ABP has amended its articles of association following criticism from the pensions supervisor DNB that the executive board risked become ‘marginalised’ in relation to non-executive directors in the way voting was structured. A simple majority of all directors (executive and non-executive) is now sufficient for decision making.

This has come to light from minutes of the ABP accountability body and from a response from the fund to questions about this from our sister publication Pensioen Pro.

The regulator DNB had investigated the way the so-called ‘reverse-mixed’ management model was implemented at ABP. The fund switched to this model nearly three years ago in a bid to operate more effectively – in particular to oversee the forthcoming transition to a DC- type pensions model and to manage the asset management unit APG.

Under the reverse mixed model, executive directors manage the day-to-day affairs of a pension fund, while non-executive directors hold both a supervisory and policy decision making role, but both sit on a unitary board. The non-executive directors are usually appointed by social partners but often also pensioners.

ABP initially stipulated in its articles of association that policy decisions not only had to be adopted by a simple majority in the entire board, but that the majority of the non-executive members also had to agree and votes from both employers and employee representatives were needed to reach a majority.

DNB was critical of this. In a statement to the pension fund, the supervisor stated that there was a risk that the executive board has ‘insufficient clout’ and ‘becomes marginalised’ in the ‘reverse-mixed’ board.

The ABP board can now make decisions on the basis of a simple majority with the approval of either (or both) non-executive directors on behalf of employers or those on behalf of employees. The vote of Harmen van Wijnen, chairman of the executive board, counts for two.

ABP’s board consists of an independent chair, three executive directors and twelve non-executive directors (five on behalf of employers, four on behalf of the unions and three on behalf of pensioners).

No more separate voting

An ABP spokesperson pointed out in a response to Pensioen Pro that until the recent amendment to the articles of association, non-executive members had not voted down a single proposal that had already been adopted by the entire board. The articles have now been adapted to fit the way decision-making takes place in practice.

This means proposals may now be formulated with a little more leeway because it is not necessary for both employer and employee representatives to vote in favour. In the new set-up, only the weighted voting ratio within the entire board matters: of the 28 votes, employers have 10; executive directors and unions have six; pensioners four and the independent chair two.

This should mean the executive board can now get a proposal adopted if either the board members of employers or of employees vote in favour. The executive board needs support from either one or the other in all cases.

Other ‘reverse-mixed funds’

ABP was an outlier with its two-step process. A tally of a number of larger funds with this model, including PME, Rail & OV, Huisartsen, Rabobank and PNO Media, finds that all allow decisions with a simple majority of votes in the board.

However, there are a few funds where the articles of association stipulate that at least one of the non execs of both the employers and the employees must vote in favour of a proposal in order for it to be adopted. This is the case with PNO Media and the Rabobank pension fund.

Read the digital edition of IPE’s latest magazine

Topics