The Management Fee will be reduced by any cash compensation paid by Cannae to its named executive officers; Hurdle Rate
and Graduated Incentive Fee Structure: Subject to Cannae's investments generating an 8% IRR, 15% of realized gain between 1.0x to 2.0x return on a liquidity event and 20% of realized gain over 2.0x return on a liquidity event; High Water Mark: Upon each liquidity event where an incentive fee is earned, Cannae will deduct for any net unrealized losses looking at the investment portfolio as a whole.
This return, also called the hurdle rate
, represents the opportunity cost of the company under the prevailing risk environment.
So, for Dodong to be happy, he should invest the proceeds in an instrument that gives him a rate greater than the sum of the breakeven rate (12.95 percent) and the risk-free hurdle rate
(18.81 percent or 19.09 percent, depending on how many days are assumed to be in a year).
This will enable hotels to set a hurdle rate
for OTAs, in turn incentivising OTAs to sell above that rate to earn a higher commission.
Socioeconomic Planning Secretary Ernesto Pernia said the project which is under review by the technical board of the NEDAInvestment Coordination Committee (NEDA-ICC) passes the so-called hurdle rate
or the minimum rate of return required to make the investment worthwhile.Clarifications, however, are sought on the financial rate of return of the project which would give the government a clearer picture of the project's profitability.
In contrast, business segments with high or very high percentages of their revenues coming from lending products and are also performing badly on many or all of these levers are far below the ideal hurdle rate
of 16 percent return on equity (ROE).
"Most PMS charge a 2% annual fee and get 20% profit beyond a hurdle rate
," says Prateek Pant of RBS Private Banking, which offers non-discretionary PMS.
PERFORMANCE fees are contingent charges that are levied if a fund outperforms a specified benchmark or 'hurdle rate
' and they are charged in addition to a fund's annual management fee.
Earlier we discussed the hurdle rate
- the required rate of return for any capital commitment.
For example, the distribution (60%, 15%, 25%) indicates that the project has a 60% chance of generating a return that is above the company's hurdle rate
(the minimum amount of return that the company requires before they will make an investment in something), a 15% chance of yielding a return near the hurdle rate
, and a 25% chance of creating a return below the hurdle rate