AP2 Index of Female Representation in publicly-quoted companies: boards, executive managements and employees A study conducted by Nordic Investor Services, May 2013

AP2 Female Representation Index Review The proportion of women represented on the boards of publicly-quoted companies declined for the second year running, from 22.9% (2011) to 22.7% (2012) and 22.3% (2013). Conversely, the proportion of women represented in the same companies’ executive managements has risen steadily, from 15.3% to 16.3% in 2012 and almost a whole percentage unit to 17.2% in The gap between the proportion of women in the companies executive managements and boards has thereby declined from 6.4% in 2012 to 5.0% in At the rate of change noted for the past decade, it will take 31 years before women comprise 50% of company boards. As for executive managements, it will take no less than 52 years. We must wait until 2065 before women comprise 50% of executive managements. There is a distinct dividing line between male-dominated and female-dominated industries when it comes to women in executive management and – in particular – among employees. The greatest proportion of women is found in the largest companies and in sectors with a high percentage of female employees. The service and consumer staples sectors have the highest percentage of women on their boards: 28.8% and 25.9% respectively. The media and healthcare sectors have the highest percentage of women in executive management: 26.3% and 23.5% respectively. The commodities sector is worst concerning the percentage of women represented, both on boards and in executive management. Even so, female representation on executive managements in this sector has increased, and men now comprise less than 90% (11.7% women).

3 Background: AP2 Female Representation Index – 10 years As a long-term institutional investor, the Second Swedish National Pension Fund/AP2 is keen to develop effective techniques of corporate governance and is therefore interested in contributing to a balanced debate on how the proportion of women on the boards of publicly- quoted Swedish companies can be increased. Previously, however, no instruments have been available for gauging progress relating to the proportion of women represented on boards and in executive management at sector and corporate levels. This is why AP2 launched its Female Representation Index in January 2003, to compile detailed data on the proportion of women represented on boards and in executive positions at Swedish publicly-quoted companies. The Index is based on the assumption that the boards of Swedish quoted companies recruit their members from personnel who occupy leading positions in these companies. Measuring the proportion of women both in executive positions and in these quoted companies as a whole provides a good basis for judging the degree to which the recruiting base for Swedish boards has developed over time. Statistics showing the percentage of women studying engineering, economics and law, compared to the percentage occupying management positions in the private sector, provides an indication of the extent to which women drop out of the job market, despite their qualifications and experience. This material will be made available to our portfolio companies, the media and other stakeholders and via the AP2 website ( and can be referenced freely providing the source: “Andra AP-fonden/Nordic Investor Services”

4 Chair Recruitment chain “In principle, I am only interested in formerly or currently active CEOs, and rely on the fact that the recruiting base maintains a reasonable size every year, as formerly active CEOs retire.” Chairman of a publicly-quoted company (Source: Sjöstrand, Petrelius: “Recruitment to Group boards”) Board CEO Executive management Manager Employee Graduate

5 Women drop out The proportion of women declines as you progress further up the operative corporate career ladder. Women drop out proportionately all the way from university graduation to corporate management. Only a limited percentage of company employees are women, both overall and in Sweden. On the positive side, the proportion of women on company boards and in executive positions in the private sector is rising.

6 For the second year in succession, female representation on boards has declined, while representation on executive managements has increased. The gap between the percentage of women on boards and executive managements is narrowing. The rapid growth in the percentage of women represented on boards between 2002 and 2010 has slowed. The percentage of women in executive management continues to rise and is at its highest level ever. Fewer women on boards, more in management

7 The proportion of women is higher among younger managers Percentage of female managers, by age group, 2012 The proportion of female managers in the youngest age group (25-29) is 26%, followed by 27% for the age group and 28% for those aged There is then a sharp decline to 16% for those aged The proportion of women among older executives is less than 8%. The fact that considerable numbers of women who become managers at a younger age also drop out has been a fairly consistent trend over the years. In contrast, the proportion of women managers in the private sector has risen slowly over time, at a rate that has accelerated in recent years.

8 Women are dropping out Women are dropping out in a series of steps, from new graduates (almost half) to employees (almost a third), to managers (one in four), to Group management (one in six). Two steps may be observed: an operative step and one relating to boards, where women are seldom the Chair. Four of the parameters studied reveal a positive trend: new graduates,, employees, executives and CEOs. Percentage of women, 2013 (2012) Whole population Executives CEOs Chairs Boards Graduates Employees Managers 5.5% (4.3%) 4,3% (4,3%) 50.1% (50.1%) 22,3% (22,7%) 17.2% (16.3%) 47.8% (46.5%) 27.0% (28.2%) 30.8% (30.5%)

9 Declining percentage of women on boards The proportion of women on boards has declined for the second year in succession and now amounts to 22.3% (2013). The number of companies in which women account for 25% of board members continues to decline. Of the 253 companies studied, 110 (43.5%) had achieved 25% female representation on their boards in 2013, compared to 117 companies (45.6%) in In 2011, the number was 122 companies (48.8%). Since 2002, the proportion of women on the boards of quoted companies has increased from 6.1% to 22.3%, while the proportion of women in executive positions has only risen from 11.1% to 17.2%. Women Chairs and CEOs continue to be rare. The proportion of female Chairs remains unchanged at 4.3%, while the proportion of female CEOs has increased to 5.5%.

