DEF 14A of Advanced Flower Capital Inc.
Filed Apr 17, 20260001140361-26-015204
INDEPENDENT DIRECTORS
INDEPENDENT DIRECTORS
INDEPENDENT DIRECTORS
| ALEXANDER C. FRANK | | | Class III Independent Age: 68 Position(s) Held with Fund: Director; Chair, Audit and Nominating and Governance Committees Director Since: 2020 Term of Office: Expires at the 2029 annual meeting Number of Companies in Fund Complex Overseen: 3 | BUSINESS EXPERIENCE AND PRINCIPAL OCCUPATION(S) DURING THE PAST FIVE YEARS) | | | Mr. Frank has more than 30 years’ experience in financial and operational infrastructure. Since July 2024, he has also served as Sunrise Realty Trust, Inc.’s (“SUNS”) lead independent director. He previously worked at Fifth Street Asset Management Inc. (“Fifth Street”), which he joined in September 2011 and during his tenure through September 2017, he held various positions and was responsible for the operations of the company during his tenure from 2011 to 2017. Since retiring in September 2017, Mr. Frank has served as a board member at Fifth Street. He was the Chief Operating Officer and Chief Financial Officer of Fifth Street from the time of its initial public offering in 2014 to its sale to Oaktree in 2017. From September 2008 to March 2011, he served as a Managing Director and Chief Financial Officer of Chilton Investment Company LLC, a global investment management firm. Prior to that, Mr. Frank spent over 22 years at Morgan Stanley, having served as global head of institutional operations, global corporate controller and chief financial officer of U.S. broker/dealer operations and global treasurer. In his roles, he oversaw various securities infrastructure services, creating efficiencies throughout the organization, and managed all aspects of the internal and external financial control and reporting functions. Mr. Frank began his career in audit and tax accounting at Arthur Andersen LLP before joining Morgan Stanley in 1985. He received an M.B.A. from the University of Michigan and a B.A. from Dartmouth College. | | | KEY ATTRIBUTES | | | Mr. Frank brings to our Board a deep knowledge of financial management. He provides our Board with key insights to the financial markets, capital raising activities, and the management of a large, complex business. OTHER DIRECTORSHIPS HELD DURING THE PAST FIVE YEARS TCG Strategic Income Fund Sunrise Realty Trust, Inc. |
INDEPENDENT DIRECTORS
| ADVANCED FLOWER CAPITAL INC. | 2026 PROXY STATEMENT | 6 |
INDEPENDENT DIRECTORS
| MARNIE SUDNOW | | | Class III Independent Age: 58 Position(s) Held with Fund: Director Director Since: 2022 Term of Office: Expires at the 2029 annual meeting Number of Companies in Fund Complex Overseen: 1 | BUSINESS EXPERIENCE AND PRINCIPAL OCCUPATION(S) DURING THE PAST FIVE YEARS) | | | Ms. Sudnow was appointed to the Board in January 2022. Ms. Sudnow has over 25 years experience in management consulting. Ms. Sudnow has served as the Senior Vice President of Client Success for Stylitics, a data-driven omnichannel consulting firm to global retailers since June 2022. Previously, Ms. Sudnow served in various roles, most recently as the Senior Vice President of Strategic Accounts, North America, for Mediaocean, an advertising services and software company, from October 2010 to June 2020. Today, Ms. Sudnow is an Executive Coach working with senior leaders to maximize performance and engage hybrid teams to drive business results. Ms. Sudnow received her B.A. in Business Administration, Finance and Marketing from the University of Delaware. Ms. Sudnow is a founding member of CHIEF, a private network for executive women, and a member of The Female Quotient. | | | KEY ATTRIBUTES | | | Ms. Sudnow brings to our Board valuable management experience and strategic planning in dynamic, data-driven environments, especially in retail industries, her knowledge of which provides valuable insight to the discussions of our Board. | | | OTHER DIRECTORSHIPS HELD DURING THE PAST FIVE YEARS | | | None |
INDEPENDENT DIRECTORS
| | THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR ALL” OF THE DIRECTOR NOMINEES. |
INDEPENDENT DIRECTORS
| ADVANCED FLOWER CAPITAL INC. | 2026 PROXY STATEMENT | 7 |
INDEPENDENT DIRECTORS
All Other Continuing Directors
INTERESTED DIRECTOR
INTERESTED DIRECTOR
INTERESTED DIRECTOR
| LEONARD M. TANNENBAUM | | | Class I Interested Age: 54 Position(s) Held with Fund: Chairman and Director Director Since: 2020 Term of Office: Expires at the 2027 annual meeting Number of Companies in Fund Complex Overseen: 3 | BUSINESS EXPERIENCE AND PRINCIPAL OCCUPATION(S) DURING THE PAST FIVE YEARS) | | | Mr. Tannenbaum has served as our Chairman since October 2024, prior to which he served as our Executive Chairman and Chief Investment Officer since November 2023 and as our Chief Executive Officer and Chairman and a director from July 2020. Since February 2024, Mr. Tannenbaum has served as director of SUNS, since February 2024 and as Executive Chairman since the Spin-Off (as defined below). Mr. Tannenbaum is responsible for our overall management and, in his capacity as a principal of the Adviser, leads the Investment Committee, which is responsible for overseeing investment processes including origination, credit