Fund management report
Första AP-fonden issues a fund management report and thereby applies the recommendations in the Swedish Code of Corporate Governance as far as applicable with respect to the Fund’s organizational structure. However, not all rules in the Code are applicable, since Första AP-fonden is a government entity (for more details see the Fund’s website www.ap1.se).
The AP funds are more independent that most other government entities, since their operations are regulated only by law and not by directive. The funds’ board of directors and independent auditors are appointed by the Swedish Government.
Every year, the performance and management of the AP funds is evaluated by order of the Swedish Government and the results are presented in a communication to the Swedish Parliament. The communication for the financial year 2005 (2005/06:210) was the first to be based on the government’s new policy for governance and evaluation of the AP funds.
Board of Directors
Första AP-fonden’s Board of Directors consists of nine members who are appointed by the Swedish Government. The Government also appoints the Chairman and Deputy Chairman. Of the other members, two are nominated by the employer organizations and two by the employee organizations. The Fund’s Managing Director is not a member of the Board.
All members of the Board of Directors were re-elected in 2008. The members have been appointed to serve until the income statement and balance sheet for 2008 have been adopted. When a new member is elected, the Fund arranges a special review of Första AP-fonden’s operations.
The Government determines the amount of fees and remuneration to be paid to the members of the Board. Remuneration for the full year amounts to SEK 100,000 for the Chairman, SEK 75,000 for the Deputy Chairman and SEK 50,000 each for the other Board members. The members of the Fund’s audit receive additional annual compensation of SEK 15,000 each.
Procedural plan
The Board is responsible for overseeing the Fund’s organization and management of the investment assets. The work of the Board is regulated by a procedural plan that is adopted yearly.
Every year, the Board establishes the Fund’s operational plan, goals and guidelines for investment operations, budget, risk management plan and ownership policy. The Board also appoints a Managing Director to whom it delegates responsibility for the Fund’s day-to-day activities.
The Board of Directors is required to hold at least four meetings per year. The Fund’s external auditors report to the Board at least once every year.
Committees
From among its own members the Board appoints two committees, an audit committee and a remuneration committee.
The audit committee assists the Board in matters related to internal control, operating risks, financial reporting and auditing. However, decision-making authority and responsibility in these areas is held by the Fund’s entire Board of Directors. In 2008 the committee consisted of Deputy Chairman Håkan Tidlund together with Board members Katja Elväng and Per Nordberg. The committee met on three occasions during the year.
The remuneration committee assists the Board in matters related to remuneration. In 2008 the committee consisted of Board Chairman Anna Hedborg and Board members Anna Ekström and Tor Marthin. The committee met on one occasion during the year.
Work of the Board in 2008
In 2008 the Board held seven minuted meetings. The meetings were attended by an average of eight Board members.
One of the Board’s foremost tasks is to discuss and take a position on the composition of the strategic benchmark in relation to the Fund’s commitments in the pension system. In 2008 the focus on this area was particularly strong due to a decision regarding the composition and implementation of a new ALM portfolio, both before and during the financial crisis. Aside from Board meetings, a special board seminar was held to discuss ALM-related issues.
Asset management and risk reporting have also been standing items on the agenda. At one meeting, the Board of Directors evaluated its work during the past year.
Fund management
The Board of Första AP-fonden has delegated responsibility for the Fund’s day-to-day activities to the Managing Director. The Executive Management Team consists of the Managing Director, together with the Administrative Manager and the heads of External Management, Business Support and Risk Management, Strategic Asset Allocation, Foreign Exchange/Treasury, HR and Corporate Communications.
Remuneration to the Managing Director consists of basic salary and payment of defined contribution pension premiums equal to 30% of basic salary. For that portion of salary granting entitlement under the national pension scheme, the pension premium is reduced to 11.5%. Remuneration to the other senior executives is determined by the Managing Director and consists of basic salary and pension premiums according to the applicable agreements for bank employees. Första AP-fonden applies market-based salaries.
Auditors
Första AP-fonden’s auditors are appointed by the Swedish Government. The current ordinance, shared by Anna Peyron and Lars Bonnevier, both from Ernst & Young, commenced on 18 June 2008 and extends until the Fund’s income statement and balance sheet for 2008 have been adopted. Anna Peyron has been appointed by the Government to coordinate the auditing procedures of the AP funds. In addition to his appointment as auditor of Första AP-fonden, Lars Bonnevier has been appointed together with Anna Peyron as auditor of the Third, Fourth and Seventh AP funds (AP3, AP4 and AP7).
The auditors present their observations from the audit directly to the Board in the form of a written audit report and an oral presentation.
The auditors participate in at least one Board meeting per year and meet with the Board Chairman or audit committee as needed. The auditors also submit a yearly report to the Swedish Ministry of Finance.
The auditors’ duties include examining the Fund’s operating activities, the administration of the Fund, the annual accounts and the accounting records, and expressing an opinion on the Fund’s annual accounts and asset management based on their audit. Their duties also include assessment of Första AP-fonden’s application of the accounting and valuation standards established for the AP funds and whether the overall presentation of information in the financial statements provides a true and fair view of the Fund’s financial position and results.
|
|
Appointed by recommendation of | Attendance at Board meetings | Fee | Audit Committee | Attendance in Audit Committee | Remuneration Committee | Attendance in Remuneration Committee | Fees for committee work |
|---|---|---|---|---|---|---|---|---|
| Anna Hedborg, Chairman | – | 7/7 | 100,000 |
|
– | Chairman | 1/1 |
|
| Håkan Tidlund, Deputy Chairman | – |
6/7 |
75,000 |
Chairman |
3/3 |
– |
|
15,000 |
| Anna Ekström | Employer organization (SACO) | 7/7 | 50,000 |
|
|
Member | 1/1 |
|
| Katja Elväng | – | 6/7 | 50,000 | Member | 3/3 | – |
|
15,000 |
| Anders Knape | Employer organization (Sveriges Kommuner och Landsting) | 6/7 | 50,000 |
|
– | – |
|
|
| Christina Lindenius | – | 5/7 | 50,000 |
|
– | – |
|
|
| Tor Marthin | – | 5/7 | 50,000 |
|
|
Member | 1/1 |
|
| Per Nordberg | Employer organization (Svenskt Näringsliv) | 6/7 | 50,000 | Member | 3/3 | – |
|
15,000 |
| Erland Olauson | Employee organization (LO) | 5/7 | 50,000 |
|
– | – |
|
|
