A model with clear roles and responsibilities for management of the portfolio company, its Board of Directors and EQT, complemented by a TROIKA forum to facilitate growth.
EQT applies a corporate governance model for all majority-owned portfolio companies with clear roles and responsibilities. Once a new portfolio company is acquired, EQT appoints a Board of Directors with a Chairman, generally an Industrial Advisor, supported by other sector/industry specialists from the industrial network and an Investment Advisory partner. The Board of Directors defines and monitors strategic plans in the portfolio companies and ensures that management gets the relevant support and resources to run the company in an efficient, responsible and accountable manner.
The board is carefully structured for each portfolio company and its specific needs and is usually kept small to ensure strong commitment and swift decision-making. The Board of Directors appoints the CEO.
An important requirement for the governance to work well is that management, the Board of Directors and EQT, as owner, share the same interest. This is achieved by inviting the board and senior management to invest in the portfolio company. A common mindset and shared agenda is also established through a joint business plan and a high level of transparency.
An important pillar within the EQT Portfolio Governance Model is the TROIKA, consisting of the Chairman, the portfolio company CEO and the EQT partner. The TROIKA works closely together on an informal basis and continuous basis, which provides a sounding board to the CEO. He or she can address and get advice and support on different topics such as operational or strategic issues. The TROIKA offers the portfolio company an extra supportive forum and keeps the owners updated on the business and progress. The TROIKA does not have decision-making powers and is in no way a substitute for the portfolio company Board of Directors.
Continuous performance evaluation is a crucial part of the EQT Portfolio Governance Model. The performance of the CEO, Chairman, the overall Board of Directors and the Investment Advisory Professional is assessed once a year in a comprehensive appraisal process. This process ensures that relevant competencies are present on the board and that governance works in accordance with EQT's objectives and principles. This evaluation can lead to changes in the board composition.
All EQT Business Segments apply the EQT Governance Model, apart from EQT Credit, as the EQT Credit Funds invest in debt only.