Michael Forman
About Michael Forman
Michael C. Forman (age 64) is Chairman and Chief Executive Officer of FS KKR Capital Corp. (FSK) and has served as a director since 2007; he is an “interested director” due to his affiliation with FS/KKR Advisor, LLC, FSK’s external adviser . He co-founded and has led FS Investments since 2007, and previously founded a private equity and real estate investment firm; he began his career as a corporate and securities attorney at Klehr Harrison Harvey Branzburg LLP. He holds a B.A. (summa cum laude) from the University of Rhode Island and a J.D. from Rutgers University . FSK’s board met 9 times in 2024 with all directors meeting the 75% attendance threshold; Forman serves as both CEO and Chair with governance mitigants including a Lead Independent Director (Michael J. Hagan) and a majority-independent board (9 of 11) . FSK is externally managed; executive officers (including the CEO) receive no direct compensation from FSK, and the advisory fee structure (base management fee and incentive fees) is the primary pay-performance lever at the company level rather than individual CEO awards .
Past Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| FS Investments | Founder; Chairman & CEO | 2007–present | Built multi-product credit platform; sponsor of FSK and affiliated vehicles . |
| Private equity and real estate investment firm (pre-FS Investments) | Founder | Not disclosed | Investment and operating experience across specialty finance and real assets . |
| Klehr Harrison Harvey Branzburg LLP | Attorney, Corporate & Securities | Early career (not disclosed) | Legal foundation in corporate/securities law; transactional expertise . |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| KKR FS Income Trust (K-FIT) | Chairman & CEO; Trustee | Not disclosed | Affiliated non-traded BDC; governance/oversight role . |
| KKR FS Income Trust Select (K-FITS) | Chairman & CEO; Trustee | Not disclosed | Affiliated non-traded BDC; governance/oversight role . |
| FS Specialty Lending Fund (f/k/a FS Energy and Power Fund) | Leadership/directorship | Not disclosed | Affiliated fund in FS platform . |
| FS Credit Opportunities Corp. (f/k/a FS Global Credit Opportunities Fund) | Leadership/directorship | Not disclosed | Affiliated fund in FS platform . |
| FS Credit Real Estate Income Trust; FS Credit Income Fund; FS Energy Total Return Fund; FS Series Trust; FS Multi-Alternative Income Fund | Leadership/directorship | Not disclosed | Multiple affiliated vehicles . |
| Civic/Non-profit boards | Member | Not disclosed | The Philadelphia Equity Alliance; Drexel University; Philadelphia Center City District Foundation . |
Fixed Compensation
| Component | 2024/2025 disclosure | Notes |
|---|---|---|
| Direct compensation from FSK (salary, bonus, equity) | None | “The Company’s executive officers do not receive any direct compensation from the Company” (externally managed BDC) . |
| Director fees from FSK | $0 | FSK does not pay compensation to directors who serve in an executive officer capacity (Forman) . |
| Cost reimbursement to Adviser | Ongoing | FSK reimburses the Adviser for allocable administrative personnel costs under the Administration Agreement . |
Performance Compensation
Company-level fees paid to the external adviser (which indirectly influence CEO economics via the adviser) and how they tie to performance:
| Fee component | Formula / performance link | Hurdle/catch-up | 2024 accrued | 2024 paid |
|---|---|---|---|---|
| Base management fee | 1.50% of average weekly gross assets excluding cash and cash equivalents; reduced to 1.0% on assets financed over 1.0x D/E since 6/15/2019 | N/A | $216 million | $219 million (payable at 12/31/24: $53 million) |
| Subordinated incentive fee on income | 17.5% of pre-incentive fee NII, subject to quarterly hurdle; “catch-up” to 2.12% of NAV per quarter | 1.75% per quarter (7.0% annual) hurdle; catch-up to 2.12% | $167 million | $173 million (payable at 12/31/24: $35 million) |
| Capital gains incentive fee | 20% of cumulative realized capital gains since inception, net of losses/depreciation and fees previously paid | Annual, in arrears | Accrued quarterly per policy | Paid per year-end calculation |
| Administration fee (reimbursed costs) | Allocable portion of administrative services and personnel costs | N/A | $10 million | $12 million paid in 2024 |
Additional context:
- Temporary $15 million/quarter income fee waiver was in place for six quarters post-FSK/FSKR merger (total $90 million); expired 12/31/2022 .
Implications: Incentives emphasize sustainable net investment income above a hurdle and realized gains over time, creating potential pressure to maintain/expand earning assets and realize gains while managing credit risk .
Equity Ownership & Alignment
| Holder | Shares beneficially owned (3/31/2025) | % of outstanding | Ownership detail |
|---|---|---|---|
| Michael C. Forman | 170,518 | <1% | 130,039 (2011 Forman Investment Trust); 10,787 (FS Investments) (disclaimed beyond pecuniary interest); 8,694 (spouse); 7,360 (401(k)); 14,221 (IRA) . |
Additional alignment and policy points:
- Options/equity plans: “There are no outstanding options or warrants… No stock has been authorized for issuance under any equity compensation plans.”
- Insider trading/pledging/hedging: Policy prohibits short sales, derivatives, hedging/monetization transactions, and holding or pledging Company securities in margin accounts without advance approval; pre-clearance and window periods required .
- Dollar range: Forman’s beneficial ownership exceeds $100,000 (board dollar-range disclosure) .
