EQT Corp. is rolling out a revised fee structure aimed at aligning incentives with long-term value creation, responding to growing investor scrutiny. The new model introduces a tiered fee system based on fund performance, with adjustments effective January 2026.
- New fee model introduces tiered fees based on fund IRR thresholds starting January 2026
- Fees reduced for IRRs below 12%, increased by up to 20% for IRRs above 18%
- Affects $42 billion in assets under management across European and North American funds
- Quarterly performance dashboards to be published for fund transparency
- Projected 0.2% average fee reduction for underperforming funds, up to 1.5% increase for top performers
- Stock rose 2.3% on announcement; institutional investors signaled support
EQT Corp. has announced a comprehensive overhaul of its fee framework to address mounting concerns from institutional investors about alignment with long-term investment outcomes. The updated strategy, set to take effect in January 2026, replaces the traditional fixed-fee approach with a performance-based model that tiers management fees based on internal rate of return (IRR) thresholds across its private equity funds. Under the new structure, fees are reduced for funds generating IRRs below 12%, while fees increase by up to 20% for funds exceeding 18% IRR, creating stronger incentives for outperformance. The change follows a period of declining investor sentiment, as shown in recent surveys indicating that 67% of EQT’s limited partners expressed concerns over fee transparency and return alignment. The firm’s latest annual report disclosed that 54% of its portfolio companies achieved an IRR above 15% in 2024, but overall fund-level fees remained flat at 1.8% of committed capital annually. This discrepancy fueled doubts about whether the current model adequately rewarded superior execution. The new performance-based approach is expected to impact approximately $42 billion in assets under management, primarily across EQT’s flagship European and North American private equity vehicles. The company has also committed to publishing quarterly performance dashboards for each fund, enhancing transparency. Analysts project that the shift could reduce average annual fees by 0.2 percentage points for underperforming funds while increasing total fees collected by up to 1.5 percentage points for top-tier performers. Market reaction has been cautiously positive, with EQT’s stock rising 2.3% in early trading on the announcement. Institutional investors, including several major pension funds with stakes in EQT’s latest fund, have signaled support for the reform. The move positions EQT as one of the first major private equity firms to implement a formal, IRR-driven fee escalation mechanism, potentially influencing broader industry standards in 2026 and beyond.