Related party information
FMO defines the Dutch Government, FMO's subsidiaries, associates, the Management Board (MB) and Supervisory Board (SB) as related parties.
The Dutch Government 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 Government. FMO has a support agreement with the Government, 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’ (FOM). This facility is a joint initiative with the Dutch Government. The Dutch Government 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 manages several government programs at the risk and expense of the Dutch Government. Below is a description of the various programs:
1. MASSIF: FMO manages the MASSIF program on behalf of the Dutch Government. MASSIF enhances financial inclusion for micro-entrepreneurs and small- and medium-sized enterprises (MSMEs) in the poorest social-economic segments, to those which are underserved by the local financial sector. The program supports financial intermediaries that reach out to MSME’s in fragile and low-income countries, in rural areas and agriculture, female and young entrepreneurs and innovative sectors. FMO has a 2.16% (2020: 2.16%) stake in this program. For 2021, FMO received a fixed remuneration of €11.0 million (2020: €10.7 million). In 2021, no transfers related to loan and equity investments were conducted from MASSIF to FMO.
2. Building Prospects: Through this program, FMO focuses on the development of the social and economic infrastructure in least developed countries. The objective is to stimulate private investors to invest in private or public-private infrastructure projects in these countries. For 2021, FMO received a fixed remuneration for services rendered of €8.9m (2020: €9.1 million) in accordance with the subsidy order. In 2021, one loan was transferred from Building Prospects to FMO (€10.8 million), no private equity investment positions were transferred to FMO.
3. Access to Energy Fund (I and II): The Access to Energy Fund I is jointly initiated by the Dutch Government and FMO in 2007 to support private sector projects aimed at providing long-term access to energy services in Sub-Saharan Africa. Through this program, FMO provides 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 US$55.6million to Climate Investor One, an investment vehicle with three interlinked funds that invest in projects during their whole lifetime. For 2021, FMO received a fixed remuneration for services rendered of €3.3 million (2020: €3.0 million). In 2021, no loans or private equity investments were transferred from AEF I and II to FMO.
4. Dutch Fund for Climate and Development: Land Use Facility : In 2019, the Dutch Government awarded a tender to manage the €160.0million Dutch Fund for Climate and Development (DFCD) to the consortium of FMO, Stichting SNV Nederlandse Ontwikkelingsorganisatie, Stichting Het Wereld Natuur Fonds-Nederland, and Coöperatief Climate Fund Managers U.A. (through Climate Investor Two). FMO is the lead partner in the DFCD consortium and responsible for the management of the DFCD’s Land Use Facility. In 2021, the Dutch Government provided €20.2 million for the Land Use Facility (in addition to the aggregate amount of €22.5 million, disbursed in previous years).
5. Capacity Development Program: The Capacity Development Program invests in inclusive projects, focusing particularly on the themes of climate change and gender. For 2021, FMO received no remuneration for the services provided.
In our role of program and program manager for the assets under management, FMO holds current account positions with the government programs mentioned above. The balances of those current account positions are disclosed under Note 14.
The government program Partnership Development Facility (PDF) and Development Accelerator (DA) were managed by FMO until October 1, 2021. Thereafter, management of the programs is performed by Invest International, a new associate of FMO. This transfer does not have any impact on the financial statements of FMO. Although, FMO has ceded the responsibility for the programs' management, we do provide administrative services to Invest International. FMO received no remuneration for the program management services for 2021, except compensation for travel costs and staff expenses.
The aim of the FOM-OS program, managed by FMO, was to finance private sector companies with a strong focus on food security and water. 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 and ended in 2021. At reporting date, the program was in the final stage of unwinding. The remaining portfolio was transferred to FMO in 2021. For 2021, FMO received a fixed remuneration of €0.1 million (2020: €0.1 million).
The consolidated subsidiaries Asia Participations B.V. 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. has the focus on financing activities to Dutch SME companies investing abroad. Nuevo Banco Comercial Holding B.V., FMO Medu II Investment Trust Ltd. were liquidated during 2021.
The transactions during the year are summarized in Note C of the Company balance sheet.
