Chrysalis Investments (CHRY) has provided an update to its performance fee arrangements, which are the result of discussions between the board and Jupiter. The aim of the discussions has been to revise the current performance fee arrangements in order to ensure long term alignment between the management team and Chrysalis shareholder interests. CHRY’s board says that an agreement in principle has now been reached on the revisions to the performance fee. In summary these are:
- Overall performance fee level reduced from 20% to 12.5% of the amount by which the adjusted net asset value exceeds the higher of the high-water mark and the hurdle rate
- Performance fee to be satisfied in shares (excluding tax and other liabilities attributable to receipt of the performance fee which will be satisfied in cash), with a deemed issue price set at the higher of NAV and share price as at the year-end in respect of which the fee accrues
- The shares allotted under the performance fee will be allocated by Jupiter solely to the members of the management team to ensure alignment of the team with Chrysalis shareholders
- Current “high-water mark” set in September 2021 is maintained at the same level
- Introduction of a deferred settlement structure; 25% of the shares due in any performance fee payment will be immediately issued with the remaining 75% of payment deferred by Chrysalis for between 3 and 5 years, subject to share price tests
- A cap on the performance fee payable in any one year based on the performance fee payment not resulting in the Company’s total expense ratio (TER) exceeding 3.75% in that year
CHRY’s announcement says that further details will be provided to shareholders in due course. A circular is to be circulated to shareholders whose consent will be sought as these changes are deemed a related party transaction for the purposes of the Listing Rules. If approved by shareholders, it is expected that the revised arrangements will apply with effect from the start of the current financial year.