Related party information
FMO defines the Dutch State, its subsidiaries, associates, Government funds, the Management Board and Supervisory Board as related parties.
The Dutch State holds 51% of FMO’s share capital. The remaining 49% is held by commercial banks and other private investors. In 2005 FMO received its last contribution to the development fund from the Dutch State. FMO has a guarantee provision from the State, which is detailed in section ‘additional information’.
FMO stimulates the development of small and medium Dutch-sponsored enterprises in selected emerging markets through the ‘Faciliteit Opkomende Markten’. This facility is a joint initiative with the Dutch Ministry of Foreign Trade and Development Corporation. The State acts as a guarantor for 80% to 95% of the outstanding loans. As of 1 July 2016, the mandate of this facility has been transferred to the ‘Rijksdienst voor Ondernemend Nederland’ (RVO). After the transfer only existing loans in the portfolio and pipeline were serviced. These loans are included in the consolidated annual accounts under ‘Loans to the private sector’.
FMO executes several government funds and programs at the risk and expense of the State. Below is a description of the different funds and programs:
1. MASSIF provides risk capital and local currency financing to financial intermediaries in developing countries who in turn serve micro- and small-scale entrepreneurs and lower income households. FMO has a 2.17% (2017: 2.26%) stake in this fund. For 2018, FMO received a fixed remuneration of €10,895 (2017: €12,410). In 2018 one loan was transferred from MASSIF to FMO in accordance with the transfer policy which was agreed with the Government.
2. Infrastructure Development Fund Through this fund, FMO concentrates on the development of the social and economic infrastructure in least developed countries. FMO aims to stimulate private investors to invest in private or public-private infrastructure projects in these countries. By providing risk capital, the Infrastructure Development Fund decreases risk for other financiers. As a result, additional private funds are attracted. For 2018, FMO received a fixed remuneration of €8,220 (2017: €8,213) in accordance with the subsidy order.
3. Access to Energy Fund (I and II) FMO agreed with the Dutch Minister for Development Cooperation to execute the subsidy scheme, Access to Energy Fund. Through this fund, FMO provides risk and concessional financing through equity, local currency loans, subordinated debt and grants to facilitate projects that generate, transmit or distribute sustainable energy. In 2017 the Access to Energy Fund II committed USD 55.6 million to Climate Investor One, an investment vehicle with three interlinked funds that takes projects through their whole lifecycle. For 2018, FMO received a fixed remuneration of €2,165 (2017: €1,836). In 2018 one loan and one investment were transferred from the Access to Energy Fund to FMO in accordance with the transfer policy which was agreed with the Government.
4. FOM OS The program finances private sector companies with a strong focus on food security and water. For 2018, FMO received a fixed remuneration of €300 (2017: €300). The program has been closed for new commitments at the request of the Ministry of Foreign Trade and Development Corporation as per June 30, 2014.
5. Capacity Development Program The Capacity Development Program invests in inclusive projects, focusing particularly on the themes of climate change and gender. For 2018, FMO received a fixed remuneration of €337 (2017: €241).
6. Partnership Development Facility The Partnership Development Facility aims to develop high impact projects in developing countries. The facility identifies and develops projects in trade corridors that are relevant for the local and Dutch economy. The main themes of the facility are food security and climate adaptation. For 2018, FMO received no remuneration except for staff compensation (2017: nil).
7. Development Accelerator The Development Accelerator is a facility which aims to develop initiatives in the private and public sector with a focus on climate, energy, water, and health. The ultimate objective is a financial solution for an impact project with Dutch interest at Financial Close. It will contribute to sustainable cities, climate mitigation and adaptation in order to contribute to the achievement of the Sustainable Development Goals and strengthening opportunities for the Dutch business community. For 2018 FMO received no remuneration (2017: nil).
In our role of fund manager for the assets under management we held current account positions with State funds. The balances of those current account positions are disclosed under Note 10 and Note 14.
A part of our loan portfolio €29,857 (2017: €38,956) is disbursed under the program from the Dutch State and recognized in our consolidated balance sheet (under Loans to the private sector). The credit risk of these loans is covered by Dutch State for 80%-95%. We refer to the section Guarantee provisions in the Agreement between the State and FMO of November 16, 1998 in the section Additional Information. The results due to addition and release of specific value adjustments follows the accounting policy for Loans to the private sector.