underwriting, risk analysis and loan approvals. Mr. Tannenbaum has extensive leadership experience, including his experience as the founder of Fifth Street Asset Management, Inc., a credit asset manager with a nationwide platform, and its Chief Executive Officer from its inception in 1998 until October 2017 when substantially all of its assets were sold to Oaktree Capital Management (“Oaktree”). Prior to such sale to Oaktree, Fifth Street had a core focus on disciplined credit investing across multiple economic cycles, and issued billions of dollars in public equity, private capital and public debt securities. Fifth Street made flexible investments across capital structures to growing middle market companies, primarily in conjunction with private equity sponsors. It managed approximately $5 billion of assets across multiple private investment vehicles and two publicly-traded business development companies. Fifth Street dissolved and liquidated its operations in the first half of 2022 and since its asset sale to Oaktree, it has had no revenue generating operations and makes no investments. Mr. Tannenbaum had a controlling interest in Fifth Street. Subsequent to the sale to Oaktree in 2017, Mr. Tannenbaum founded Tannenbaum Capital Group, a group of affiliated investment managers that are focused on allocating capital across various strategies including credit and commercial real estate. Mr. Tannenbaum currently also serves as a director of Southern Realty Trust, Inc. (“SRT”). Mr. Tannenbaum graduated from The Wharton School of the University of Pennsylvania, where he received a B.S. in economics. Subsequent to his undergraduate degree from the University of Pennsylvania, he received an MBA in Finance from The Wharton School as part of the submatriculation program. He is also a holder of the Chartered Financial Analyst designation and is a member of The Wharton Graduate Executive Board. Mr. Tannenbaum is married to the Company’s President and Chief Investment Officer, Robyn Tannenbaum. Mr. Tannenbaum is deemed to be an “interested person” of the Company under the Investment Company Act of 1940, as amended (the “1940 Act”) as a result of his ownership of greater than 5% of the outstanding voting securities of the Company and affiliations with the Adviser. | | | KEY ATTRIBUTES | | | Mr. Tannenbaum brings extensive financing industry and leadership experience to our Board. He provides our Board with critical understanding of our business and execution of our strategic plans. He is the Founder, and a substantial shareholder, of AFC. | | | OTHER DIRECTORSHIPS HELD DURING THE PAST FIVE YEARS | | | TCG Strategic Income Fund Sunrise Realty Trust, Inc. |
INTERESTED DIRECTOR
| ADVANCED FLOWER CAPITAL INC. | 2026 PROXY STATEMENT | 8 |
INDEPENDENT DIRECTORS
INDEPENDENT DIRECTORS
INDEPENDENT DIRECTORS
| THOMAS L. HARRISON | | | Class I Lead Independent Age: 78 Position(s) Held with Fund: Director; Chair, Compensation Committee Director Since: 2020 Term of Office: Expires at the 2027 annual meeting Number of Companies in Fund Complex Overseen: 1 | BUSINESS EXPERIENCE AND PRINCIPAL OCCUPATION(S) DURING THE PAST FIVE YEARS) | | | Since April 2019, Mr. Harrison has served as a Senior Operating Partner at Merida Capital Holdings, a private equity firm investing across the cannabis ecosystem. In addition, Mr. Harrison brings 30 years of experience in marketing, communications and brand positioning. He formerly founded Harrison & Star Business Group in October 1987, a healthcare marketing and communications agency that was acquired by Omnicom Group Inc. (“Omnicom”) in 1992. He is Chairman Emeritus of Diversified Agency Services, a division of Omnicom and one of the world’s largest holding groups of marketing services companies. He was appointed President of the division in April 1997. He is currently a board member for MainStem, the leading purchasing platform in the state-regulated cannabis industry, as well as New Frontier Data, the cannabis industry’s leading consumer data platform. Mr. Harrison has recently been appointed to the Board of Narrative Strategies, a leading DC-based PR/PA/crisis management firm and to the Board of Agenus Pharmaceuticals, a clinical stage oncology biopharmaceutical company. He sits on the board of ACTV8me, an advertising attribution technology company, He is a board director for the Montefiore Health System. Dr. Harrison brings to our Board an important combination of leadership, marketing, cannabis industry, healthcare and financial expertise. His experiences at large corporations and his current board service make him instrumental in helping our Board implement our business and financial strategy. | | | KEY ATTRIBUTES | | | Mr. Harrison brings to our Board an important combination of leadership, marketing, cannabis industry, healthcare and financial expertise. His experiences at large corporations and his current board service make him instrumental in helping our Board implement our business and financial strategy. OTHER DIRECTORSHIPS HELD DURING THE PAST FIVE YEARS | | | None |
INDEPENDENT DIRECTORS
| ADVANCED FLOWER CAPITAL INC. | 2026 PROXY STATEMENT | 9 |
INDEPENDENT DIRECTORS
