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Supervisory Board Report

6.1 A challenging year

Although COVID-19 forced all staff and members of the Management and Supervisory Boards to mainly work from home, every aspect of the pension administration and asset management activities nevertheless continued unabated.

At the same time, the organization continued its preparations for the major changes that will take place in the Dutch pension system in the next few years. These changes will pose major challenges for the APG organization. APG wants to offer its clients - the pension funds - appropriate and high-quality services at a competitive price under the new system too, and their participants as many income years as possible, all this while conducting a socially responsible asset management.

6.1.1 Pension of the Future

The changes in the pension system for which APG is preparing will lead to major and complex changes in pension provision and administration. These changes must be implemented within in a brief period of time, which will demand a great deal of extra work. For example, large volumes of data concerning individual pension rights will have to be carefully checked and where necessary shifted, to be able to enter the correct participant data in a new policy and capital administration system. In addition, certain regulations will be simplified.

The Supervisory Board is aware that the change to a new system will have a major impact on the participants’ pensions and on their feelings about this. This is why the Board is keeping a close eye on the developments and on the steps that APG is taking during the change process. Clear communication is needed to remove potential uncertainty on the part of the participants. Fortunately, APG can draw on the extensive knowledge and experience available in its own organization to steer the change process.

It is inspiring to be preparing for the future. Behind the scenes, “renovating the store while remaining open for business” means both extra work and a great deal of adjustment on the part of both the organization and the staff. Among other things, new knowledge and skills must be acquired. Furthermore, in a market beset by labor shortages, employees with specific competencies must be recruited, who will need time to find their place within the organization. These challenges require the full support of HR, both the staff and the managers, especially in these times defined by COVID-19. It is a time in which the bond between APG and its new hires and existing employees manifests itself in different ways. This is why this issue has the particular attention of the Board.

In 2021, both providing the day-to-day services and preparing for the significant changes in the pension system were recurrent themes discussed by the Supervisory Board and its committees, as well as the subject of scheduled consultations with shareholders and the Works Council. In addition, the Board received regular updates on the change process during separately scheduled strategy sessions.

The Supervisory Board was appointed by the shareholders of APG (ABP and SFB). It is tasked, among other things, with safeguarding the organization’s continuity. The Supervisory Board does this for instance by supervising and advising the Executive Board, and by liaising regularly with the Works Council. Although the day-to-day management of APG is charged to the Executive Board, the members of the Supervisory Board are very much involved and maintain regular contact with the various APG departments and employees. 

6.1.2 Important focal points in 2021

Apart from supervising the proper execution of the day-to-day services and the complex preparation for a new pension system described above, the Supervisory Board also dealt with a number of other specific matters in 2021.

6.1.2.1 Composition of the Executive Board

The Supervisory Board is pleased to announce that a highly suitable candidate to succeed chair of the Executive Board Gerard van Olphen was found within APG’s own organization, in the person of Annette Mosman. At the Board’s request, Jan Nijland, Director of Group Risk & Compliance, will take up the position of CFRO from March 3, 2021, which was previously held by Annette Mosman. Preparations have begun to select a permanent CFRO. The Supervisory Board furthermore prepared the reappointment of Ronald Wuijster as member of the Executive Board as of March 1, 2022.

6.1.2.2 Implementation of the strategy 2021-2025

From the beginning, the Supervisory Board has been involved by the Executive Board in the strategy for 2025. This process has resulted in drawing up a strategic road map for 2021-2025, whose ultimate goal is to “maximize pension value”. 
The Board was also closely involved in the process of implementing this strategy. The Board was informed both about the general progress and about specific issues, such as developments in the political arena in respect of pension legislation, the progress made on the implementation within the APG business units, the role played by IT in facilitating the digital transformation, and issues relating to information security.

In discussions with the Board about the strategy, issues such as implementing the strategic direction of the organization, the speed of implementation, the setting of priorities, the recruiting of sufficient staff, and expectation management for APG’s stakeholders were addressed, as well as APG’s future cost structure in a more competitive market. Although APG is well on track, it is a major challenge to find the staff it needs to implement the strategy on time. In this regard, the Supervisory Board has focused on strategic personnel planning, succession management, staff development, APG’s corporate culture, and diversity.

In 2021, the Executive Board devoted ample time to clarifying and prioritizing the ambitious strategic road map. It did so for instance by organizing several staff meetings, something that was much appreciated by APG’s staff. The Supervisory Board heartily supports these initiatives.

