BDC conversion): Base fee moves to 1.50% of gross assets (with a leverage breakpoint reducing the rate to 1.00% on assets financed >1.0x debt/equity); incentive fee rate lowers to 17.5% from 20% with a 6% net assets hurdle and separate capital gains fee; termination fee eliminated under 1940 Act regime .
• Voting influence: As of record date for the special meeting, Tannenbaum beneficially owned ~22.8% of voting power and stated intent to vote in favor of proposals enabling conversion and fee structure changes .
• AFC Agent LLC: wholly owned by Leonard and Robyn; serves as agent, paid by borrowers—structural conflict risk despite no fees paid by AFCG .
• Subsidiary of Private Company G: ongoing disputes and litigation; AFCG alleges defaults and pursued foreclosure; parent company filed a complaint in California alleging misconduct; AFCG deems claims baseless and will defend vigorously .
• Private Company A: waiver granted on subsidiary guarantee requirements for a specific majority-owned subsidiary in which Leonard holds a 20% equity interest (potential conflict); loan subsequently defaulted and moved to receivership; AFC Agent earns agent fees paid by borrower .

Attendance and Committee Structure

Governance Assessment

• Positives:

  • Deep credit and governance experience; Wharton MBA, CFA; long-tenured sector track record .
  • Robust committee independence: all standing committees are fully independent, with Audit overseeing related party transactions and Management Agreement renewals .
  • Insider trading policy prohibits hedging and pledging; clawback policy adopted in line with SEC/Nasdaq rules .

• Risks and RED FLAGS:

  • Control and fee conflicts: Tannenbaum controls ~72.4% of Parent Manager; as Chairman, not independent; proposed BDC advisory agreement and leverage flexibility could increase fees payable to Manager—material related-party alignment risk .
  • Familial ties: Married to AFCG’s President & CIO (Robyn Tannenbaum), who is also a Parent Manager owner—elevated conflict potential and perceived governance risk .
  • Voting influence: Intends to vote ~22.8% in favor of conversion and fee changes—outsized influence on outcomes affecting Manager economics .
  • AFC Agent LLC: Agent fees paid by borrowers to an entity wholly owned by Leonard and Robyn—economic interlock with lending operations .
  • Related-party waivers: For Private Company A, AFCG waived subsidiary guarantee requirements relating to an entity where Tannenbaum has a 20% equity stake—potential preferential treatment risk .
  • Litigation exposure: New complaint in Sept 2025 by borrowers alleging mismanagement and asset seizure—legal overhang that may affect investor confidence .

Overall: Board committee independence and formal policies mitigate some risks, but Tannenbaum’s dual role as Chairman and controlling owner of the Manager, plus family and affiliate interlocks, present persistent conflicts. Conversion to BDC, leverage changes, and revised fee mechanics heighten the need for rigorous independent oversight and transparent related-party review .