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Tetragon Financial Group
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== Fees and charges<ref name=":2" /> == Tetragon pays a 1.5% pa management fee to TFM based on its net assets calculated monthly. TFM is also eligible to receive a quarterly incentive fee at a rate of 25% on the increase in NAV (before any dividends or other relevant capital adjustments such as share repurchases) above a hurdle. The latter is calculated as the higher of the two prior quarter-end NAVs (adjusted for dividends and capital adjustments) plus a hurdle rate, which is equal to three-month US dollar Libor plus 2.65% per year (currently c 2.86% for Q121). If the hurdle is not met in any calculation period, the shortfall is not carried forward to future periods, which effectively means the high-water mark applies only to the two prior quarters. Edison Investment Research alsos note that as at end-2021 Tetragon had US$104.1m of accrued fees (3.7% of NAV). The board of directors is entitled to a fixed fee of US$0.4m pa (US$125k each member; Dear and Griffith waived their fee), which can be realised in the form of shares. Additionally, some senior employees of the structure are eligible to equity-based compensation. The shares are bought from the market and held in an escrow account until they are vested upon fulfilment of certain targets. During FY20, Tetragon released 0.4m shares from escrow and 1.6m from treasury shares as stock dividends and equity-based compensation. During FY21 Tetragon bought 0.2m shares from the market, which compares to 6.6m acquired in FY20. Reade Griffith and Paddy Dear are owners of TFM. Mr Griffith is also employed by TFG Asset Management and is the chief investment officer of Polygonโs event-driven European equity strategies. His current contract has been in place since July 2019 and includes US$9.5m paid in cash upon signing, US$3.75m paid in 2020 and up to 5.6m shares to be granted over seven years depending on performance (of which 0.3m were granted in FY21), which are held in escrow. The employment agreement replaces an earlier agreement, which included a US$0.1m annual salary.
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