Christian L. Oberbeck
About Christian L. Oberbeck
Christian L. Oberbeck is Chairman, President, and Chief Executive Officer of Saratoga Investment Corp. (SAR), serving on the Board since 2010; he was 65 as of the 2025 proxy . He has 38+ years in leveraged finance, founded and manages Saratoga Investment Advisors (SAR’s external manager), and is Managing Partner of Saratoga Partners; prior roles include Managing Director at Castle Harlan (joined at founding in 1987), and earlier work at Arthur Young and Blyth Eastman Paine Webber . Education: BS in Physics and BA in Mathematics from Brown University (1982) and MBA from Columbia University (1985) .
Recent performance context for SAR: total assets were $1,191.5mm (FY2025) vs $1,191.2mm (FY2024) ; weighted average portfolio yield was ~10.8% (FY2025) vs ~11.4% (FY2024) ; total return based on market value was 27.17% (FY2025) vs -3.92% (FY2024), and total return based on NAV was 10.11% (FY2025) vs 4.20% (FY2024) .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Saratoga Investment Advisors | Founder & Managing Member | Since 2010 | Established and leads SAR’s external manager; sets investment policies; member of investment committee . |
| Saratoga Partners | Managing Partner | Co-managed since 1995; full responsibility since 2008 | Leads middle-market private equity strategy; governance and investment oversight . |
| Castle Harlan, Inc. | Managing Director | Joined at founding in 1987 | Led successful buyouts in manufacturing and financial services . |
| Arthur Young (Corporate Development) | Professional | Pre-1987 | Corporate development experience in finance . |
| Blyth Eastman Paine Webber | Corporate finance | Pre-1987 | Investment banking experience . |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| Saratoga Investment Advisors | Founder, Managing Member; Investment Committee Member | Since 2010 | Unanimous approval required for investments >$1mm; implements SAR’s strategy day-to-day . |
| Saratoga Partners | Managing Partner | Since 2008 | Private equity leadership; affiliated with SAR’s adviser . |
| Various middle-market companies | Director | Various | Has served on numerous boards, enhancing deal oversight and monitoring . |
Fixed Compensation
- Executive officers (including Oberbeck) are not compensated by SAR; SAR has no employees—services are provided by Saratoga Investment Advisors under the Management and Administration Agreements .
- Director cash/equity compensation applies to independent directors only; “interested” directors (including Oberbeck) receive no board fees .
Independent director fee levels:
| Fiscal Year | Board Retainer | Meeting Fees | Chair Premiums | Example Totals |
|---|---|---|---|---|
| FY2025 | $90,000 | $3,500 per board; $2,000 per committee | Audit Chair $15,000; Other Chairs $8,000 | Looney $126,500; Whitman $120,000; Williams $120,000 |
| FY2024 | $70,000 | $3,000 per board; $1,500 per committee | Audit Chair $12,500; Other Chairs $6,000 | Looney $102,500; Whitman $96,000; Williams $96,000 |
Performance Compensation
SAR’s external manager (which Oberbeck leads) is paid via:
- Base Management Fee: 1.75% per annum of gross assets (excluding cash), calculated quarterly; benefits increase with leverage .
- Income Incentive Fee: Quarterly on pre-incentive fee net investment income (NII) with a 1.875% quarterly hurdle; 100% “catch-up” from 1.875% to 2.344%, then 20% above 2.344% .
- Capital Gains Incentive Fee: Annual, 20% of cumulative realized gains since 5/31/2010 minus cumulative realized losses and unrealized depreciation, less prior capital gains fees .
Detailed structure table:
| Metric | Weighting | Target/Threshold | Payout Mechanism | Vesting/Timing |
|---|---|---|---|---|
| Pre-incentive fee NII (quarterly) | 100% of eligible NII above hurdle | 1.875% quarterly hurdle; catch-up to 2.344% | 100% of NII between hurdle and 2.344%; 20% above 2.344% | Paid quarterly in arrears . |
| Capital Gains (annual) | 20% of positive cumulative gains | Realized gains minus losses/depreciation since 5/31/2010 | 20% of net amount, less prior capital gains fees | Paid annually in arrears . |
Risk alignment notes:
- Fee design may encourage leverage and risk (e.g., PIK and deferred interest) per SAR’s risk factor disclosures .
Equity Ownership & Alignment
Beneficial ownership and trends:
| Metric | FY2023 | FY2024 | FY2025 |
|---|---|---|---|
| Shares Beneficially Owned | 1,530,480 | 1,527,690 | 1,505,809 |
| Ownership % of Outstanding | 12.3% | 11.1% | 9.4% |
| Shares Pledged as Collateral | 500,000 | 600,000 | 600,000 |
Breakdown of 2025 holdings: 650,426 direct; 87,213 via CLO Partners LLC; 100,000 via CLO Partners Holdings LLC; 117,196 children (voting retained); 1,791 spouse (voting retained); 549,183 held by Elizabeth Birkelund (voting largely retained by Oberbeck per Transfer Agreement, with right of first refusal) .
Policies and red flags:
- Insider trading policy generally prohibits hedging and pledging, except in limited cases pre-approved by the Chief Compliance Officer; Oberbeck’s pledge of 600,000 shares is disclosed (alignment risk) .
- Transfer Agreement: Oberbeck retained voting rights on 549,183 shares held by Elizabeth Birkelund and has right of first refusal on any sale by her .