| ROBERT LEVY | | | | BUSINESS EXPERIENCE AND PRINCIPAL OCCUPATION(S) DURING THE PAST FIVE YEARS) | | Class II Independent Age: 60 Position(s) Held with Fund: Director Director Since: 2020 Term of Office: Expires at the 2028 annual meeting Number of Companies in Fund Complex Overseen: 1 | Mr. Levy has served as our independent director since December 2020. Currently, Mr. Levy works as a Managing Member at LBX Acquisitions, a privately held real estate investment management company, a position he has held since January 2018. Prior to launching LBX Investments, Mr. Levy co-founded Big V Capital (“BVC”) in March of 2016, where he oversaw and underwrote the partnership’s 11 Southeastern U.S. shopping center acquisitions and managed all capital raising (both debt and equity) and asset management efforts. Prior to BVC, Mr. Levy was the Chief Operating Officer of the Real Estate Group at Benefit Street Partners, a multi-strategy credit manager with over $11.0 billion in assets under management from May 2015 to June 2016. Prior to Benefit Street, Mr. Levy held various leadership positions at Centerline Capital Group, including Chief Executive Officer, Chief Operating Officer, Chief Financial Officer, and Member of the Board of Trustees. Centerline was a multifamily finance and investment management company with over $13 billion in debt and equity under management. Mr. Levy received his M.B.A. from the Leonard M. Stern School of Business at New York University and his B.A. in Economics from Northwestern University. | | | KEY ATTRIBUTES | | | Mr. Levy brings to our Board a critical management experience in capital raising within the finance industry. | | | OTHER DIRECTORSHIPS HELD DURING THE PAST FIVE YEARS | | | None |
INDEPENDENT DIRECTORS
| ADVANCED FLOWER CAPITAL INC. | 2026 PROXY STATEMENT | 10 |
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| Corporate Governance |
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Corporate Governance Guidelines Our Board of Directors has adopted Corporate Governance Guidelines to assist the Board in the exercise of its duties and responsibilities and to serve the best interests of the Company and our shareholders. Our Corporate Governance Guidelines direct our Board’s actions with respect to, among other things, our Board composition, responsibilities of directors, director compensation, director orientation and continuing education, succession planning and the Board’s annual performance evaluation. A current copy of our Corporate Governance Guidelines is available under “Corporate Governance” on our website at https://investors.advancedflowercapital.com. Director Independence The Board consists of five members, four of whom are classified under applicable rules of the Nasdaq Stock Market (“Nasdaq”) as “independent” directors and under Section 2(a)(19) of the 1940 Act as not “interested persons” (each such Director, an “independent director”). Under the Nasdaq rules and our Corporate Governance Guidelines, independent directors must comprise a majority of our Board of Directors. Under Nasdaq rules, a director will only qualify as an “independent director” if our Board of Directors affirmatively determines that the director, in the opinion of our Board of Directors, does not have a relationship which would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. Our Board reviews any relationship that each of our directors has with us, either directly or indirectly, that could interfere with exercising independent judgment in carrying out a director’s responsibilities. Based on these independence standards, the Board has affirmatively determined that each of Messrs. Harrison, Frank, and Levy, and Ms. Sudnow is “independent” and not an “interested person” as those terms are defined under the rules of Nasdaq and the 1940 Act, respectively. Mr. Tannenbaum is not an independent director under applicable rules of Nasdaq as a result of his prior service as an executive officer. In addition, Mr. Tannenbaum is an “interested person” of the Company as a result of his ownership of greater than 5% of the outstanding voting securities of the Company and affiliations with the Adviser. Board Leadership Structure We do not have a policy as to whether the chairperson of our Board should be an independent director and we believe that our flexibility to select our chairman and reorganize our leadership structure from time to time is in the best interests of us and our shareholders. Presently, Mr. Tannenbaum, serves as the Chairman of the Board. We believe that we are best served through our existing leadership structure with Mr. Tannenbaum serving as Chairman of our Board combined with Mr. Harrison serving as lead independent director. We believe that Mr. Tannenbaum’s extensive finance industry and leadership experience and critical understanding of our business and knowledge of how to craft and execute on our business and strategic plans qualifies him to serve as the Chairman of the Board, and his relationship with AFC Management, LLC (our “Adviser”) provides an effective bridge between our Board and our Adviser, thus ensuring an open dialogue between our Board and our Adviser and that both groups act with a common purpose. We believe that the leadership structure of our Board must be evaluated on a case-by-case basis and that our existing Board leadership structure provides sufficient independent oversight over our Adviser. In addition, we believe that the current governance structure, when combined with the functioning of the independent director component of our Board and our overall corporate governance structure, strikes an appropriate balance between strong and consistent leadership and independent oversight of our business and affairs. However, we re-examine our corporate governance policies on an ongoing basis to ensure that they continue to meet our needs.
