AP3 cuts management bonuses
SWEDEN - Tredje AP-fonden (AP3), the Third Swedish National Pension Fund, has confirmed its chief executive has refunded a bonus paid in relation to 2007 performance and said no bonuses or 'variable compensation' will be paid to employees for 2008, in a bid to improve confidence in the fund.
The Board of AP3 revealed Kerstin Hessius, chief executive of AP3, had initiated the action of refunding her "honorarium" of two months salary from 2007, while additional measures agreed by the board include the restriction of the "variable compensation system" for the fund's other employees for 2009.
It said no "variable compensation" was paid for the fiscal year 2008 to any AP3 employees, and added no bonuses would be paid for 2009 if the fund reports a negative result.
The Board also confirmed the limit for the level of compensation has been reduced from four months' salary to just two for directors involved in the management team, while the management team would also experience a pay freeze in 2009.
It also highlighted the CEO and the head of risk and financial control are not included in the performance based incentive scheme.
Claes de Neergaard, chairman of AP3, said the board is "keen to strengthen confidence in the fund" and said he hoped the "issue of the honorarium" could be put behind them so the staff and board can "concentrate on the core task of managing the pension capital".
Hessius said, as CEO, her primary responsibility is to ensure the fund creates good long-term results and continues to earn the public's trust, so added "my hope is that my initiative and today's agreement will contribute to this".
The decision to limit compensation, particularly for senior management, follows criticism from both the Swedish government and Aktiespararna - the Swedish Shareholders' Association - of the scale of bonus payments of some companies, and has led to situations such as the senior management at the AMF pension refunding bonuses last weekend.
AP3 noted the Swedish government is planning a review of the guidelines for bonuses and variable compensation, and it confirmed AP3 will adapt again if the findings "lead to more restrictive rules" than it has already implemented.
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