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Case Study 8: Alignment & Compensation Structure

CLIENT:

Alternative Asset Management Subsidiary of Broad Financial Institution

CLIENT SITUATION:

• Needed to redesign the alignment and economics among its key constituents: The investors, the firm, the investment teams and professionals, and the parent company

CASEY QUIRK APPROACH:

• Researched trends in management fees, profit and revenue sharing, equity ownership and compensation in the industry
• Identified models around which alignment structures are typically formed and analyzed their reasons for success or failure
• Conducted interviews and assessed the needs and concerns of key constituents within the firm, investors and stakeholders
• Suggested an initial structure and refined with clients' working team

PROJECT OUTCOME:

• Delivered fully-vetted alignment plan, including the following:
  - New management and incentive fees plan including with modified performance measurement and payout timeframes
  - Five-year transition to new investment team annual compensation plan
  - Profit sharing and equity participation plan
  - Equity recapitalization scheme between the team and the parent company