Annex to extra newsletter, December 2014 Being a representative on the Board of Trustees or Accountability Council is a demanding job Suitability requirements Pensions are becoming increasingly complex. The economic and financial risks are high, so the requirements for membership of both the Board of Trustees and the Accountability Council of SPF are also high. Candidates must have both expertise and all the competences necessary to perform their roles. Professionalism is also essential. There have been many calls for an increase in the suitability requirements for members of the Board of Trustees and The Accountability Council. Society and the regulators such as De Nederlandsche Bank (DNB) and the Authority for the Financial Markets (AFM) are continuously raising the bar, and SPF believes rightly so. The risks involved in managing pension money and providing accurate information entails, should finally be well managed. Profiles In addition to suitability, it is important for candidates to be able to devote enough time and attention to this responsible role. The requirements for members of the Board of Trustees and the SPF Accountability Council are laid down by the Board in profiles. The full profile of both the Board of Trustees and the Accountability Council is reproduced below. Both profiles provide a good insight into the requirements for members of the two bodies. Assessment The suitability of candidates for both positions is assessed before they are added to the list of candidates for the elections. You can read about this process in the section The nomination procedure. An elected Board member can only be appointed if the pension fund regulator, De Nederlandsche Bank (DNB), does not object. Appointments to the Accountability Council do not require the approval of De Nederlandsche Bank. A development plan, containing agreements about training to be undertaken, is drawn up with newly appointed members of the Board or Accountability Council. The work of a member of either body is evaluated regularly during the term of office. Remuneration Pensioners representatives on the Board of Trustees and Accountability Council are paid for attending meetings and for travel expenses. The nomination procedure The Board of Trustees operates according to the equal representation model, which means that the members work on equal terms. The Board consists of eight equal members and two professionals. Four of the equal members are nominated by the employees, two by the works council on behalf of the employees and two pensioners are elected by the pensioners to represent them. The two (external) professionals are appointed by the Board of Trustees for a term of three years. The equal Board members are appointed for a period of four years. They may be reappointed for a maximum term of twelve consecutive years. The fund endeavors to ensure that the population of the old SPF and the (former) PF SIP are equally represented on the Board. The Accountability Council consists of two representatives of the employer SABIC, two representatives of the employees and two representatives of the pensioners. The employees and pensioners representatives are elected directly by, and from among, the employees and pensioners. The representatives sit on the Accountability Council for a term of four years. As with the Board of Trustees, the fund endeavors to ensure that representatives from the old SPF population and the (former) PF SIP population are equally represented on the Accountability Council. For more information about the Board of Trustees model, see the table on the following page. SPF calls on members to apply for nomination as a pensioners representative on the Board of Trustees or as pensoners or employees representatives on the Accountability Council. The closing date for applying for nomination is 5 January 2015. 3.
NEW BOARD MODEL Board of Trustees (10 members) Four Employers 2 Bergen op Zoom / Raamsdonksveer Two Employees 1 Bergen op Zoom / Raamsdonksveer Two Pensioners 1 Bergen op Zoom / Raamsdonksveer (former) PF SIP Two External To be appointed by the Board 2 Limburg (old) SPF Accountability Council (6 members) Two Employers 1 Bergen op Zoom / Raamsdonksveer Two Employees 1 Bergen op Zoom / Raamsdonksveer Two Pensioners 1 Bergen op Zoom / Raamsdonksveer (former) PF SIP (old) SPF We are seeking candidates for the groups shown in red. Conditions Anyone who is a pensioner on the date of appointment is eligible for election as a pensioners representative on the Board of Trustees and the Accountability Council. Anyone receiving a retirement pension, dependent s pension, disability pension, pre-(early) pension or a comparable benefit under an early retirement scheme is therefore eligible. Anyone who is an employee of the SABIC companies affiliated to SPF on the date of appointment is eligible to represent the employees on the Accountability Council. To be admitted to the list of candidates for the elections, a candidate must meet the requirements of the profile drawn up both for the Board of Trustees and the Accountability Council. The full text of both profiles is included in this annex to the newsletter. When drawing up the list of candidates and calling the elections (sending out the ballot papers in January) the fund will take into consideration whether or not the PF SIP pensioners have agreed to the collective value transfer to SPF. Only pensioners who vote for collective value transfer can apply for nomination, are eligible for election and can vote. Applying for nomination A pensioner can apply for nomination both to the Board of Trustees and the Accountability Council. After a discussion between the potential candidate and the selection panel, the candidate must choose whether to apply for nomination to the Board of Trustees or the Accountability Council. It is not possible to be added to the list of candidates for both bodies. Assessment of suitability A selection panel assesses whether the candidate meets the requirements of the profile for a member of the Board of Trustees or Accountability Council on the basis of the curriculum vitae, the application for nomination and the covering letter. Both candidates for the Board and for the Accountability Council can then be invited to a meeting. If the selection panel decides that a candidate does not meet the requirements of the profile, the candidate is informed of this in writing before the list of candidates is published. The selection panel s decision is binding and is not subject to appeal. List of candidates The electoral committee will place candidates who meet the requirements of the profile on the list of candidates for the Board of Trustees or the Accountability Council. The order in which they are placed on the ballot papers will be decided by drawing lots. The candidates will be informed of their position. If you have any further questions about applying for nomination after reading the information in this newsletter, please contact Hub Vleeshouwers of SPF Management Support. He can be contacted on 045 5782717 or by email to Hub.Vleeshouwers@dsm.com. 4