- No options currently exercisable within 60 days as of March 31, 2025 (company-wide) .
Employment Terms
| Topic | Disclosure | Source |
|---|---|---|
| Employment with FSK | Executives (including CEO) are not employees of FSK; services provided by employees of the Adviser or affiliates under advisory/administration agreements . | |
| CEO start in role | Director since 2007; CEO/Chair of FSK (years not separately disclosed) . | |
| Contract term, severance, change in control (individual) | Not disclosed at FSK level (externalized management) . | |
| Clawback policy (Company) | Adopted Nov 2, 2023; mandatory recovery of “Incentive-Based Compensation” received by Covered Executives in the 3 prior fiscal years upon an accounting restatement; no indemnification; recovery methods include cancellation/reimbursement/offset . | |
| Adviser indemnification | Adviser and affiliates indemnified except for willful misfeasance, bad faith, gross negligence, or reckless disregard of duties under advisory/administration agreements . |
Board Governance (service history, roles, independence)
- Service history: Class C director; on ballot for a new term expiring 2028; director since 2007; serves as Chairman of the Board and CEO (non-independent/interested director) .
- Dual role implications: CEO + Chair structure balanced by a Lead Independent Director (Michael J. Hagan) who sets agendas with the Chair and leads executive sessions; majority of board is independent (9 of 11) per 1940 Act and NYSE requirements .
- Committees and independence: Forman, as an interested director, is not listed as a member of the four standing committees. Audit (Chair: Ford), Valuation (Chair: Kropp), Nominating & Corporate Governance (Chair: Harrow), Compensation (Chair: Ford) are fully independent .
- Attendance: Board met 9 times in 2024; each director attended at least 75% of applicable meetings .
Director Compensation (for Forman as director)
| Item | Amount |
|---|---|
| Cash/equity compensation from FSK for board service | $0 (executive directors are not paid by FSK) . |
Note: Independent director fee schedule (effective Aug 1, 2024) increased retainers and chair/member fees; not applicable to Forman as an executive director .
Related Party Economics and Conflicts (context for incentives)
- 2024 fees/expenses to Adviser: Base management fee $216mm (paid $219mm); Subordinated incentive fee on income $167mm (paid $173mm); Administration expenses $10mm (paid $12mm) .
- Co-investment/conflicts: Detailed conflict disclosures on allocation of time and investment opportunities among affiliates; the Adviser seeks “fair and equitable” execution per policies and exemptive relief .
- Share issuance at discount to NAV: Board sought authority (annually) to issue shares below NAV subject to 1940 Act “required majority” approvals; acknowledges potential dilution and management fee conflict; Board determined benefits could outweigh detriment before any such issuance .
Performance & Track Record (select context disclosures)
- Trading context: In 2024, FSK shares traded at 6%–24% discount to NAV depending on quarter; quarterly distributions ranged $0.70–$0.75 per share; Q1 2025 YTD high/low $24.06/$20.47 per share (NAV for Q1 2025 not yet disclosed as of 3/31/2025) .
- Compliance: CEO signed 2024 10‑K certifications; company adopted NYSE-compliant clawback policy .
Risk Indicators & Red Flags
- Alignment risks typical of external management structures: Incentive fee design (income hurdle and capital gains fee) may influence asset growth and realization strategies; Board discloses and oversees conflicts and valuation processes .
- Dual role (CEO + Chair): Mitigated by lead independent director and majority-independent board .
- Pledging/hedging: Prohibited without advance approval; preclearance required—reduces hedging/pledging misalignment risk .
- Ownership scale: Beneficial ownership is <1% of shares outstanding; alignment relies more on reputation, platform economics, and adviser’s fee structure than on CEO’s FSK equity stake .
Equity Ownership & Alignment – Detailed Table
| Metric | Value | Source |
|---|---|---|
| Shares beneficially owned (Forman) | 170,518 | |
| % of shares outstanding | <1% | |
| Ownership breakdown | 130,039 (2011 Forman Investment Trust); 10,787 (FS Investments) (disclaimed beyond pecuniary interest); 8,694 (spouse); 7,360 (401(k)); 14,221 (IRA) | |
| Options/warrants outstanding (company-wide) | None | |
| Shares subject to options exercisable within 60 days (company-wide) | None | |
| Insider policy on pledging/hedging | Prohibited without advance approval; no derivatives/short sales; preclearance required |
Investment Implications
- Pay-for-performance at FSK operates via the external advisory contract, not individual CEO grants. The 17.5% income incentive fee (over a 7% annualized hurdle with catch-up) and 20% capital gains fee can align with sustainable NII and realized gains but also create incentives to grow earning assets and manage realizations; 2024 adviser economics were substantial ($216mm base; $167mm income fee; $10mm admin) .
- Governance mitigants (lead independent director; majority-independent committees overseeing audit/valuation/compensation) address CEO + Chair concentration; executives receive $0 directly from FSK, reducing classic “option overhang” or “guaranteed pay” risks, though alignment depends on adviser incentives rather than CEO’s direct equity compensation .
- Insider policy banning pledging/hedging and the absence of option overhang reduce selling pressure and hedging misalignment; Forman’s stake (<1%) is meaningful in dollars but not a controlling influence; monitoring adviser fee outcomes, valuation oversight, and any “below NAV” issuance decisions remains critical for shareholders .