Remuneration at AP4

AP4's role as manager of Swedish nation pension funds requires that the level of remuneration to the Fund's employees, including the CEO, is reasonable, justifiable and explainable.

AP4 generally strives to ensure that, overall, levels of remun-eration are in line with the market and enable the Fund to attract and keep talented employees. However, the Fund shall not be a wage leader.

AP4's Board of Directors

AP4’s Board of Directors has a responsibility to address remuneration issues in a purposeful, responsible and transparent way. The Board of Directors annually determines the policies governing remuneration and other terms of employment for employees of AP4.

Furthermore, the Board conducts an annual follow-up of how these policies have been applied within AP4 over the preceding year. It also verifies and establishes that government guidelines on terms of employment for Executive management in the AP Funds have been adhered to. With the support of external consultants the Board, as part of this work, regularly compare AP4’s remuneration levels for both the executive management group and other employees using salary statistics from relevant and comparable employers in the market.

The Remuneration Committee

The Remuneration Committee is a Board-appointed body comprising three members of the Board. The Committee’s responsibility is to serve in a consultative, monitoring and preparatory role as regards remuneration to the CEO and AP4's  executive management group, as well as managers who report directly to the CEO.

The Remuneration Committee prepares important remuneration resolutions and manages other related tasks delegated by the Board. The committee also prepares issues concerning AP4’s principles for remuneration and other terms of employment for all employees and is responsible for monitoring the application of these principles. Finally, the Remuneration Committee prepares the assessment of AP4’s compliance with government guidelines for the terms of employment for
Executive management at the AP Funds.

The AP Funds' common policy

A common policy for remuneration terms, staff benefits, entertainment and business travel for AP1, AP2, AP3, AP4, AP6 and AP7 was formulated in 2012, and was adopted by AP4’s Board. The common overarching policy is supplemented by

AP4’s more detailed internal staff-related policies and guidelines, including AP4’s remuneration policy. The above policies and guidelines are subject to annual review.

AP4's Remuneration Policy

According to AP4’s remuneration policy, total remuneration consists of fixed salary, incentive-based salary, pension and other benefits.

Fixed salary

Fixed salaries shall be in line with the market and competitive, but not market leading. Salaries are determined on an individual basis, taking into account the level of responsibility and degree of difficulty of the duties involved, as well as the competency and capacity required for the work of each employee.

Incentive-based salary

The Board of Directors annually approves a plan for incentivebased remuneration for all the Fund’s employees. No incentivebased salaries are paid to the CEO, the executive management, Head of Risk Control or the compliance officer. The plan provides for a capped incentive-based salary amounting to no more than two months’ salary, conditional on the attainment of goals based on objective criteria that have been established in advance. The goals incorporated into the incentive-based plan shall be balanced between a collective contribution and the individual employee’s contribution and responsibility to the overall outcome over a rolling three-year period. Incentivebased remuneration is paid only if the Fund, in the year to which the incentive-based remuneration pertains, reports an absolute profit.

Pension

AP4 complies with the "BTP" plan, in accordance with the relevant collective bargaining agreement (BAO, the Employers’ Organization of the Swedish Banking Institutions/ SACO, the Swedish Confederation of Professional Associations), for all employees except for the CEO. Employees hired after April 1, 2008, with a salary exceeding 10 income base amounts, will be eligible for alternative BTP, a pension plan based on defined contributions, in which a premium corresponding to 30% of the salary component exceeding 7.5 income base amounts is paid. Other employees are covered - unless otherwise agreed - by a retirement pension based largely on defined benefits in accordance with the BTP plan.

The CEO is entitled to a pension at the age of 65 years and a pension allocation corresponding to 30% of salary.

Substitution of salary for pension/increased retirement pension

All employees are entitled to substitute part of their gross salary for pension premium payments in a way that is cost-neutral to the Fund.

Other benefits

The aggregated value of other benefits amounts to a limited proportion of the total remuneration paid. Other benefits include health insurance, group insurance and fitness subsidies. AP4 also has four parking spaces that employees can use, which are taxable as a fringe benefit.

Notice of termination/Severance payments

Period of notice follows the rules of the collective agreement between BAO and SACO for all employees excluding the CEO and Deputy CEO.  The CEO have a mutual notice period of six months. Upon termination, as is called for by AP4, severance pay amounts to a maximum of 18 months’ salary for the CEO. In the case of new employment or income from business activity, remuneration paid during the period of notice or severance payment will be reduced by an amount corresponding to the new income.