EUR 508.94 For Business Accounts Only

Etude de l'AG du 29/06/2017

Carried Interest update:
3i receives carried interest from third-party funds and pays a portion to participants in its own carry plans. The Company also pays carried interest to participants in its proprietary capital invested.
The strong run of realisations from investments made between 2010 and 2012 that have completed over the last few years meant that the cash hurdles on the Company’s associated proprietary capital plan (the so-called Buyouts 2010–12 carried interest scheme) were exceeded. 3i began paying carried interest to its participants for the first time this year. During the year, £127 million of cash was paid out to the participants in the Private Equity plans (2016: £9 million). Of this £98 million related to the carry payable on the Buyouts 2010–12 scheme which exceeded its cash hurdle in the year.
Carried interest payable on 3i’s investment portfolio is typically accrued between 10% and 15% of gross investment return. In FY2017, carried interest payable was £431 million (2016: £171 million) for Private Equity, of which £202 million relates to the carry plan participant’s share of carried interest receivable from EFV, the Company’s largest private equity fund (2016: £48 million). Carried interest payable accrued on 3i’s investment portfolio was £229million (2016: £123 million). £159 million (31 March 2016: £71 million) of this £229 million balance relates to the carry payable on the Buyouts 2010–12 plan, which includes Action.
 
Item 2: Approve the Remuneration Report. The structure is unsatisfactory.  50% of the bonus is determined at the discretion of the Remuneration Committee and the  structure is not weighted more towards rewarding long-term performance.  Furthermore, alignment with performance has not been definitively demonstrated and total variable remuneration is considered excessive. 
Items 13 & 14: Appoint the Auditors and Authorise the Board to Determine the Auditor's Remuneration.  The auditor's tenure exceeds our tenure limit of 10 years. Ernst & Young LLP has been the Group’s statutory external auditor since before the Group was listed on the London Stock Exchange in 1994.  Furthermore, non-audit fees incurred during the year were 168.42% of audit fees, which is above our limit of 100%.  Three-year aggregate fees also exceed ECGS guidelines.
Item 16: Increase the maximum aggregate limit on directors' fees.  It is proposed to increase the maximum amount of directors’ fees from £1,000,000 to £1,500,000, representing a 50% increase.  In 2016, total director fees amounted to  £841,000 or 84.1% of the total amount authorized.  There is still room under the current authority and the Board has not presented justification for this substantial increase.