Question on recent MF Modelling test on mgmt options

Hey all, 

I just wrapped up a case-study at a mega-fund and was stumbling a bit across one question. I really don't want to overcomplicate this but hear me out: 

• Assume management participates in 10.0% of the equity value over 1.0x sponsor MOIC (i.e. cost basis of original sponsor investment)

The nuance here is that mgmt. only participates above 1x sponsor MOIC

The way how I view mgmt. options normally 

Lets make the example: 

• Initial equity value is ~600mn (sponsor equity) thus ~$6 per share (assuming 100 shares)
• Mgmt. gets 10% in options, thus new share count ~111 shares (11 mgmt, 100 sponsor) to reflect the new structure of 90% / 10%
• Mgmt. needs to pay proceeds/strike to participate in pool, i.e. $6*11mn options = 66$mn;
• Total equity is now at ~1,900mn add on top the mgmt proceeds then we distribute roughly 1966mn (1900 + 66) 90% to sponsors and 10% to mgmt

The way how I view mgmt. options with this slight "restriction" (>1 MOIC)

• I would have rune exact the same logic then above but then make a distribution waterfall, i.e., Sponsor gets equity back (600) then you have the remaining pool of ~1,300mn equity to which mgmt is entitled 10% but only after paying strike price (~66mn contribution) and then I split 1,300 + 66mn again to sponsor/mgmt.

Does this make sense to you guys?