A part of Watch Media

AMWatchFriday27 January 2023

  • Search
  • Log in
  • Fund Management
  • Pension
  • Responsible Investing
  • People
  • Search
  • Log in
  • Latest
  • Search
  • Log in
  • Fund Management
  • Pension
  • Responsible Investing
  • People
02/10/2017at 13:07

Nets CEO needs to have skin in the game, as company goes private

If Bo Nilsson remains as CEO of Nets under the new owners, he may be forced to invest a considerable amount of his personal wealth in the company in order to keep his "skin in the game", according to a PhD in private equity funds. Nets has no comments.
Bo Nilsson, CEO of Nets | Photo: PR
by DANIEL HEDELUND

It is a respectable sum that the CEO of Nets, Bo Nilsson, will have to shell out if he decides to remain  as CEO of the company under its new owners, a group of private equity funds that bid about DKK 40 billion last week for the payment services provider.

This is what Robert Spliid, external lecturer at Copenhagen Business School and PhD in private equity funds, believes. A frequent requirement from private equity funds is for the top management to have "skin in the game", says Robert Spliid. This means that top management is expected to invest a considerable amount of their own personal wealth in the company. And seeing as Bo Nilsson has made about DKK 600 million (EUR 80.5 million) from investing in an equity scheme in Nets, the new owners will most likely make demands on the CEO's future investment in the company.

"The basic condition for having your skin in the game is that it will hurt if the game gets rough. If you already secured half a billion for yourself and you risk maybe losing 10 million, that's not skin in the game," Robert Spliid says.

Raked it in from investment in Nets

According to Danish business media Finans, Bo Nilsson allegedly invested in the area of DKK 30 million in Nets equities before Nets' initial public offering last year. This investment has grown to DKK 600 million today. Because his wealth has grown significantly, it will take more for Bo Nilsson to indisputably have his "skin in the game". It is often the starting point for a private equity fund to put its CEO in a position to lose "a considerable portion of their personal wealth" if the company underachieves, he says.

"So you can't see skin in the game as a predefined quantity. When a private equity fund brings in a new CEO, they have to risk losing something, so the amount is defined by the size of CEO's private wealth," he says.

So if Bo Nilsson remains with nets, he will have to invest quite a lot of money because he is very wealthy?

"Basically, yes. He will have to invest a very large sum for it to actually hurt him financially if the company does badly," he says.

A general requirement from private equity funds

The possible new buyers of Nets, which include private equity fund Hellman & Friedman, have expressed that they wish to continue with the same top management as before, but Bo Nilsson  has not yet revealed his plans. Robert Spliid says that he naturally does not know whether Hellman & Friedman will downright require him to invest a considerable sum of his personal wealth in Nets if he chooses to stay, but it is often a general requirement from private equity funds, Robert Spliid says.

"If you look at some of the past examples, there have been top executives who had to take out a mortgage on their house in order to provide sufficient capital.  If you risk being thrown out of your home if things go downhill, you will feel very motivated to run things smoothly," he says.

Bo Nilsson has previously defended the massive equity schemes in Nets by arguing that stockholders and top management's interests must correspond, and so top management must have money at stake.

AMWatch has reached out to Nets to ask how big a stake Bo Nilsson would have to own under the new owners in order to have "skin in the game", but Nets had no comments. Nets also states the Bo Nilsson had no comments on Robert Spliid's argument that the effect of an investment depends on the size of the investment compared to the personal capital.

English Edit: Marie Honoré

Sign up for our newsletter

Stay ahead of development by receiving our newsletter on the latest sector knowledge.

!
Newsletter terms

Front page now

Pension firms can play a significant role to make companies more in a more sustainable direction, says SPP and Storebrand Head of Sustainability, Johanna Lundgren Gestlöf. | Foto: Jonas Eng
AMNews

Two more pension firms join the green club in Swedish sustainability rankings

Swedish unit-link insurance companies have undergone their annual sustainability assessment by insurance brokers, Söderberg & Partners. Several have moved up and down the rankings.
  • Alecta goes from amber to red in sustainability report
  • New sustainability report: Higher quality in fund offerings from Swedish unit-link insurance companies

For subscribers

Maunu Lehtimäki, CEO of Evli. | Foto: PR Evli.
AMWatch

Alternative sales grow and net flows start to stabilize at Finland's Evli

For subscribers

Speed is of the essence when launching new investment products, CFO Masih Yazdi says. | Foto: PR / SEB
Fund Management

