Item 5: Fees and Compensation
The information in this Item 5 reflects the terms on which the Firm provides investment advice to its
Clients.
Items 5.A. and 5.B.
For its advisory services to the Funds, Engine No. 1 generally charges a quarterly management fee
(“Management Fee”) ranging from 0.25% to 0.375% (approximately ranging from 1% to 1.35% per year),
depending on the class of interest held by the Fund Investor. The Firm, or a Fund's general partner (the
“General Partner”), is generally entitled to an incentive allocation (the “Incentive Allocation), generally
ranging from 15% to 17.5% per fiscal year, usually made or payable at the end of each fiscal year (and on
any withdrawal by or distribution of funds to an Investor during a fiscal year). The Incentive Allocation for
certain classes of interests are subject to an annualized 6% hurdle rate and the Incentive Allocation of
another class of interests is subject to a multi-year, non-cumulative annualized 6% hurdle rate. The
Management Fee is paid in advance and calculated within 15 days of the first day of each fiscal quarter.
The Firm is authorized to deduct Management Fees, Incentive Allocations, and expenses directly from the
Clients, and in effect, the Investors’ capital accounts. As applicable, the Firm or a General Partner may, by
agreement with particular Investors, reduce, waive, or modify the Management Fee or Incentive
Allocation attributable to those Investors. Details regarding Management Fees, Incentive Allocations and
expenses are set forth in the Clients’ relevant offering and governing documents.
Item 5.C.
The Firm and any Client’s General Partner bear their own operating, general, administrative and overhead
costs and expenses, other than the expenses described below. All or a portion of these costs and expenses
may be paid for by brokerage firms that execute trades for the Clients.
The Clients bear their own expenses as determined by the applicable Clients’ fund documents, which
generally include the following: (i) the Management Fee; (ii) expenses related to the research, due
diligence, financing, monitoring and disposition of actual and prospective investments, whether or not
such investment is consummated, including the following: third-party investment sourcing fees (including,
without limitation, performance-based fees); fees and expenses related to obtaining research and market
data (including, without limitation, any information technology hardware, software or other technology
incorporated into the cost of obtaining such research and market data, and including fees and expenses
related to obtaining, processing and analyzing research or market data that may be considered "big data"
or "alternative data"); due diligence expenses including, without limitation, consulting and appraisal fees;
investment-related travel expenses; brokerage, prime brokerage and futures commission merchant fees,
commissions and expenses (including fees, commissions and expenses paid or reimbursed to an external
trading desk); expenses relating to block trades; expenses relating to short sales; clearing and settlement
charges; custodial fees and expenses; bank service fees; interest expenses and fees related to financings
or refinancings; fees and expenses of proxy research and voting and class action-related services; fees and
expenses related to a current or potential activist campaign (including proxy contests and other
solicitations, research, director candidate fees, proxy solicitor fees and reasonable travel expenses), and
compensation, indemnification and other expenses of any nominees proposed by the Firm as directors or
executives of campaign targets; and fees and expenses of third-party professionals, including, without
limitation, consultants, investment bankers, attorneys and accountants; (iii) organizational and
reorganizational expenses; (iv) the Client's direct or indirect pro rata share of any compensation payable
in connection with the management of any designated investment by an unaffiliated third party or
management team, which may include both asset-based fees and performance-based fees or allocations
(which, for the avoidance of doubt, will not offset the Management Fee or Incentive Allocation); (v) fees
and expenses relating to information technology hardware, software or other technology (including,
without limitation, costs of software licensing, implementation, data management and recovery services
and custom development) used to research investments, evaluate and manage risk, facilitate valuations,
facilitate accounting functions and/or facilitate compliance with the rules of any self-regulatory
organization or applicable law (including, without limitation, reporting obligations), facilitate and manage
the order execution of securities or otherwise manage any trading subsidiary or special purpose vehicle,
such as Bloomberg terminals, portfolio management systems, risk management systems and order
management systems and fees and expenses of third-party risk management products, models and
services; (vi) fees and expenses of third-party valuation service providers and third-party administrative
fees and expenses and including, without limitation, the costs of engaging or appointing a Money
Laundering Reporting Officer, a Deputy Money Laundering Reporting Officer and an Anti-Money
Laundering Compliance Officer; (vii) the costs of any litigation or investigation involving activities of the
any trading subsidiary or special purpose vehicle; (viii) taxes and third-party audit and tax preparation
expenses; (ix) 80% of insurance expenses, including, without limitation, premiums for cybersecurity
insurance and liability insurance covering Engine No. 1, the General Partner, the Firm and the members,
partners, officers, employees and agents of any of them, and each member of the advisory committee;
(x) fees and expenses of the independent members of the advisory committee (xi) costs of preparing and
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