Fees and Compensation
The compensation applicable to each client fund is set forth in detail in each client fund's
offering documents, as amended from time to time. A brief summary of such fees is provided
below.
Perry Corp. typically receives compensation from each of its clients (and in the case of its clients
that are structured as a master/feeder fund structure, at either the master fund or feeder fund
level) based both on a percentage of assets Perry Corp. manages and on a percentage of the
performance achieved for the client. Generally, each year, Perry Corp. charges each client a
management fee of 1% of its assets that Perry Corp. manages, and each client is subject to a
performance-based compensation equal to 20% of its net profits, subject to certain limitations
and discounts (specifics follow below).
Perry Corp.'s management fees and performance-based compensation are usually not negotiable,
although Perry Corp. permits all significant investors who are similarly situated to participate at
reduced rates in some of the client funds it manages. Perry Corp. (either directly or through one
of its affiliates which is the general partner or the investment manager of the client funds)
generally does have the discretion to waive all or a portion of the asset-based fee and/or
performance-based compensation, but typically only exercises this discretion for investors that
are firm employees or their affiliates, including family members. Perry Corp. and its affiliated
entities that serve as general partners or investment managers to its client funds do not pay asset-
based fees or performance-based compensation with respect to their investments.
In addition, Perry Corp. has occasionally entered into side letter arrangements with certain
investors in its client funds, in which Perry Corp. granted them different terms. These terms may
include reduced asset-based fees and/or performance-based compensation in addition to
favorable withdrawal rights, information rights, key man provisions, provisions allowing
investors to pledge their interest in a client fund as collateral and/or “most favored nation”
clauses, which require Perry Corp., in the event that it offers better terms to one investor, to offer
the same terms to a similarly situated investor with most favored nation status.
Perry Corp.'s performance-based compensation is typically structured as a profit-sharing
allocation through a general partner interest held by one of its affiliates.
Asset-Based Fees
All clients, on behalf of investors in Perry Corp.'s clients, pay a fee based on a percentage of its
assets that Perry Corp. manages.
• Perry Partners L.P.: Effective January 1, 2017, Perry Corp. reduced the asset-based
fee to 1% of the value of each investor’s assets in the client. Perry Corp. has always
charged asset-based fees on special situation investments based on the lower of cost
or market value.
• Perry Partners International, Inc.: An asset-based fee on substantially the same terms
as those applicable to Perry Partners L.P.
Performance-Based Compensation
All clients, on behalf of investors in Perry Corp.'s clients, also are subject to the following
incentive allocation or fee, based on investment performance:
• Perry Partners L.P.:
o An annual allocation equal to one of the following, based on each investor’s
election:
20% of the investor’s portion of Perry Partners L.P.'s net realized and
unrealized profits for the year, excluding unrealized gains on illiquid
investments characterized as special situation investments, subject to a
one-year “loss carryforward” limitation,
20% of the investor’s portion of Perry Partners L.P.'s net realized and
unrealized profits for the year, excluding unrealized gains on special
situation investments. If an investor's capital account has sustained net
realized or unrealized losses in any previous year, Perry Corp. is generally
only allocated 10% (or a higher rate in certain cases) of net realized and
unrealized profits allocated to the investor's capital account until two-and-
half times the amount of such net realized or unrealized losses are
recovered, at which point the allocation becomes 20%; or
20% of the investor’s portion of Perry Partners L.P.'s net realized and
unrealized profits for the year, excluding unrealized gains on illiquid
investments characterized as special situation investments, subject to a
perpetual “loss carryforward” limitation.
o For certain investors (or groups of investors), in Perry Partners L.P. and/or
Perry Partners International, Inc., having investments in one or both of these
client funds exceeding a threshold amount, the annual performance-based
compensation rate is 17.5%, subject to certain exceptions.
o The performance-based compensation is calculated after deducting the asset-
based fee and operating expenses and is calculated separately in respect of
each investor.
• Perry Partners International Master, Inc.: An annual allocation, based on each
investor’s election, on substantially the same terms as those applicable to Perry
Partners L.P.
Perry Corp. automatically deducts the asset-based fees described above from its clients’
accounts.
• Perry Partners L.P. and Perry Partners International Master, Inc.: These client funds
pay these fees at the end of each quarter.
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