Michael Forman
About Michael Forman
Michael C. Forman (age 64) is Chairman, President and Chief Executive Officer of FS Credit Real Estate Income Trust, Inc. (FSREI), serving as CEO since inception in 2016 and Chairman since July 2017; he is also Chairman and CEO of FS Real Estate Advisor, the Company’s external adviser, since August 2016 . He co-founded FS Investments in 2007 and previously spent nearly 20 years as a corporate and securities attorney; he holds a B.A. (summa cum laude) from the University of Rhode Island and a J.D. from Rutgers University . Under his tenure, net income attributable to stockholders increased across FY 2022–FY 2024 (see table below) .
| Metric | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|
| Net Income - (IS) ($USD) | $126,378,000 | $150,203,000 | $175,014,000 |
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| FS Real Estate Advisor, LLC | Chairman & CEO | Since Aug 2016 | Leads external adviser to FSREI; compensation structure (base/performance fees; RSUs/PCRs) directly influences alignment and capital formation . |
| FS Investments | Co-founder | Since May 2007 | Built multi-asset alternatives platform sponsoring FSREI and other funds, providing distribution and origination capabilities . |
| FB Capital Partners, L.P. | Co-founder & Managing GP | Since 2005 | Investment firm investing in private equity, debt, and real estate; foundation for later platform growth . |
| Klehr Harrison Harvey Branzburg & Ellers LLP | Partner, Corporate & Securities | 1991–c.2005 | Legal expertise in corporate/securities underpinning capital markets and governance oversight . |
External Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| The Franklin Institute | Executive Committee Member | N/A | Community leadership and network connectivity . |
| Vetri Foundation for Children | Chairman | N/A | Non-profit leadership; reputational capital . |
| Children’s Hospital of Philadelphia | Corporate Council Member | N/A | Community/health ecosystem connectivity . |
| Drexel University | Board involvement | N/A | Education ecosystem ties in Philadelphia region . |
| Center City District Foundation | Board involvement | N/A | Civic development engagement . |
| Philadelphia School | Capital Campaign Co-chair | N/A | Philanthropic leadership . |
Fixed Compensation
- FSREI pays no direct compensation to executive officers (including Mr. Forman). Officers are employees of FS Real Estate Advisor and are compensated by FS Investments or its affiliates; FSREI reimburses only allocable administrative costs for certain personnel (excluding those serving as FSREI executive officers) .
- Directors who also serve in an executive officer capacity (e.g., Mr. Forman) receive no director fees; independent directors receive retainers and restricted shares (details below) .
| Independent Director Compensation (FY 2024) | Amount |
|---|---|
| Annual retainer | $150,000 (cash + restricted shares mix) |
| Audit Committee Chair retainer (add-on) | $20,000 |
| Lead Independent Director retainer (add-on) | $20,000 |
| 2024 restricted shares granted (total to independents) | 23,002 Class I shares at grant-date fair values $24.17–$24.20 per share |
Note: Mr. Forman receives none of the above director retainers/awards from FSREI .
Performance Compensation
Because FSREI is externally managed, incentive economics accrue to the Adviser Entities (FS Real Estate Advisor and sub-adviser Rialto). As Chairman/CEO of the adviser, Mr. Forman’s economic interests are indirectly tied to these mechanisms.
| Incentive Element | Metric/Formula | Target/Hurdle | Vesting/Settlement | Notes |
|---|---|---|---|---|
| Base Management Fee | % of NAV (Class T/S/D/M/I) | 1.25% per annum | Quarterly, in arrears; adviser may elect cash, Class I shares, or performance-contingent rights (PCRs) | Class-specific; none on Class F/Y . |
| Performance Fee | 10% of Core Earnings with hurdle and catch-up | Hurdle = 1.625% of avg adjusted capital per quarter (6.5% annual); catch-up to 1.806%/qtr, then 10% thereafter | Quarterly, in arrears | Class-specific; none on Class F . |
| Class I PCRs (Performance-Contingent Rights) | Issuance tied to “Excess Distributable Income” when Adjusted Core Earnings > distributions; also requires achieving Class I yield target | Initial Yield Target = 6.0% annualized on Class I shares | Class I shares become issuable on “Performance Achievement Date”; 6-month no-repurchase window; thereafter Company must repurchase on request at then-current transaction price (subject to REIT/Maryland law) | Accelerated vesting if advisory/sub-advisory agreements are terminated in specified scenarios . |
| Class I RSUs (Administrative Services Fee paid in RSUs) | 1.0% of NAV per annum paid in Class I RSUs | N/A (administrative fee) | Vesting schedules: for grants after 3/31/2025, ratably on months following 2/3/4/5-year anniversaries; previously outstanding RSUs vest in 2026–2029; earlier plan (12/1/2022) vested over 1/2/3 years | 6-month no-repurchase window; later Company must repurchase on request at transaction price; independent directors must approve if combined with stockholder repurchases exceeds plan limits . |
- Executive-specific salary/bonus/option/PSU details are not applicable at FSREI (no direct executive pay; equity awards above accrue to the Adviser Entities, not to executives personally) .