The consolidated subsidiaries Nuevo Banco Comercial Holding B.V., Asia Participations B.V., FMO Medu II Investment Trust Ltd. and Equis DFI Feeder L.P. are used for intermediate holding purposes. The subsidiary FMO Investment Management B.V. carries out portfolio management activities for third party investment funds which are invested in FMO’s transactions in emerging and developing markets. Nedlinx B.V. was incorporated in November 2017 and will focus on financing activities to Dutch SME companies investing abroad.
The transactions during the year are summarized in Note C of the company balance sheet.
In line with our investment activities we hold stakes directly in private equity companies or indirectly via fund structures. Investments are treated as associates in case criteria in accordance with our accounting policies are met.
We refer to the significant accounting policies and Note 7 for the transactions during the year.
Remuneration of the Management Board
FMO’s remuneration policy aims to offer a competitive remuneration allowing to attract, motivate and retain capable directors with sufficient knowledge and experience in international development finance. The remuneration policy is in line with the mission of FMO, the corporate values, the strategy, the risk appetite as well as with the expectations of the various stakeholders.
The remuneration level of members of the Management Board is based on the median, composed of two equal proportions of a private benchmarks and a public benchmark. For the CEO applies an absolute cap for the fixed remuneration of €282 per annum (2019). For the other members of the Management Board this cap amounts to €240 and €207 for the second echelon (Directors).
Due to agreements made before the introduction of the current maximum remuneration levels, the salary of one member of the Management Board is currently above the applicable maximum salary. In the future only structural salary adjustments as indicated by the CLA Banks, will be applicable.
The total remuneration consists of a fixed salary, a pension arrangement and other benefits. The pension arrangement is a defined benefit, average-pay scheme with a conditional indexation arrangement. The nominal pension obligations are guaranteed by a pension insurer. Pension is accrued until the maximum cap possible under the Dutch tax framework (2018: €105) The other benefits consist accident and disability insurance, a gross expenses fee and the use of a company car. Members of the management and other identified staff members are not entitled to any form of variable income (e.g. individual bonuses or profit-sharing).
All members of the Management Board are appointed for a period of 4 years, which can be renewed.
On December 31, 2018 the Management Board consisted of three statutory members (2017: three). The members of the Management Board have no options, shares or loans related to the company.
The total remuneration of the Management Board in 2018 amounts to €867 (2017: €957) and is specified as follows:
Allowance for retirement 3)
Peter van Mierlo 1)
Allowance for retirement 3)
- 1 Peter van Mierlo started in the CEO role as per July 1, 2018.
- 2 Cost related to pension accrual up to salary of €105 (2018)
- 3 Personal pension allowance related to the pension base of the surplus salary above the maximum of the tax framework (This allowance has been discontinued for all employees entering FMO as from January 1, 2017.)
- 4 Includes contributions to a company car, fixed expense allowance, survivors pension benefit and compensation of interest on mortgage (only applicable to employees qualifying and in service of FMO on December 31, 2016)
Except for pensions of €76 (2017: €82) all components above are short term employee benefits.
In accordance with the GRI Standards, the ratio between the total fixed remuneration of the highest-paid individual and the median of the rest is 0.29 (2017: 0.29). Or in other words the highest-paid individual received a total fixed remuneration of 3.5 times the amount paid to the Median of (the rest of) the total population (2017: 3.5 times).
The annual remuneration of the members of the Supervisory Board is as follows:
Pier Vellinga 1)
Dirk-Jan van den Berg
Koos Timmermans 3)
Farah Karimi 4)
Jean Frijns 2)
- 1 Pier Vellinga became Chairman of the Supervisory Board as per 1 October 2017 and stepped down as Chairman of the SARC.
- 2 Jean Frijns stepped down as Chairman of the Supervisory Board as per 1 October 2017.
- 3 Koos Timmermans became member of the Supervisory Board and Chairman of the SARC as per 27 September 2017.
- 4 Farah Karimi became member of the Supervisory Board and the SARC as per 1 November 2018.
The members of the Supervisory Board have no shares, options or loans related to the company.