Corporate governance
Voting at Swedish AGMs in 2008
During 2008, the Second AP Fund exercised its voting rights at the AGMs of 51 quoted Swedish companies. The Fund voted against board proposals at three of these AGMs.
The Second AP Fund voted against discharging the board of directors that had been active until September 2007 in D. Carnegie & Co (Carnegie) from liability. This was primarily to ensure that options remained open for possible future actions for damages against members of the board. The board that was active until December 2008 investigated the likelihood of successfully pursuing a claim against the old board, and reached the conclusion that this would not be the case.
Subsequent to the Swedish National Debt Office’s takeover of Carnegie’s subsidiaries as collateral in November 2008, an extraordinary general meeting was convened, partly because a balance sheet had been drawn up for liquidation purposes and partly because the board was no longer complete, following a number of resignations. Prior to the Meeting, the nomination committee worked to nominate a new board based on the previous board’s recommendation to continue operating the company and not to place Carnegie in receivership. None of the previous members of the board made themselves available for re-election and, despite intense efforts to recruit suitable candidates, the nomination committee, which was chaired by the Second AP Fund’s Carl Rosén, decided against nominating a new board of directors. The representative for Max Matthiessen on the nomination committee, whose own suggestions for board members were approved by the Meeting, protested this decision. The Meeting therefore rejected the Second AP Fund’s proposal that an official receiver be appointed to complete the legal procedures initiated by the old board. The Second AP Fund registered its dissent against the selection of a new board.
The Second AP Fund voted against the incentive system operated by Lundin Petroleum, as it was not performance related and had not been treated as a separate item in the notice convening the meeting.
Voting at foreign AGMs in 2008
During the year, the Second AP Fund has exercised its voting rights at the AGMs of 64 foreign companies. The selection was based on the size of the Fund’s holding, in connection with the work of the AP Funds’ Joint Ethical Committee, or in collaboration with international investors. At the majority of these AGMs, the Fund either voted against board proposals or in favour of proposals submitted by the shareholders.
In cases where the Fund voted against a board’s proposals, the motivation was shareholder rights. Concerning the right to elect a board of directors according to the majority principle, the Fund has collaborated with the US pension fund CalPers. Concerning the need for more comprehensive information and the ability to vote on remuneration issues, the Fund has worked closely with America’s TIAA-CREF. As for demands for more detailed reporting on environmental issues, the Fund has cooperated with the US investor network CERES. In cases where a board has proposed the appointment of a CEO who is also the chairman of the board, the Fund has voted against the board, in line with the view on shareholder rights adopted by the Swedish market.
Second AP Fund’s participation in nomination committees 2008/2009
The Fund has been represented on the nomination committees of thirteen companies: Carnegie, Kungsleden (chairman), Biotage, Castellum, Elekta, Haldex, Hexagon, Intrum Justitia, JM, Lundin Petroleum, Meda, Oriflame and Vostok Gas. The Fund’s representative on the Carnegie nomination committee resigned after the AGM in December 2008.
Board composition – women/men
For the first time in ten years, the steady increase in the number of women elected to corporate boards has been broken. According to the Second AP Fund’s index, the percentage of women on corporate boards fell from 19.3 to 18.6 percent. The percentage of women in executive management committees remained unchanged at just under 13 percent.
During autumn 2008, the Fund initiated a dialogue with the nomination committees and executive managements of those companies within respective industries featuring the lowest percentage of women in their executive managements and boards of directors.
Female representation index »
Protecting shareholders’ rights
Review of take-over regulations in Sweden
Näringslivets Börskommitté (NBK), which administers and develops the take-over regulations that are subject to Swedish self-regulation, initiated a review of these regulations in 2008. The Second AP Fund is participating in an NBK reference group on this issue.
Initiative
The Joint Ethical Committee of the National Swedish Pension Funds was established on January 1st 2007, and published its first annual report in the spring of 2008. The Joint Ethical Committee focuses on monitoring and analysing the portfolio holdings of the First to Fourth AP Funds, to ensure that portfolio companies are not party to crimes in contravention of international conventions to which Sweden is a signatory. The Committee has established a process for monitoring all portfolio investments, which involves selecting 10-15 companies that are placed on a ‘dialogue list’, where the individual AP Fund believes that it may be able to persuade the selected companies to establish routines to preclude new incidents or crimes in contravention of international conventions.
The Second AP Fund is one of the founding signatories of the UN’s Principles for Responsible Investment (PRI). Monitoring of the Funds’ investments according to these principles was carried out during 2008 and published on the PRI website. The Joint Ethical Committee of the AP Funds has also employed the PRI information forum. Within the framework of PRI, the Second AP Fund has participated in a scheme to persuade additional private-equity companies to add their signatures to the PRI.
Excluded companies
Wal-Mart (human rights in working life) and Singapore Technologies (landmines) had previously already been excluded from the Second AP Fund’s investment universe. During the year, the Fund also excluded Alliant Technologies, GenCorp, General Dynamics, Hanwha, L-3 Communications, Lockheed Martin, Poongsan, Raytheon and Textron. All these companies market cluster bombs, in contravention of the Convention on Cluster Munitions, to which Sweden is a signatory. These exclusions were implemented following a recommendation by the Joint Ethical Committee of the AP Funds.
Further information
The Second AP Fund’s work on governance issues in 2008/2009 was presented in a separate report published in October 2009. The report may be downloaded from the website ("Corporate governance report") or ordered directly from the Fund. The same applies to the Joint Ethical Committee’s annual report for 2008, which was published in March 2009.