Penalty Definitions for Penalty Calculations and Payout

You can set up penalty definitions to calculate penalties on carried interest. In a penalty definition, you provide the percentage to use for penalty calculations and specify which costs to apply penalties to.

After you set up penalty definitions, you can enable the agreement to calculate penalties and track payout. When enabled to track payout, Joint Venture Management tracks the following balances over successive periods until payout is reached:

• Total carried amounts
• Total penalty amounts
• Total carried plus penalty balance

Payout occurs when a nonconsenting stakeholder’s accumulated carried costs plus penalties are fully offset by carried revenue. When payout is reached, the excess revenue should be manually disbursed to the nonconsenting stakeholder through a Payables invoice. The carried interest agreement is automatically ended and the nonconsenting stakeholder returns to active participation in the joint venture.