Profile of the Board of Trustees Stichting Pensioenfonds SABIC (SPF) is a company pension fund which provides pensions for the employees of SABIC in the Netherlands. The pension scheme operated by the fund is a CDC scheme. The Board of Trustees of SPF aims to invest the contributions of the scheme members to obtain the best return at acceptable risk and costs. The Board of Trustees has outsourced policy advice, management support, pension administration activities, financial administration and asset management to DSM Pension Services (DPS). The Board of Trustees also uses the services of an actuary, an auditor and a compliance officer. The Board has and will always have final responsibility for all activities of SPF. General profile of a member of the Board of Trustees In view of the scale and complexity of SPF, a Board member must have the knowledge, skill and competences required for a director and must be able to manage a large company pension fund and give guidance to the administrative organization for the tasks outsourced to it. The Board members must act in the interests of the members, former members, other beneficiaries, pensioners and employers of the pension fund and must ensure that they are equally represented. To be able to do so, it is important that they acquire detailed knowledge of the fund, the specific target groups and risks and of how and when the Board of Trustees can control and adjust them. The Board members will maintain the contacts required to ensure that they are aware of the concerns of a particular group of stakeholders in the pension scheme and the fund. On accepting the position of Board member, they must at least meet the DNB s requirements for suitability level A. Knowledge and experience The members of the Board of Trustees must have up-to-date knowledge and experience of: managing an organization relevant laws and regulations pension schemes and types of pension financial and actuarial aspects including finance, investment, actuarial principles and re-insurance administrative organization and internal auditing communication outsourcing risk management. An effective Board must have this knowledge and must also be able to use it. Board members must therefore be capable of analyzing matters relevant to the management of a pension fund, making decisions about them, evaluating them and if necessary making adjustments. Additional (specific) competence requirements are set for Board members who are members of an advisory committee, for the particular area of the pension fund assigned to them. Competences In addition to knowledge and experience, SPF also attaches particular importance to the ability of Board members to work cooperatively, be prepared to ask critical questions and be decisive. A Board member must be able to strike a good balance between the interests of SPF and those of all stakeholders, must have a grasp of strategy and must be aware of political and social attitudes. The Board of Trustees as a whole has the following competences as each member of the Board has them to a greater or lesser extent: strategic thinking responsibility loyalty communication skills ability to cope with stress authenticity negotiating skills strategic guidance multidisciplinary thinking and judgment capacity to reflect cooperation awareness of surroundings independence decisiveness customer, quality and results orientated persuasiveness 5
Professionalism Professionalism is mainly a matter of practical and measurable aspects of behavior, including, for example, giving an impression of having fund characteristics in the genes and having a well-developed sense of boardroom dynamics, the effect of the tone at the top and the importance of integrity for the reputation and effective functioning of organizations. All of this underlies the integrity of the director. Integrity as a director indicates reliability as a board (member). People who are described as having integrity generally act in accordance with their principles and honor the obligations they have taken upon themselves, even in difficult circumstances in which they are under pressure to deviate from their principles. A person of integrity is reliable, honest, respectful and behaves consistently in different situations. The Board sets great store by professionalism. Other requirements Every board member must also meet the following requirements: a. feel involved in the progress of the fund and act to achieve its fund s objectives (personal ownership); b. follow the suitability plan which applies to the Board and the Personal Development Plan drawn up specifically for him/her; c. be willing to have his/her work as a board member assessed; d. abide by the code of conduct for Board members; e. follow current developments in pensions and be able to draw conclusions about the consequences for the fund; f. attend meetings of the Board and make a constructive contribution. Additional requirements Diversity also plays a part in the overall composition of the Board of Trustees. The Board firmly believes that internal diversity broadens its horizons and thus promotes its effectiveness. The diversity requirements laid down in the Pension Funds Code are currently met. Depending on the current composition of the Board of Trustees, it is looking for a member with specific knowledge, skills and competences who demonstrates particular behavior. In this situation, knowledge, competences and professionalism are key factors for suitability, along with the diversity required for the completeness of the Board. For each nomination, the Board takes account of the importance of knowledge, competences and professionalism and of how the individual candidate contributes to the overall