10 Board and executive management by sector, as per market capitalization Boards Percentage of women on boards and in executive positions, Executive managements

11 The discrepancy between boards and executive managements is shrinking The proportion of women at board level is increasing in large Caps and declining in mid and small caps, the largest decline being in small caps. Small caps still account for the lowest proportion, and the gap to mid Caps is widening. Large Caps have regained pole position from mid Caps, featuring the highest proportion of women on their boards (25.2%), followed by mid Caps (24.8%) and small caps (18.8%). At executive management level, female representation is increasing at both large and mid Caps. The greatest increase has been noted by the mid cap companies (1.4 percentage units) which, at 16.6%, have regained second place from small cap (16.5%) by the smallest margin. At 18.8%, large Caps posted the highest proportion of women in executive positions. The result is a declining gap between the percentage of women on boards and in executive positions. At the aggregate level, the gap has shrunk to 5.0 percentage units in 2013, from 6.4 percentage units in The mid cap companies still account for the greatest discrepancy, of 8.3 percentage units (9.7 percentage units in 2012), followed by large Caps at 6.4 percentage units (7.2 in 2012) and small caps, with a mere 2.2 percentage units (3.3 in 2012).

12 Boards by sector (1/2) Percentage of women on boards by sector,

13 Boards by sector (2/2) Percentage of women on boards by sector,

14 Executive positions by sector (1/2) Percentage of women in executive positions by sector,

15 Executive positions by sector (2/2) Percentage of women in executive positions by sector,

16 Divergent trends across sectors The sectors with the highest percentage of women on boards are those that are considered to be traditional female sectors, such as Services and Consumer Staples. Telecoms and Commodities feature a low percentage of women on their boards. In five of nine sectors, the percentage of women on boards is declining. Commodities is by far the worst sector, with female representation on companies’ boards at a mere 12.7%. When it comes to executive management, the highest percentage of women is found in the Media, Healthcare and Finance sectors. At the bottom of the ratings, yet again, are the Industrial, Commodities and IT sectors. All sectors have noted mixed development since measurements were started in 2002, but sector rankings have in principle remained constant. Healthcare is the sector that over the long term has noted the most stable increase and also sustained a consistently high level. IT has remained at a consistently low level. This increases the differences between sectors, making it even clearer which are ‘female’ sectors. Development in the Media & Entertainment sectors has been extremely varied when seen over the entire period, since This sector has by far the highest percentage of women in executive positions, but it is also by far the smallest sector on the stock exchange and therefore sensitive to slight variations in the number of women in executive managements and on boards.

17 Total global employees, by market cap group Percentage of female employees by market cap group,

18 Employees in Sweden, by market cap group Percentage of female employees by market cap group,

19 Employees in Sweden and executive managements by sector (1/2) Percentage of female employees and of women in executive managements by sector,

20 Employees in Sweden and executive managements by sector (2/2) Percentage of female employees and women in executive managements by sector,

21 Total global employees, by sector (1/2) Percentage of female employees by sector,

22 Total global employees by sector (2/2) Percentage of female employees by sector,

23 Stable but low percentage of female employees There is a clear division between ‘female’ and ‘male’ sectors. Only two sectors in Sweden feature a marginal majority of women employees: Services and Consumer Staples. The percentage of female employees in the Industrial and Commodities sectors is about 20%, although this percentage is rising, unlike other sectors. The Industrial and Commodities sectors also have very few women in executive managements: about 10%. The small cap companies have a higher percentage of women than the mid cap and large cap companies. However, significantly less than half of the employees in all market cap groups are women, both in total and in Sweden. Sectors with a high percentage of female employees often have a high percentage of women in executive positions. The overall percentage of women employees has in principle remained unchanged, while all sectors have noted increased female representation at the executive level. In all sectors, the percentage of female employees is greater than that of women in executive positions. Since the variation between groups concerning the percentage of women in executive positions is relatively minor, the discrepancy between employees and executive positions is largest in companies with a high percentage of women employees. The relative percentages of female employees in Sweden and internationally have both been studied and in most cases are very similar.

24 Method and data We count the number of seats on boards and the number of people in executive management and the total number of employees. Board: The number of women represented/the total number of seats for board members elected by the AGM Executive management: Number of women/total number in the Executive Committee Employees (in Sweden and total): Number of women/number of employees 253 companies quoted on the Stockholm Stock Exchange Chairmen: 253 seats Other full AGM elected members of the board: Total number of seats on boards: Executive managements: persons CEOs: 253 persons Other senior executives: persons Percentage of seats on boards held by women, based on board composition in May 2013, compared with June 2012, 2011, 2010 and 2009, May 2008, 2007, 2006, 2005, 2004, July 2003 and December 2002.

25 Percentage of women per market cap group

26 Percentage of women by sector