Compass Diversified Holdings, parent of the 5.11, BOA, Primaloft, and Velocity Outdoor subsidiaries, has entered into a Seventh Amended and Restated Management Services Agreement with Compass Group Management LLC, the company’s manager.
The Amendment, beginning in the first quarter on January 1, 2025, restructures the management fee under the existing Management Services Agreement to consist of a base management fee and an incentive management fee.
Pursuant to the Amendment, the base management fee will be
- an Initial Threshold Fee of 2.0 percent of the company’s adjusted net assets when the adjusted net assets are less than or equal to $3.5 billion;
- the Initial Threshold Fee, plus 1.25 percent of the amount of adjusted net assets exceeding $3.5 billion when the adjusted net assets are more than $3.5 billion but less than $10 billion, or
- 1.5 percent of the company’s adjusted net assets when the adjusted net assets are $10 billion or more.
The Incentive Management Fee will be 0.25 percent of the adjusted net asset amount exceeding $3.5 billion when the adjusted net assets are over $3.5 billion but less than $10 billion. The company earns the incentive management fee only if its annualized internal rate of return on equity for the trailing three years exceeds 12 percent. The incentive management fee is also subject to approval by the Compensation Committee of the company’s Board of Directors.
The Amendment also eliminates the payment of an integration services fee by the company’s subsidiaries to the Manager and excludes excess cash held by the company and its subsidiaries, subject to certain exceptions, from the calculation of the company’s adjusted net assets, along with certain other changes.
Image courtesy 5.11 Tactical/Compass Diversified Holdings