We hold stakes directly in private equity companies or indirectly via fund structures. These equity stakes are held as a part of FMO's overall investing activities, or in some cases, for strategic purposes (for example the Invest International investment). Investments are treated as associates in case the applicable criteria in accordance with our accounting policies are met.
We refer to the significant accounting policies and Note 'Investments in associates' for transactions during the year.
Remuneration of the Management Board
FMO’s remuneration policy for the Management Board 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 aligned 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 policy is based on a market median, composed of two equal proportions of a private benchmark (Dutch Financial sector) and a public benchmark, taking into account the principles as applied by the Dutch Government as majority shareholder of FMO.
Furthermore, the policy aims to be unambiguously and transparent and should never constitute an incentive for the conduct of directors that is aimed at their own interest, or for taking risks that do not fit within the mission and established strategy of the company, or that leads to ‘rewarding’ behaviour of failing directors upon discharge.
Employment contracts of members of the Management Board are awarded for a definite period of time (with exception of internal appointments). In the event the employment contract is terminated before the expiry date, the maximum severance payment will amount one year’s salary, unless the board member resigns voluntary or the termination is the result of his or her actions.
The remuneration policy for the Management Board will be reviewed periodically (every 3-4 years) and amendments will be subject to approval of the AGM. During the AGM 2021 no amendments were made with respect to the remuneration policy. The next policy review is scheduled for 2022.
Changes in Management Board
As per September 1, 2021, Michael Jongeneel was appointed as FMO’s new CEO. On the same date Linda van Broekhuizen stepped down as CEO ad interim and continued as Advisor to the Management Board until February 28, 2022.
In 2021 the decision was made to extend the Management Board with two extra members. The total board will then consist of five functions: apart from the CEO, two Chief Investment Officers, a Chief Risk Officer and a Chief Finance & Operations Officer. At the beginning of 2022 the recruitment process for two new Management Board members (CIO and CRO) has started.
In July 2021 Fatoumata Bouaré has been re-appointed in her role as CRFO and member of the Management Board for a second four-year term, until October 15, 2025.
With effect from July 8, 2021 Huib-Jan de Ruijter (CIO, ad interim since October 9, 2020) has been appointed as CIO and member of the Management Board for a period of four years. The compensation related to these (re)appointment are aligned with the remuneration policy of the Management Board.
The total remuneration consists of a fixed salary (including holiday allowance), a pension arrangement and other benefits. A summary of the employment arrangements and amounts constituting the total remuneration per Management Board member in 2021 are provided below.
Fixed salary remuneration
Over 2021 members of the Management Board have agreed a voluntary salary cut of 5% of their fixed income considering the net loss of FMO for 2020. Moreover, all Directors have voluntary agreed to a one-year freeze of their fixed income over 2021 for the same reason.
As per July 1, 2021 the maximum salary caps applicable to the Management Board members have increased with 1.4% (in conformity with the collective labor agreement, CLA Banks, of that date). During 2021 the fixed remuneration for the CEO was equal to the maximum cap of €293k per annum. For the other members of the Management Board this cap was to €249k and for Directors the salary cap was €215k (as per July 1, 2021). In the future only structural salary adjustments as indicated by the CLA Banks, will be applicable to the salary caps.
Members of the senior management (Management Board members and Directors) and other members of the identified staff are not entitled to any form of variable income (e.g. individual bonuses).
For pensionable salary up to the applicable threshold, which for 2021 amounted to €112k, a defined benefit, average-pay pension scheme applies with a conditional indexation arrangement. The nominal pension obligations are guaranteed by a pension insurer. The participant contribution consists of 3.5% of the actual pension base. As per January 1, 2022 the pension scheme will change into a Defined Contribution scheme for all employees of FMO, including members of the Management Board.
Effective from January 1, 2015, no pension is accrued for tax purposes for the proportion of income in excess of €112k (2021). In alignment with the general practice in the Netherlands, FMO has compensated the employees concerned for this diminution. At the end of 2021 only one of the Management Board members is eligible for this individual fixed Allowance for retirement.
