EQT’s Corporate Governance Model for its portfolio companies creates clear roles and responsibilities for management of the company, its Board of Directors and EQT. We believe the “TROIKA” concept is pivotal in driving growth and development in the portfolio companies.

EQT primarily exercises its ownership influence through the portfolio company Board of Directors. The Board defines and monitors strategic plans in the portfolio company. It ensures that the management is able to run the company in a responsible and accountable manner.

When a portfolio company has been acquired, EQT appoints a new Board with a Chairman independent from EQT Partners. The Chairman is generally an industrialist with management background sourced from the EQT Industrial Network. The Chairman is supported by other Board members, who
are sector specialists and professionals with relevant experience, and by EQT Partners. 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.

The Expansion Capital funds differ from the other funds in that they invest as a lender. Nevertheless, in the majority of cases, the cocontrol rights as well as representation on the Board of Directors enables the Expansion Capital funds to be an active stakeholder.

The TROIKA forum
The CEO, the Chairman of the Board of Directors and the EQT representative are generally referred to as the “Troika” and form an important pillar of EQT’s Corporate Governance Model. The members of the Troika work closely together and conduct regular follow-ups between Board meetings. The forum also further enables an active dialogue with and is a sparring partner to the CEO on a continuous and informal basis.

Evaluation and monitoring
Continuous performance evaluation is a crucial part of the EQT Corporate Governance Model. The performance of the CEO, Chairman, the overall Board of Directors and the EQT representative 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 principles. This evaluation can lead to changes in the Board composition. EQT also monitors the companies’ overall development compared with the original plan. This is done on the basis of briefings to the EQT funds’ Investment Advisory committees. In addition, EQT Partners advises on the exit process and assists in financing and M&A issues.

Common mindset
An important requirement for the governance to work well is that management, the Board of Directors and EQT share the same interest and all act as owners. This is achieved by requiring that the parties invest in parallel in the portfolio company, based on the same valuation. A common mindset and shared agenda are also established through a joint business plan and maximum transparency.