Employment Terms
- SAR’s executives are employed by Saratoga Investment Advisors; SAR reports no executive employment contracts, severance or change-of-control benefits payable by SAR .
- Management Agreement can be terminated by SAR’s Board or stockholders (or the Adviser) on 60 days’ notice; renewed annually by the Board (most recently July 8, 2024) .
- Administration Agreement renewed annually; expense cap increased from $4.3mm to $5.0mm effective Aug 1, 2024 .
Board Governance
- Board composition: Five directors; majority independent per BDC rules; Oberbeck and Steenkamp are “interested” directors .
- Dual role: Oberbeck serves as Chairman and CEO; Board cites his strategic knowledge as rationale; executive sessions of independent directors occur at each Board meeting with Steven M. Looney designated as presiding director/Lead Independent Director .
- Committees (all independent): Audit (Chair Looney; financial expert), Compensation (Chair Williams), Nominating & Corporate Governance (Chair Whitman) .
- Meeting activity: Board met seven times in FY2025; each director attended ≥75% of Board/committee meetings; all five directors attended the 2024 annual meeting . In FY2024 Board met eight times; each director attended 100% .
Related Party Transactions and Conflicts
- SAR is externally managed; Management and Administration Agreements with Saratoga Investment Advisors are renewed annually; Oberbeck controls the Adviser, creating potential conflicts addressed through Board oversight .
- SEC exemptive relief (Dec 12, 2023) allows negotiated co-investments with affiliates, subject to independent director “required majority” approvals .
Performance & Track Record
| Metric | FY2024 | FY2025 |
|---|---|---|
| Total Assets ($mm) | $1,191.2 | $1,191.5 |
| Portfolio Composition (% 1st lien / 2nd lien / unsecured / structured / equity) | 85.7 / 1.6 / 1.4 / 2.7 / 8.6 | 88.7 / 0.7 / 1.7 / 1.5 / 7.4 |
| Weighted Avg Yield | 11.4% | 10.8% |
| Total Return (Market) | -3.92% | 27.17% |
| Total Return (NAV) | 4.20% | 10.11% |
Leverage context (selected debt outstanding):
- FY2024: SBA debentures $214.0mm; Encina facility $35.0mm; multiple public notes outstanding .
- FY2025: SBA debentures $170.0mm; Encina $32.5mm; Live Oak $20.0mm; multiple public notes outstanding .
Board Service History and Dual-Role Implications
- Board service: Oberbeck has been a SAR director since 2010 and is an “interested” director due to his role at the Adviser .
- Governance mitigants: Lead Independent Director, fully independent committees, and executive sessions each Board meeting .
- Independence concerns: Combination of CEO and Chairman plus external management control concentrates influence; Board’s annual management agreement review and independent oversight are cited mitigations .
Risk Indicators & Red Flags
- Pledging: 600,000 shares pledged as collateral (policy generally prohibits pledging absent pre-approval) .
- Incentive fee alignment: Structure can incentivize leverage and PIK/deferred interest, potentially increasing risk .
- Late filings: Oberbeck filed a late Form 4 for a transfer to children in 2022; Steenkamp filed a late Form 4 in 2024 (process discipline signal) .
- Related-party management: External manager controlled by Oberbeck; potential conflicts managed via Board reviews and independent committees .
Compensation Structure Analysis
- Shift in pay locus: Because SAR’s executives are paid by the Adviser, SAR’s pay-for-performance hinges on fee structures tied to assets and NII/capital gains, not executive salaries/bonuses at SAR .
- At-risk pay: Incentive fees are explicitly performance-linked (NII and capital gains) with defined hurdles and catch-up mechanics .
- Guaranteed vs variable: Base fee (1.75%) is fixed against gross assets and increases with leverage, which can reduce alignment with shareholders in down markets; incentive fee promotes NII generation .
- Repricing/modification: No evidence of executive equity repricing at SAR since executives receive no SAR equity compensation; fee terms remain as disclosed .
Employment & Contracts
- No SAR employment contracts, severance, or change-of-control provisions for Oberbeck; termination and renewal terms apply to Management and Administration Agreements with the Adviser (60-day termination; annual renewal) .
- Clawbacks/tax gross-ups: Not disclosed for SAR executives; insider trading policy sets conduct standards .
Say-on-Pay & Shareholder Feedback
- No say-on-pay applicable (external management; executives not compensated by SAR); proxies focus on director elections and auditor ratification .
Investment Implications
- Alignment: Oberbeck’s substantial beneficial ownership (9.4% in 2025) and retained voting rights over 549,183 transferred shares align interests, but the pledge of 600,000 shares introduces overhang risk in stress scenarios and may signal liquidity needs .
- Incentives: The fee framework can favor asset growth and NII generation, potentially via leverage and PIK structures; investors should monitor leverage levels, PIK incidence, and NII sustainability relative to the 1.875% quarterly hurdle .
- Governance: CEO-Chair dual role and control of the Adviser elevate independence concerns; mitigants include a majority independent board, independent committees, and executive sessions each meeting .
- Performance trend: FY2025 rebound in market/NAV returns suggests improved conditions vs FY2024; continued vigilance on portfolio yield compression and asset mix is warranted .
- Trading signals: Watch for 13D/4 activity around pledged shares, changes in beneficial ownership, and any adjustments to Management/Administration Agreements; monitor 8-K disclosures for quarterly portfolio updates and leverage changes .