INDEPENDENT DIRECTORS
| ADVANCED FLOWER CAPITAL INC. | 2026 PROXY STATEMENT | 11 |
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The Board’s Role in Risk Oversight One of the key functions of our Board is informed oversight of our risk management process. Our Board administers this oversight function directly, with support from its three standing committees, the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee, each of which addresses risks specific to its respective areas of oversight as discussed below. In addition, our Adviser has also established an Investment Committee for us, the members of which consist of employees of our Adviser and/or its affiliates, and which currently includes certain affiliates of our Adviser and certain of our officers. The Investment Committee works in conjunction with our Board to manage our credit risk through a comprehensive investment review process.
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| ● | Audit Committee. Our Audit Committee has the responsibility to consider and discuss our major financial risk exposures and the steps our management has taken to monitor and control these exposures, including guidelines and policies to govern the process by which risk assessment and management is undertaken. The Audit Committee also monitors compliance with legal and regulatory requirements and the review and approval of our related party transactions, in addition to oversight of the performance of our internal audit function (to the extent such function is required by applicable rules and regulations). Because the Committee is already charged with approving our related party transactions, our Board has charged the Audit Committee with overseeing amounts payable to our Adviser pursuant to our the investment advisory agreement between us and the Adviser (the “Advisory Agreement”) and making recommendations to our Board with respect to our Board’s approval of the renewal of our Advisory Agreement. |
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| ● | Compensation Committee. Our Compensation Committee is generally responsible for discharging the Board’s oversight responsibilities relating to reimbursement of expenses to our Adviser and its affiliates for compensation paid by such entities to their respective employees pursuant to the Advisory Agreement, and the preparation of reports on or relating to executive compensation required by the rules and regulations of the Securities and Exchange Commission (the “SEC”). |
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| ● | Nominating and Corporate Governance Committee. Our Nominating and Corporate Governance Committee provides oversight with respect to corporate governance and ethical conduct and monitors the effectiveness of our corporate governance guidelines, including whether such guidelines are successful in preventing illegal or improper liability-creating conduct. |
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In addition, our Board and the Audit Committee meet regularly with our Adviser and consider the feedback our Adviser provides concerning the risks related to our enterprise, business, operations and strategies. Our Adviser regularly reports to our Board and the Audit Committee on our loan portfolio and the risks related thereto, asset impairments, leverage position, affiliate payments (including payments made and expenses reimbursed pursuant to the terms of the Advisory Agreement), compliance with applicable covenants under the agreements governing our indebtedness and compliance with requirements of the 1940 Act to which business development companies are subject. Members of our Board are routinely in contact with our Adviser and our executive officers, as appropriate, in connection with their consideration of matters submitted for the approval of our Board or the Audit Committee and the risks associated with such matters. We believe that the extent of our Board’s (and its committees’) role in risk oversight complements the Board’s leadership structure because it allows our independent directors, through the three fully independent Board committees, executive sessions with the independent auditors, and otherwise, to exercise oversight of risk without any conflict that might discourage critical review. We believe that a board of directors’ role in risk oversight must be evaluated on a case by case basis and that our Board’s role in risk oversight is appropriate. However, we re-examine the manner in which our Board administers its oversight function on an ongoing basis to ensure that it continues to meet our needs.