SEB aims for speedy product launches to make up for huge AUM drop in 2022

For subscribers

Photo: Thomas Borberg/Ritzau Scanpix
Responsible Investing

Dane's equity holdings shrank by 9% in 2022

For subscribers

Foto: Shannon Stapleton/Reuters/Ritzau Scanpix
AMNews

Investors are missing earnings data after 2022 IPO collapse

For subscribers

Karl C. W. Mathisen fills position as CEqO at Folketrygdfondet on Feb. 1. | Photo: Folketrygdfondet
People

Folketrygdfondet finds new head of equities in own ranks

For subscribers

Further reading

Speed is of the essence when launching new investment products, CFO Masih Yazdi says. | Foto: PR / SEB
Fund Management

SEB aims for speedy product launches to make up for huge AUM drop in 2022

The loss of a SEK 50bn mandate affected SEB’s AUM performance last year. Looking ahead, CFO Masih Yazdi believes that alternatives and fixed income will be important investment areas.

For subscribers

Maunu Lehtimäki, CEO of Evli. | Foto: PR Evli.
AMWatch

Alternative sales grow and net flows start to stabilize at Finland's Evli

In 2022, the sales of Evli’s alternative investment products saw notable growth with fee income from this product range increasing by 50%. CEO Maunu Lehtimäki evaluates the company’s annual results.

For subscribers

Storebrand Fonder CEO Åsa Wallenberg considers sustainability a guiding principle for the company. | Foto: Fredrik Hjerling
Fund Management

Storebrand Fonder provides more than three-quarters of Swedish fund inflow

The fund manager contributed the lion’s share of net inflow to the Swedish fund market last year – SEK 14.5bn of a SEK 19bn total. Sustainability is the key to the company’s investment policy.

For subscribers

Latest news

  • Two more pension firms join the green club in Swedish sustainability rankings – 16:01
  • Investors are missing earnings data after 2022 IPO collapse – 15:07
  • Dane's equity holdings shrank by 9% in 2022 – 14:48
  • SEB aims for speedy product launches to make up for huge AUM drop in 2022 – 10:42
  • Alternative sales grow and net flows start to stabilize at Finland's Evli – 10:27
  • Folketrygdfondet finds new head of equities in own ranks – 09:37
  • Global clean-energy investments match fossil fuel for the first time – 07:50
  • Here is how Norwegian fund managers performed in 2022 – 26 Jan
  • Morgan Stanley fines its bankers over messaging breaches – 26 Jan
  • Slight recovery in SEB’s AUM in fourth quarter – but outflow continues – 26 Jan
See all

Jobs

  • PenSam søger en jurist med interesse for den finansielle sektor

  • Porteføljemanager til danske ejendomme i PenSam

Watch Jobs

  • Scrum Master with a practical approach

  • Business Intelligence Specialist

  • Jurister søges til Corporate Legal i Danmarks Eksport & Investeringsfond

  • Senior Porteføljemanager

  • Erfaren fuldmægtig eller advokat med interesse for danske og internationale virksomheder

See all jobs

Jobs

  • PenSam søger en jurist med interesse for den finansielle sektor

  • Porteføljemanager til danske ejendomme i PenSam

See all jobs

Colophon

AMWatch
Search

Sections

  • Fund Management
  • Pension
  • Responsible Investing
  • People
  • Sitemap
  • RSS feeds

Editor

Anne Louise Houmann

alh@amwatch.dk

Tel.: +45 2830 5142

Editor-in-chief

Anders Heering

Publisher

JP/Politiken Media Group Ltd

Advertising

annoncering@infowatch.dk

Tel.: +45 7077 7491

Advertising

Job Advertising

job@infowatch.dk

Tel.: +45 7077 7491

Jobs

Subscription

Try AMWatch or get an offer for a subscription meeting the exact needs of you or your company.

amwatch@infowatch.dk

Tel.: +45 7077 7491

Learn more about subscriptions here

Address

AMWatch

Rådhuspladsen 37

1785 Copenhagen K, Denmark

Tel.: +45 3330 8382

Guidelines

  • Privacy Policy

Copyright © AMWatch — All rights reserved

Microsoft is in the process of discontinuing Internet Explorer – and so are we.
For a better experience, we recommend using one of the following browsers.

Kind regards,
AMWatch

Google ChromeMozilla FirefoxMicrosoft Edge