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Total beneficial ownership (Forman) | 479,516 shares; less than 1% of outstanding (120,484,178 shares as of Apr 1, 2025) . |
| Ownership breakdown | Includes 223,111 Class I shares via Franklin Square Holdings, L.P. and 253,072 Class I shares via FS Real Estate Advisor, LLC (both deemed beneficially owned by Mr. Forman) . |
| Pledging | To the Company’s knowledge, persons listed (including Mr. Forman) “have not pledged any of the shares as security” . |
| Hedging policy | The Board has not adopted specific policies prohibiting hedging by officers/directors/adviser employees; hedging transactions (e.g., collars/swaps) are not expressly restricted (red flag for alignment) . |
| Insider trading policy | Adopted and filed as Exhibit 19.1 to the FY 2024 10-K . |
| Equity plans | No options outstanding; 138,180 shares available under equity comp plans as of 12/31/2024 . |
Employment Terms
| Element | Status |
|---|---|
| Employment agreement with FSREI | None; executives are adviser employees . |
| Severance / Change-in-Control (Company-level) | Not disclosed for executives (no Company-level executive comp program) . |
| Advisory Agreement term/termination | External advisory contract may be terminated without cause on 60 days’ notice; independent directors review and can terminate without penalty; one-year contract terms with unlimited renewals . |
| RSU/PCR acceleration on contract changes | Certain nonrenewal/termination scenarios accelerate vesting; other scenarios cause forfeiture; see RSU/PCR terms . |
| Non-compete / non-solicit | Not disclosed in proxy for executives; advisory agreement governance addressed by Board/independent directors . |
Board Governance and Service
- Roles: Mr. Forman is an “interested director” serving as Chairman and CEO; majority of the Board is independent per charter/bylaws; lead independent director (John A. Fry) appointed March 11, 2025 to enhance independent oversight and executive session leadership .
- Committees: Only a standing Audit Committee (Connors—Chair; Brown; Fry—independent; Connors deemed “audit committee financial expert”); no standing Compensation Committee because executives receive no direct compensation from the Company; Board as a whole handles director compensation and nominations .
- Meetings and attendance: Board met five times in FY 2024 (four regular); each director then serving attended at least 75% of meetings .
- Director compensation: Executives (including Mr. Forman) receive no director compensation from FSREI; independent director compensation as noted above .
Related Party Transactions and Fee Alignment
- Adviser/Sub-adviser fees: Base management fee = 1.25% of NAV (class-specific); performance fee = 10% of Core Earnings above a 6.5% annual hurdle with catch-up; sub-adviser (Rialto) receives 50% of base and performance fees .
- Administrative services fee: 1.0% of NAV per annum payable in Class I RSUs with defined vesting; RSUs can be repurchased by the Company after a six-month hold at the then-current transaction price (subject to limits/approval) .
- PCRs: Adviser Entities may receive Class I PCRs that convert into Class I shares if Adjusted Core Earnings exceed distributions and the Class I yield target (initially 6%) is met; repurchase rights apply after six months; accelerations on certain terminations .
- Governance safeguards: Independent directors must annually evaluate adviser compensation against performance, fees at peers, and service quality; they can terminate the advisory agreement without penalty on 60 days’ notice .
- Charter constraints: No fees paid to adviser/directors in connection with stock repurchases; restrictions on loans to affiliates; affiliate voting limits on conflicted matters .
Performance & Track Record
- Net income attributable to stockholders increased from $126.4M (FY 2022) to $150.2M (FY 2023) to $175.0M (FY 2024), indicating growing earnings capacity under the current management/advisory model .
- FSREI emphasizes Board risk oversight of valuation policies, investment strategy reviews, and service provider oversight (adviser, sub-adviser, dealer manager, transfer agent, auditor) as part of ongoing governance .
Risk Indicators & Red Flags
- CEO-Chair duality: Concentration of authority; mitigated by appointment of a lead independent director in March 2025 and majority-independent board .
- Hedging policy: Absence of a hedging prohibition policy for officers/directors/adviser employees may weaken alignment with stockholder downside risk .
- External management fee structure: Potential for dilution/repurchases due to fee payment in shares/RSUs/PCRs and subsequent repurchase rights; independent director approvals provide some protections .
- No compensation committee/say-on-pay: No executive pay at Company-level; compensation oversight focuses on adviser fees rather than individual executive incentives .
Equity Ownership & Beneficial Ownership Detail
| Holder | Shares Beneficially Owned | % of Outstanding |
|---|---|---|
| Michael C. Forman | 479,516 (includes 223,111 via Franklin Square Holdings, L.P.; 253,072 via FS Real Estate Advisor, LLC) | Less than 1% (120,484,178 shares outstanding as of 4/1/2025) |
Investment Implications
- Alignment and selling pressure: Adviser election to receive fees in shares/PCRs coupled with six-month post-issuance repurchase rights at the current transaction price can create periodic selling pressure and incremental dilution, partially constrained by independent director oversight and repurchase limits .
- Pay-for-performance: While FSREI has no executive pay program, adviser compensation is explicitly tied to Core Earnings and a 6.5% annual hurdle (plus a 6.0% initial yield target for PCRs), linking fee upside to distributable performance—this can support income discipline but may incentivize strategies that maximize Core Earnings/yield metrics .
- Governance: CEO-Chair duality presents independence considerations; the March 2025 lead independent director appointment and majority-independent board are meaningful mitigants investors should track for robustness of oversight, including annual adviser fee reviews and the ability to terminate without penalty .
- Ownership: Mr. Forman’s beneficial ownership is below 1%, but he has significant economic influence through the Adviser Entities; absence of a hedging prohibition is a governance caution, though the proxy notes no share pledging by listed insiders .
Sources: FSREI DEF 14A (April 4, 2025) ; FSREI 10-K FY 2024 (March 21, 2025) ; FSREI 10-K FY 2023 ; FSREI 10-K FY 2022 .