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| ADVANCED FLOWER CAPITAL INC. | 2026 PROXY STATEMENT | 12 |
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Committees of the Board of Directors The Board has three standing committees: the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee. Each of our standing committees is comprised solely of independent directors. The written charters of these committees are available under “Corporate Governance” on our website at https://investors.advancedflowercapital.com.
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| | Audit | Compensation | Nominating & Corporate Governance | | Alexander Frank | Chair | | Chair | | Thomas Harrison | | Chair | | | Robert Levy | | | | | Marnie Sudnow | | | | | | Committee Member | | Audit Committee Financial Expert |
INDEPENDENT DIRECTORS
Audit Committee Our Audit Committee consists of three members, Messrs. Frank, Harrison and Levy, with Mr. Frank serving as Chair of the committee. Our Board has affirmatively determined that each of Mr. Harrison, Mr. Frank and Mr. Levy is independent under Nasdaq rules and not “interested persons” as such term is defined in the 1940 Act and also meets the enhanced standards of “independence” established by Nasdaq and the SEC for members of the Audit Committee. Our Board has also determined that (i) Mr. Frank and Mr. Levy each qualify as an “audit committee financial expert” under SEC rules and regulations and (ii) each member of the Audit Committee is “financially literate” as the term is defined by Nasdaq listing standards. The Audit Committee’s principal functions include oversight related to:
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| ● | the integrity of our financial statements; |
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| ● | the qualifications and independence of any independent registered public accounting firm engaged by us; |
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| ● | the performance of our internal audit function (to the extent such function is required by applicable rules and regulations) and any independent registered public accounting firm; |
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| ● | the determination of the fair value of assets that are not publicly traded or for which current market values are not readily available; and |
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| ● | the entry and monitoring of related party transactions. |
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The Audit Committee assists our Board in its management of AFC. In particular, the Audit Committee (i) serves as an independent party to monitor our financial reporting processes and internal control system; (ii) discusses the audit conducted by our independent registered public accounting firm; (iii) provides an open avenue of communication among our independent registered public accounting firm, our management and our Board; and (iv) serves as an independent party to review, approve and monitor our related party transactions. The responsibilities of the Audit include, but are not limited to, (i) the appointment, compensation, retention and oversight of any independent registered public accounting firm engaged by us; (ii) discussing and reviewing guidelines and policies with respect to risk assessment and risk management; (iii) reviewing the adequacy of our internal audit function (to the extent such function is required by applicable rules and regulations); (iv) assisting in performing oversight responsibilities for the internal control systems and disclosure procedures; (v) recommending to our Board whether the financial statements should be included in reports made available to its shareholders; and (vi) meeting periodically with management to discuss any of the above or any identified issues. Subject to the provisions of our related person transaction policies and procedures, the Audit Committee is also responsible for reviewing and approving our related party transactions, including matters related to our Advisory Agreement. Because the Audit Committee is already charged with approving our related party transactions, our Board has charged the Audit Committee with overseeing amounts payable to our Adviser pursuant to our Advisory Agreement and making recommendations to our Board with respect to our Board’s approval of the renewal of our Advisory Agreement. The Audit Committee and our Board must approve any renewal of our Advisory Agreement. See “Transactions With Related Persons — Policies and Procedures Regarding Related Party Transaction” for additional information.