completeness of the Board. If necessary, the Board will set additional requirements for knowledge, competences and professionalism. Time required Once established, a Board member must be able to spend an average of at least one day a week on Board business. Selection procedure and appointment The suitability of candidate Board members is assessed as objectively as possible. The Board member who represents the pensioners is elected by, and from among, the pensioners. The Board of Trustees is responsible for organizing the elections and has delegated this task to an electoral committee. The Board draws up the list of eligible candidates. A Board member is appointed subject to the approval of DNB. Diversity in terms of knowledge, background and competences on the one hand and age and gender on the other is important for the Board and plays a part in the selection of candidates. Assessment by DNB A Board member is assessed for suitability and reliability as specified in the DNB and AFM 2012 Policy Rule on suitability. The Board reports the proposed appointment of a Board member to DNB. DNB assesses the suitability of the prospective member for the position on the basis of this profile and in the context of the composition of the Board as a whole. A specific assessment criterion is the time the prospective director has available, which is measured by the VTE score. This is the standard for measuring time required, as defined in Article 35a of the Pensions Act Implementing Decision. 6
Profile of the members of the Accountability Council The Accountability Council (Verantwoordingsorgaan - VO) must deliver a judgment every year on the actions of the Board of Trustees, the policy conducted by it and its policy choices for the future. It does this on the basis of the annual report, the annual financial statements, the findings of the Visitation Committee (VC) and other relevant information. The VO also has a number of advisory rights. These advisory rights are laid down in the Administrative Framework Regulations and in the articles of association of the fund. The VO itself determines how often it meets, but meets at least four times a calendar year. The VO and the Board of Trustees hold a joint meeting at least twice a calendar year. In view of its role, the Board of Trustees considers it essential that the VO has particular qualities and that the members of the VO are fit to hold their position. The Board therefore sets requirements both for the VO as a whole and for the individual members. Requirements for the Accountability Council as a whole Competences are required in the following fields: the management of an organization relevant pension laws and regulations pension schemes and types of pension asset management actuarial aspects and reporting administrative organization and internal auditing communication outsourcing risk management. The basic principle is that the members of the VO collectively must have the basic knowledge required for DNB suitability level A and must be able to form an opinion on one or more of the areas relevant to the fund. This means that these members must be familiar with: the main relevant concepts in the field the meaning of these concepts where further information can be found whether, and to what extent, the concepts apply to the fund. A good VO member must have the required knowledge, but must also be able to use it. A VO member must be capable of analyzing the policy conducted by the Board of Trustees and delivering a judgment on it, and particularly on whether the Board of Trustees has struck a balance between the interests of all stakeholders when establishing policy and making decisions. If required a member of the VO can develop his skills further to the standard required for DNB suitability level B, in close consultation with the chair of the VO. Requirements for members of the Accountability Council Members of the Accountability Council must have the following competences: a. affinity with pensions and relevant subjects; b. a capacity for multi-disciplinary thinking, seeing the connection between various subjects; c. the capacity to reflect and look critically both at the actions of the Board of Trustees and at his or her own actions; d. integrity; e. the capacity to cooperate with other members of the Accountability Council and with the Board of Trustees; f. display energy/drive and commitment; g. the capacity to think and act independently in the interests of all parties concerned with the pension fund; h. critical thinking; i. capacity to examine the policy conducted from all angles, form his or her own opinion of it and understand the consequences of it, partly from the point of view of striking a balance between the interests of the various stakeholders. 7
Members of the Accountability Council must: a. act in accordance with the laws and regulations and the fund s code of conduct; b. be prepared to attend pension training courses; c. abide by the Code of Conduct for members of the VO; d. follow current developments in pensions and draw conclusions about the consequences for the fund; e. attend meetings of the Accountability Council and meetings of the Accountability Council with the Board of Trustees; f. keep up to date with the concerns of the stakeholders; g. make a constructive contribution to meetings; h. be able to devote the required amount of time to the work, which is estimated to be at least two hours a week. Within a year of nomination/election, every member must have a knowledge and understanding of the subject areas relevant to the fund and must meet the criteria for suitability level A. Here, knowledge is the factual knowledge required for a member to understand what he/she is discussing and also to understand the members of the VO and Board. Understanding means that the member must be able to apply his/her knowledge to the pension fund s policy. The Board helps members of the VO to achieve a higher level of suitability. Assessment against the job profile The VO will assess candidates for membership of the Accountability Council against this profile. If a member nominated by the employer does not meet the criteria of this profile, the employer will be asked to nominate another candidate. If a candidate wishes to act as a representative of the pensioners or employees and does not meet the criteria of the profile, he or she will not be added to the election list. 8