Folketrygdfondet, the manager of the Norwegian and Nordic investment portion of the Norway’s sovereign wealth fund, says it is increasingly voting against proposals at annual general meetings (AGMs) on executive pay.
The Oslo-based organisation, which runs the Government Pension Fund Norway (GPFN) as well as the Government Bond Fund, said in a column in the publication Finansavisen – which it reproduced on its own website – that its voting was based on the principle that salaries and other remuneration to senior executives had to motivate long-term value creation.
Nils Bastiansen, Folketrygdfondet’s CIO for equities, and Ann Kristin Brautaset, deputy director equities, wrote in the column: “In 2020, we voted against the board’s proposal for executive pay in seven Norwegian and other Nordic companies, and we have reached the same number so far in 2021”.
Bastiansen separately told Finansavisen that there had been a somewhat growing trend over the years in the number of AGMs in which the firm voted against executive pay packages.
“And it is questions around executive pay that we most often vote against,” he said, according to a spokeswoman for Folketrygdfondet.
The GPFN owns 11.2% of the capital included in the Oslo Stock Exchange’s main index.
In the column, Bastiansen and Brautaset said it was the board’s responsibility to establish guidelines on salaries and other remuneration for senior executives.
“Folketrygdfondet expects that the total scope of salaries and remuneration will not involve an unreasonable transfer of values from shareholders to senior executives,” the pair wrote, adding that a maximum ceiling should be set for the incentive-based part of the wage scheme.
Guidelines on salaries and remuneration should be designed to contribute positively to the company’s strategy and value development over time, they said.
“A significant proportion of the total annual remuneration to senior executives should be paid in the form of shares with long-term commitment,” the pair wrote.
In April, Folketrygdfondet voted against an item on the agenda at Lundin Energy’s AGM on “extraordinary awards” to the Stockholm-listed firm’s chief executive officer Alex Schneiter.
On its website, the GPFN manager said in its rationale for the voting decision that it was “skeptical [sic] of any type of extra bonus that rewards individuals for actions that we view as intrinsic to an executive’s duties without any explanation of the rationale to justify such a bonus payment”.
Later that month, it voted against the remuneration report on the agenda of Intrum’s AGM, saying among other things that regarding the Swedish credit management firm’s decision to adjust certain target levels due to the impact of COVID-19, it viewed discretionary adjustments as indicating “a lack of resolve on the part of the board to put incentive awards truly ‘at risk’, especially when a compelling discussion of the adjustments is not provided”.