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| ADVANCED FLOWER CAPITAL INC. | 2026 PROXY STATEMENT | 13 |
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Compensation Committee Our Compensation Committee consists of three members, Ms. Sudnow and Messrs. Levy and Harrison, with Mr. Harrison serving as Chair of the committee. Our Board has affirmatively determined that each of Ms. Sudnow and Messrs. Levy and Harrison is independent under Nasdaq rules and also meets the enhanced standards of independence established by Nasdaq and the SEC for members of the Compensation Committee. In making this determination, the Board considered whether the director has a relationship with the Company that is material to the director’s ability to be independent from management in connection with the duties of a member of the Compensation Committee. The Compensation Committee’s principal functions include:
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| ● | discharging the Board’s responsibilities relating to the compensation, if any, of our executive officers and directors; |
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| ● | overseeing the expense reimbursement of our Adviser and its affiliates for compensation paid by such entities to their respective employees pursuant to our Advisory Agreement; and |
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| ● | preparing reports on or relating to executive compensation required by the rules and regulations of the SEC. |
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The Compensation Committee has the sole authority to retain and terminate compensation consultants to assist in the evaluation of compensation matters and the sole authority to approve the fees and other retention terms of such compensation consultants. The Compensation Committee, with input from its compensation consultant, if any, and our Adviser, discusses and considers potential risks that arise from our compensation practices, policies and programs. In addition, the Compensation Committee may form and delegate authority to sub-committees or, to the extent permitted under applicable laws, regulations and Nasdaq rules, to any other independent director or committee comprised entirely of independent directors, in each case, to the extent the Compensation Committee deems necessary or appropriate. Nominating and Corporate Governance Committee Our Nominating and Corporate Governance Committee currently consists of two members, Mr. Frank and Ms. Sudnow, with Mr. Frank serving as Chair of the committee. Our Board has affirmatively determined that that each of Mr. Frank and Ms. Sudnow is independent under Nasdaq rules and not “interested persons” as such term is defined in the 1940 Act. The Nominating and Corporate Governance Committee charter defines the Nominating and Corporate Governance Committee’s principal functions, including:
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| ● | identifying individuals to become members of the Board, consistent with the procedures and selection criteria established by the Nominating and Corporate Governance Committee; |
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| ● | periodically reviewing the size and composition of the Board and recommending to the Board such modifications to its size and/or composition as are determined by the Nominating and Corporate Governance Committee to be necessary or desirable; |
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| ● | recommending to the Board the director nominees for the next annual meeting of shareholders; |
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| ● | recommending to the Board individuals to fill vacant Board positions; |
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| ● | recommending to the Board committee appointments and chairpersons; |
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| ● | developing and recommending to the Board a set of corporate governance principles, a Code of Business Conduct and Ethics and related corporation policies, practices and procedures; |
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| ● | periodically reviewing and recommending to the Board updates to our corporate governance principles, Code of Business Conduct and Ethics and related corporation policies, practices and procedures; |
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| ● | monitoring the Company’s compliance with applicable corporate governance requirements; and |
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| ● | overseeing an annual evaluation of the Board, its committees and individual directors. |
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| ADVANCED FLOWER CAPITAL INC. | 2026 PROXY STATEMENT | 14 |
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Meetings and Attendance During 2025, the Board held ten (10) meetings, the Audit Committee held six (6) meetings, the Compensation Committee held one (1) meeting and the Nominating and Corporate Governance Committee held one (1) meeting. Each of our directors attended at least 80% of the aggregate meetings of the Board and the committees of the Board on which he or she served during 2025. In addition, independent directors of our Board of Directors meet in regularly scheduled sessions without management. It is the Board’s policy that all directors are invited and encouraged to attend the Company’s annual meeting of shareholders, either in person or telephonically. One (1) of our directors, Mr. Harrison, attended our 2025 annual meeting of shareholders. Succession Planning The Board works on a periodic basis with the executive officers of the Adviser to develop, review, maintain and revise, if necessary, the Company’s succession plan upon the Chief Executive Officer’s retirement, the termination or non-renewal of the Adviser under the Advisory Agreement or in the event of an unexpected occurrence. The Chief Executive Officer’s recommendations regarding his or her successor should he or she be unexpectedly disabled are made available to the Board on a continuing basis. Annual Self-Evaluation