# Management Compensation

Management is paid two ways: **pTEAM options** and the **decaying share of
the trading fee**. That is the complete list. There is no team allocation at
the founding offering, no discretionary mint, no salary line drawn from the
treasury. Every term below is immutable at deploy and disclosed here in
full.

## 1. pTEAM options

pTEAM is a team option token in the tradition of pOHM, with two corrections:
a hard cap and automatic vesting.

| Term | Value |
|---|---|
| Strike | **1 USDG per NET**, paid into the Treasury on exercise |
| Supply cap | Cumulative NET ever minted via exercise ≤ **15% of circulating supply at the time of each exercise** |
| Vesting | Exercise rights vest **linearly over 30 days** from `finalize()` |
| Holder | **One team multisig address, fixed at deploy** — a single exercise path; any internal splitting among team members happens off-chain. As deployed: a Safe configured **1-of-1** (single hardware-wallet owner), below the 2-of-3 the fund's own specification recommends |
| Mutability | None. Strike, cap, and vesting are immutable |

### Why the strike matters more than the cap

The strike equals the 1 USDG backing floor. Exercising deposits 1 USDG into
the Treasury for every 1 NET minted — so **exercise can never dilute the
floor, only the premium**. The fund's core invariant (every NET ≥ 1 USDG
backed) holds through exercise *by construction*, and the invariant suite
enforces a stronger statement: each exercise strictly increases the backing
numerator by 1 USDG per NET minted. In the protocol's global-accretion
invariant, pTEAM exercise is one of exactly **two** operations permitted to
dilute NAV (backing per token) at all — and like the other (the epoch
dividend mint), it dilutes only the premium, never the floor. What
management's options dilute is the NAV premium shareholders trade at —
which is exactly the part management is supposed to be building.

### The vesting math

`v = clamp((now − finalizeTime) / 30 days, 0, 1)`. At any time `t`,
cumulative exercised NET ≤ `v × 15% × circulating`.

### The option does not expire, and the cap moves with supply

Read the formula again, carefully: the ceiling is `15% of circulating supply **at the time of each exercise**` — not 15% of some fixed snapshot. Circulating
supply grows (dividends, bonds), so the ceiling grows with it.

The practical consequence: **management holds a standing anti-dilution right.**
Every time supply expands, more NET becomes exercisable, and management can
restore its holding to 15% of the new float. This does not run out.

A worked example. Suppose float is 1,000 NET and the vest is complete.
Management exercises to the cap — which converges, because each exercise mints
NET that itself joins the float — ending at **176.5 NET of 1,176.5 circulating,
exactly 15%**, having paid 176 USDG into the treasury. Now suppose supply
triples over the following month. Management's stake is diluted to 5.6%, and
**300 NET more becomes exercisable**: after exercising, it holds 529 of 3,529,
back to 15%, having paid another 353 USDG.

This is deliberate and it is the pOHM lineage's design. It is also the single
most important thing on this page, so it is stated in the plainest terms
available: **management's stake does not get diluted by inflation the way
yours does. It can always buy back to 15% of the float, at 1 USDG per NET,
forever.**

What that costs shareholders is *not* the backing floor — every exercise pays
1 USDG into reserves per NET minted, so a NET is never worth less than 1 USDG
because of it. What it costs is the **premium**: minting at 1 USDG into a
treasury whose NAV is higher pulls NAV toward the floor. That is one of the
only two operations in the entire protocol permitted to do so.

**"Circulating" is defined against management's interest.** Float excludes
all protocol-held or escrowed NET — treasury holdings, InverseBond escrow,
TaxCollector accrual, and unvested NET in GenesisBond and the
BondDepository — and includes staked NET and NET in LP pools. The rule of
thumb: anything users can't sell today isn't float. This is the
conservative reading — a smaller float means a smaller effective cap on
management's options.

## 2. The decaying fee share

The same vesting clock `v` drives the trading-fee split — one clock, one
source of truth, no admin setter:

```
teamBps     = 400 × (1 − v)     // 4% → 0% over 30 days
treasuryBps = 500 − teamBps     // 1% → 5%
```

Management's fee share starts at 4% of taxed volume on day 0 (against 1% to
the treasury) and reaches **exactly zero on day 30, forever**. It cannot
re-inflate; the invariant suite pins `teamBps = 0` for all time after day
30\. The fee only exists once `finalize()` enables trading, so the decay
begins with the first taxable trade. The full day-by-day table is in the
[Trading Fee Schedule](/FEES.HTM#2-the-decay-schedule-41--05-in-30-days).

## 3. The incentive statement

Read the two instruments together:

* The fee share pays management **only in the first 30 days**, in proportion
  to real traded volume — a launch fee, front-weighted at 4% and
  self-extinguishing by formula.
* pTEAM pays management **only above the floor**: options struck at 1 USDG
  are worth exercising only when NET trades above backing, and every
  exercise refills the treasury at the floor price.

Management makes money if, and only if, the fund sustains a premium over
NAV. There is no configuration of these instruments in which management
profits from the fund trading at or below backing. We consider this the
correct alignment and invite shareholders to check the arithmetic.