6.1.2.3 Performance management

Each calendar quarter, the Executive Board reports to the Supervisory Board on the performance of APG and its business units. In 2021, the financial performance was ahead of schedule. Furthermore, excellent progress was made in achieving non-financial goals, including those relating to strategy, customer satisfaction, and sustainability. In addition to the quarterly updates, the Supervisory Board focused on the preparation of the annual accounts for 2020, including the key focus areas identified by the external auditor and the business plan for 2022.

6.1.2.4 Sustainability is a major strategic consideration

Sustainability, in all its aspects, is a major strategic consideration for APG. Quite apart from APG’s intrinsic motivation to “do its bit” to create a better world, corporate social responsibility is becoming an increasingly important issue for clients, participants, and other stakeholders. In 2021, the progress made by APG in this respect continued to be discussed with the Supervisory Board. This concerned both the asset management conducted for clients and “putting one’s own house in order” on the way to becoming climate neutral by the year 2030. When it comes to investing with impact as part of asset management, the question of whether to exclude or influence non-sustainable companies was discussed. The Supervisory Board continues to critically monitor and stimulate the progress made in the area of sustainability.

6.1.2.5 The impact of COVID-19 on APG in 2021

Just as in many other organizations, the adjustments APG was forced to make to its business operations remained in place during the second year of the COVID-19 pandemic as well. The pension administration continues uninterruptedly, remote working by the staff is going well, and customer satisfaction is as high as ever. The challenging timetable set for the change process was adhered to. Even the Supervisory Board is by now completely used to meeting online. The results of surveys of employee engagement and of working from home and from APG’s renovated offices were discussed with the Board. 

6.1.2.6 Dialogue with the stakeholders

In the rapidly changing pension industry, it is even more important for APG to maintain a dialogue with its stakeholders. It is vital for APG to communicate clearly with staff, clients, regulators, other APG stakeholders, and the community in which it operates. APG’s reputation and how this may be improved were topics of discussion in Board meetings. APG also sets great store by maintaining contact with its clients and shareholders. The Supervisory Board plays an active role in the discussions with shareholders ABP and SFB. In the course of 2021, the principal issues addressed in these discussions were the progress made on APG’s strategic goals, socially responsible investment, improving the way in which APG interacts with its clients and shareholders, and the appointments to the Executive Board.

6.1.2.7 The performance of the Supervisory Board

Throughout 2021, the Supervisory Board cast a critical eye on its own performance, both in terms of the interaction within its own Board and with the Executive Board, the APG organization, and shareholders. The key focus areas identified by the evaluation, including improving the communication with the Executive Board and the quality of the meeting documents, were addressed.

6.1.3 Composition and appointments

As of January 1, 2021, the Supervisory Board consisted of six members, with Pieter Jongstra as chair, Dick van Well as Vice-Chairman, and José Meijer, Claudia Zuiderwijk, Roger van Boxtel, and Maes van Lanschot as members.

Roger van Boxtel announced that he would resign as member of the Supervisory Board as of 1 April 2021, following a revaluation of his other positions. Roger had been a member of APG’s Supervisory Board since 2015. The second and final four-year term of office of Maes van Lanschot as member of the Supervisory Board ended on May 15, 2021. On that same date, Sarah Russell was appointed as member of the Supervisory Board - with the profile Institutional Asset Management - at APG Group, and as supervisory director of APG Asset Management.

As of December 31, 2021, the Supervisory Board consisted of five members. Its current composition means that APG is more than satisfying the target gender balance ratio of at least 30% women and at least 30% men.

6.1.4 Committees

The Supervisory Board has two committees: the Audit and Risk Committee, and the Remuneration and Selection Committee. These assist the Supervisory Board with its supervisory and advisory tasks. They also prepare the Board’s decision making in specific fields. The committees share their findings with the Supervisory Board at every meeting. 

6.1.4.1 Audit and Risk Committee

As of January 1, 2021, the Audit and Risk Committee consisted of Claudia Zuiderwijk (chair), Pieter Jongstra, and Maes van Lanschot. When Maes van Lanschot resigned as Supervisory Board member as of May 15, 2021, he was succeeded in this committee by Sarah Russell.

In 2021, the following issues were discussed, in addition to the normal topics such as next year’s business plan and the quarterly reporting on Finance, Risk & Compliance, and Internal Audit: update on IT and information security; fiscal matters; capital policy; update on project “Controlled Pension Administration”; evaluation of the performance of the external auditor; the management letter; the audit report of the external auditor; communication with the regulators. The external auditor attended all meetings of the Audit and Risk Committee. The Audit and Risk Committee meets biannually with both the internal auditor and the external auditor, without the presence of the Executive Board.