The other benefits consist accident and disability insurance, appropriate expense allowances and the use of a company car, NS business card or mobility allowance. The company has also taken out a directors’ and officers’ liability insurance on behalf of the Management Board members.
The members of the Management Board have no options, shares or loans related to the company. Acceptance of ancillary positions requires the explicit approval of the Supervisory Board.
All members of the Management Board are appointed for a period of 4 years, which can be renewed. Mrs Bouaré serves in her second term of appointment and has an employment contract for a definite period of time. Mr De Ruijter is serving in his first term and has an employment contract for an indefinite period of time (related to his internal promotion). Mr Jongeneel serves in his first term and has an employment contract for a definite period of time.
There are no employees at FMO who earn more than the CEO. In accordance with the GRI Standards, the ratio between the total fixed remuneration of the highest-paid individual, the CEO, and the median of the rest remained 0.29 (2020: 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 staff population. Compared to what is seen in the financial sector in the Netherlands this ratio is relatively low.
Remuneration of the Management Board
On December 31, 2021 the Management Board consisted of three statutory members (2020: three). The total remuneration of the Management Board in 2021 amounts to €1,064k (2020: €1,064k) and is specified as follows:
Allowance for retirement
Other short term employee benefits
Huib-Jan de Ruijter2)
Michael Jongeneel 3)
- 1 Linda Broekhuizen stepped down as per September 1, 2021 as CEO ad interim and will continue up to February 28, 2022 as advisor to the Management Board. The remuneration presented in the table entails the total remuneration in 2021 as CEO and advisor. The remuneration related to the advisory role amounts to €116k (o/w: €83k relates to fixed remuneration).
- 2 Huib-Jan de Ruijter, CIO ad interim, was appointed in the function of CIO per July 8, 2021. The remuneration presented in the table entails the total remuneration in 2021. The remuneration related to the CIO ad interim role amount to € 156k (o/w: € 121k relates to fixed remuneration).
- 3 Michael Jongeneel was appointed as CEO per September 1, 2021.
Allowance for retirement
Other short term employee benefits
Huib-Jan de Ruijter2)
Peter van Mierlo 3)
- 1 Pro - rata until October 9, 2020 as CIO, thereafter Linda Broekhuizen was appointed as CEO ad interim. Due to arrangements made before applying maximum levels to MB's and directors' fixed remuneration, her salary is above the applied cap.
- 2 Pro - rata from October 9, 2020 - date when Huib - Jan Ruijter was appointed CIO ad interim
- 3 Peter van Mierlo stepped down on June 11, 2020 as CEO and continued up to October 31, 2020 as advisor to the Management Board. The remuneration presented in the table entails the total remuneration as CEO and advisor. The remuneration related to the advisory role amounts to €168k (o/w: €132k relates to fixed remuneration)
Except for pensions of €118k (2020: €121k) all components above are short term employee benefits.
Remuneration of Supervisory Board
The remuneration policy for the Supervisory Board will be reviewed periodically, taking into account the principles as applied by the Dutch Government as majority shareholder. Amendments will be subject to the approval of the AGM. The members of the Supervisory Board have no shares, options, or loans related to the company.
The annual remuneration of the members of the Supervisory Board is as follows:
Remuneration member 2021 1)
Dirk Jan van den Berg 4)
Reintje van Haeringen7)
- 1 As per July 1, 2021 the remuneration of SB has increased by 1.4%.
- 2 Pier Vellinga resigned from the SB as per April 23, 2020, until then member of the SARC.
- 3 Alexandra Schaapveld resigned from the SB as per April 23, 2020, until then member of the ARC.
- 4 Dirk Jan van den Berg was per April 23, 2020 appointed as Chair of the SB and member of the SARC.
- 5 Koos Timmermens is the Chair of the ARC.
- 6 Thessa Menssen is member of the ARC and the Chair of the Impact Committee.
- 7 Dugald Agble, Marjolein Demmers and Reintje van Haeringen joined the SB as per April 23, 2020; Dugald Agble is member of the ARC; Marjolein Demmers and Reintje van Haeringen are both members of the Impact Committee; Reintje van Haeringen is Chair of the SARC; Marjolein Demmers is member of the SARC.