Thomas Ahlström September 2014

1. Thomas Ahlström September 2014

2. Governance and Education • Creating the right preconditions for family company survival • Preparing the Next Generation

4. Survival rates of family companies (world wide) Generation Survival percentage 2nd 30 3rd 10-15 4th 3-5 5th 1-2 6th <0,5

5. The stakeholders

6. The shareholder – the most important stakeholder

7. The family shareholder- The Superstakeholder “In a listed, or a privately held company, there is always a possibility to exit, one way or the other, whereas the fundamental idea about family ownership - in its purest form - is to keep the company, own it as a going concern, and pass it on to the next generation”.

8. The ”Golden Cage” I can’t eat my cake!

9. How does this effect governance? If you can’t (or are not supposed to) vote with your feet – you probably want to exercise influence over the company, and ideally, in a much more rigourous way than the average shareholder in the average company Owner – management interest alignment?

10. Governance models Complexity³ Annual General Meeting Family assembly - Family council Holding company – Supervisory board

11. Big Family - Big Challenges Generation Persons Year of birth 4. 50 1930 - 1960 5. 147 1951 - 2002 6. 137 1980 - 2014 7. 6 2008 - 2014 340

12. The Ahlström family - direct involvement • Some 340 family members including children and in-laws • Widely spread share ownership, 230+ family shareholders • The fifth generation has taken over at board level • 13 family members serve on 6 different boards, some on 2 boards • 6 family members are nomination board – or committee members • 14 family members serve on the holding company supervisory board • 3 family members are employed in two different companies • About 30 persons

13. How do you secure a generation shift • Trust or foundation • Family governance • Traditions, mindset, education, agreed principles • Controlled shift of power

14. At what point do you engagethe next generation? Early!

15. Education Mentoring Courses External evaluation Factory visits Finance for family business Ahlström Business Academy III Ahlström Business Academy I Strategic thinking - Insead Ahlström Business Academy II Leadership today - MIT Summer Camp Investor Day Family business - IMD Other external External – private economy 12 18 ”Equal opportunities” 30 Age ”Based on track record and potential” General Education Specific Education

16. How to get the Family Governance Working - our case • 1991 First session, Professor John Davies, Harvard • Second session • First Family Document • 1996 Third session, Professors A. Lank & F. Neubauer, IMD, Switzerland • Family Document 2nd edition ”Family Values and Policies” • Family Document 3rd edition

17. Governance & the Family Council Family General Meeting Family Assembly Family Council Mandate? Board Mgmt

18. Why do Family Councils fail? • The Family Council is a ”fair weather” institution • The power structure of the Family Council is assymetric in relation to the Companies Act, and Articles of Association • It does generally not take into account share based voting rights • It is distant from the real corporate world

19. Back to the drawing board.... Dr. Annelie Karlsson Fine tuning of the governance mode -14 Changing the corporate structure

20. Munksjö plc Specialty Paper Ownership Structure 2014 • Antti Ahlström Perilliset Holding Ahlström Family 230 shareholders Diffuion OWNERSHIP ISSUES OPERATIONAL ISSUES Ahlström Capital Private equity, industrial investments, real estate, forestry, listed shares, cleantech Ahlstrom plc Fiber Technology

21. Simplyfing a complex world Social Capital Trust and Respect Vision, Mission, Owner Strategy Intellectual Capital Operating Company Holding Company

22. ”And they lived happily ever after”

23. Thomas Ahlström