Process At least annually, the Nominating and Corporate Governance Committee oversees and coordinates a self-assessment of the Board and each committee’s own performance. These self-assessments also take into account other corporate governance principles that may, from time to time, merit consideration by the Board and each committee. The Board conducted its annual self-assessment process in December 2025. The assessment of the Board will generally include a review of any areas in which the Board or management believes the Board can make a better contribution to the governance of the Company, as well as a review of the committee structure and an assessment of the Board’s compliance with the principles set forth in our Corporate Governance Guidelines. The purpose of the review is to improve the performance of the Board as a unit, and not to target the performance of any individual Board member. The Board utilizes the results of this evaluation process in assessing and determining the characteristics and critical skills required of prospective candidates for election to the Board. Each committee of the Board conducts its self-assessment under the oversight of the Nominating and Corporate Governance Committee in accordance with the provisions set forth in its respective charter. Consideration of Director Candidates Our Board of Directors and the Nominating and Corporate Governance Committee will consider director candidates recommended for election to the Board of Directors by shareholders in the same manner and using the same criteria as that used for any other director candidate. All recommendations must be directed to the Nominating and Corporate Governance Committee c/o Secretary at 477 South Rosemary Avenue, Suite 301, West Palm Beach, FL, 33401. Recommendations for director nominees to be considered at the 2027 annual meeting of shareholders must be received in writing not later than December 15, 2026, which is 120 days prior to the one-year anniversary of the date this Proxy Statement is first available to shareholders. See “Shareholder Proposals and Director Nominations for 2027 Annual Meeting” under the section below titled “Questions and Answers About the Proxy Materials and Annual Meeting” for more information. Our Board of Directors does not have a formal diversity policy. However, in evaluating a director candidate, the Nominating and Corporate Governance Committee will consider the following criteria, among others the Nominating and Corporate Governance Committee shall deem appropriate: (i) business and professional background, (ii) contribution to the Board’s diversity of experience, profession, expertise, skill and background (including with respect to race and gender); (iii) history of leadership or contributions to other organizations; (iv) functional skill set and expertise; (v) general understanding of marketing, finance, accounting, corporate governance, federal securities and other relevant laws and regulations, and other elements relevant to the success of a publicly-traded company in today’s business environment; (vi) meets high ethical standards; (vii) experience relevant to our investment program and/or as a member of the board of directors of another publicly-held company; (viii) commitment to devoting the time and effort necessary to be a responsible and productive member of the Board of Directors; and (ix) ability to perpetuate the success of the business and represent stakeholder interests.
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| ADVANCED FLOWER CAPITAL INC. | 2026 PROXY STATEMENT | 15 |
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Shareholders who wish to nominate a person for election as a director in connection with an annual meeting of shareholders (as opposed to making a recommendation to the Nominating and Corporate Governance Committee as described above) must deliver written notice to our Secretary in the manner described in our Amended and Restated Bylaws (“Bylaws”), and as described further under “Shareholder Proposals and Director Nominations for 2027 Annual Meeting” below. Outside Directorships In recent years, some investors and proxy advisors have instituted “bright-line” proxy voting policies on the number of outside public company boards that a director may serve on. Our Board recognizes investors’ concerns that highly sought-after directors could lack the time and attention to adequately perform their duties and responsibilities, and considers each director’s performance and commitment to ensure their continued effectiveness as a director. Our corporate governance guidelines contemplate that no director may simultaneously serve on the boards of directors of more than four other public companies, excluding our portfolio companies, unless our Board of Directors determines that such simultaneous service would not impair the ability of such director to effectively serve the Company. Communications with the Board of Directors Shareholders or other interested parties who wish to contact the Board, the lead independent director, any Board committee, or our independent directors as a group may send written correspondence c/o Board of Directors at 477 South Rosemary Ave., Suite 301 West Palm Beach, FL, 33401. The name of any specific intended Board recipients should be clearly noted in the communication. All communications will be received, processed and then forwarded to the appropriate member(s) of our Board, except that, certain items unrelated to the Board’s duties and responsibilities, such as spam, junk mail, mass mailings, solicitations, resumes and employment inquiries and similar items will not be forwarded. Board members receiving communications will respond as such directors deem appropriate, including the possibility of referring the matter to our management team, to the full Board or to an appropriate committee of the Board. In addition, if requested by shareholders, our lead independent director will ensure that he is available, when appropriate, for consultation and direct communication with shareholders.
Compensation Clawback Policy
| Director Compensation |