There’s a lot of talk at the moment in the media and the political world about variable compensation at APG. We´d like to offer an explanation about the developments, background and coming changes on this subject.
Variable compensation at APG only for investment company employees
Partly due to social discussions held earlier, APG decided, together with its stakeholders, to adapt its remuneration policy. Since 1 January 2016, APG Group no longer offers any variable compensation for the vast majority of its over 3,300 employees. Only some employees in the Asset Management business unit qualify for variable compensation. That business unit also has offices in the United States and Hong Kong, where variable compensation constitutes a larger share of overall compensation than at APG in the Netherlands. For the compensation-of these employees abroad, a balance is sought between what is acceptable in the Netherlands and what is typical in the local job market and thus necessary for binding good employees to APG. The level of the variable compensation is therefore higher abroad.
Investments made as much as possible by own employees in order to save costs
APG Asset Management’s policy focuses on making investments as much as possible using internal professionals, firstly in order to have tighter control over the implementation and secondly, in order to keep the costs of investments as low as possible for our clients and their participants. For this we have to attract and retain qualified employees and therefore assume relatively higher wage costs, but in so doing we save substantially on the costs compared to external implementation. This requires a remuneration policy that fits the local job markets - which happen to be two of the world´s most important financial centers.
In 2016 APG achieved a net return of over € 40 billion
The reason why APG also has offices abroad and wishes to invest as much as possible internally is to be able to achieve the maximum return for participants. In 2016, for the pension funds on whose behalf it invested, APG Asset Management attained a net return of more than € 40 billion, which directly benefits the participants of those funds. Good investment results in turn have an impact on the level of the variable compensation that is paid out. The net return obtained for the funds ABP, bpfBOUW, SPW and PPF APG over the past five years (2012-2016) amounted to more than € 164 billion.
Variable compensation in 2016 virtually equal to 2015
Over 2016 the variable compensation for employees of APG Asset Management amounted to € 31.5 million euros. Because for the most part this concerns employees in the foreign offices, fluctuations in the dollar’s exchange rate have an impact on the amount of this compensation. Measured in local currency, the relevant compensations are in line with 2015.
Further tightening of variable compensation
Partly in connection with the social discussion on variable compensation, APG is currently looking at whether the bonuses in the Asset Management business unit in the Netherlands can be further tightened.