6.1.4.2 The Remuneration and Selection Committee

On January 1, 2021, the Remuneration and Selection Committee (“RemCo”) consisted of Dick van Well (chair), José Meijer, and Roger van Boxtel. As of April 1, 2021, Roger van Boxtel resigned as member of the APG Supervisory Board; his position on the RemCo has not been filled yet.
In the course of 2021, the RemCo addressed the following topics: succession and self-evaluation of the Supervisory Board; the succession, reappointment, allocation of duties and assessment of the Executive Board; strategic personnel planning; fleet review and succession management; work and homeworking policy during the COVID-19 pandemic; the employee engagement survey; the mobility policy; diversity; the collective bargaining agreement; and the remuneration policy. All meetings of the RemCo were attended by the Director of HR.

6.1.4.3 Meetings

In 2021, the Supervisory Board formally met fourteen times. Almost all meetings were attended by all of its members, and the members of the Executive Board were also invited. The large number of meetings was primarily due to additional meetings held in early 2021 to discuss the composition of the Executive Board. The COVID-19 measures meant that most meetings were held online; the Supervisory met only once in person. Each meeting was followed by a brief evaluation, as part of the drive for continual improvement. 

Below, an overview is given of the attendance rate of each Supervisory Board member at the formal meetings of the Supervisory Board and its committees. 

  Supervisory Board Audit- en Risk Committee Remuneration and Selection Committee  
         
Pieter Jongstra 14/14 7/7 n/a  
Dick van Well 14/14 n/a 6/6  
José Meijer 12/14 n/a 6/6  
Claudia Zuiderwijk 13/14 7/7 n/a  
Sarah Russell (since May 15th 2021) 5/6 4/4 n/a  
Maes van Lanschot (until May 15th 2021) 7/8 3/3 n/a  
Roger van Boxtel (until April 1st 2021) 6/6 n/a 2/2  

In addition to its formal meetings, the Supervisory Board met ten more times to discuss specific issues. These included a strategy session and a workshop relating to a specific aspect of the important change process that APG is going through. These were usually attended by the Executive Board as well, and on a number of occasions by shareholder ABP. On November 18, 2021, a session was held for members of the Supervisory Board as part of life-long learning, which focused on sustainability and cybersecurity.

6.1.4.4 Relationship with the Works Council

José Meijer and Roger van Boxtel were delegated by the Supervisory Board to regularly discuss matters with the Works Council. In January and June 2021, this delegation attended a consultative meeting of the Works Council. After Roger van Boxtel resigned, these duties were temporarily assumed by Dick van Well.

Topics discussed at meeting between the two Boards included finding a successor to the chairman of the Executive Board; the strategy; the basic principles; the setting of priorities and the progress made on the change process in respect of the new pension system; the capacity for change needed for this among the staff and the effect this has on the workload within the organization; the investment policy in relation to sustainability; the COVID-19 pandemic and the division between homeworking and office working; the results of the employee engagement survey; the remuneration policy and other advisory issues, as well as regular updates about the course of events at APG.

6.1.4.5 Independence of the Supervisory Board members

The articles of association and rules of procedure of the Supervisory Board contain provisions about the independence of the supervisory board members. The board is composed in such a manner that the supervisory board members can act independently and critically in respect of each other, the Executive Board, and any particular interest whatsoever. All current supervisory board members are completely independent, as defined in the Dutch Governance Code. There were no conflicts of interest in 2021.

6.1.5 Annual report and annual accounts 2021

The Supervisory Board approves the annual report of the Executive Board and the annual accounts for 2021. The Supervisory Board proposes to the shareholders to adopt this report and the annual accounts, and to simultaneously approve the proposed dividend.

6.1.6 A word of thanks

The Supervisory Board wishes to express its thanks to Maes van Lanschot for the knowledge and experience he has contributed to the discussions during the eight years he was a member of the Supervisory Board of APG and APG Asset Management. The Board also thanks Roger van Boxtel for his commitment and valuable contribution during the five years that he was a member of the Board. Furthermore, the Supervisory Board thanks the members of the Management Board and all APG employees who worked with full commitment, despite these difficult times and often from home, to provide the clients and participants with a good pension and to help with the critical process of preparing APG for the new pension system.

Amsterdam/Heerlen, March 8, 2022

The Supervisory Board:

Pieter Jongstra, Chairman

 

Dick van Well 

 

José Meijer 

 

Sarah Russell 

 

Claudia Zuiderwijk 

Read the full Annual Report