Folketrygdfondet, which runs the domestic and Nordic assets segment of Norway’s sovereign wealth fund, said pay for top executives was a major reason why it voted against management in this year’s shareholder meetings, and singled out the corporate governance code of neighbouring Sweden for criticism.

In a post on its website, the Oslo-based manager of the Government Pension Fund Norway (GPFN), said voting against remuneration schemes for senior executives and the composition of company boards had been key issues in this year’s annual general meeting (AGM) season, from its perspective.

Folketrydfondet said that as well as in Norway, it had also been active at AGMs in its Nordic neighbours, and that most cases when it had voted against management in these other countries had been about the company’s chief executive officer also sitting on the company’s board – something the asset management firm said it saw particularly in Sweden.

Annie Bersagel, portfolio manager ESG at Folketrydfondet, said:“The Swedish recommendation for corporate governance allows up to one member of the group management to sit on the board.

“We believe this is unfortunate, as one of the board’s main tasks is to control the management of the company,” she said.

In Norway, the firm said in the post, it was forbidden for the group management of ASA-registered companies to sit on the board.

Folketrygdfondet manages GPFN, the smaller part of Norway’s overall SWF which includes the much larger, and higher-profile, Government Pension Fund Global.

The NOK333bn (€32.2bn) GPFN invests according to a benchmark consisting of 60% equities and 40% bonds, with a geographical allocation of 85% to Norway and 15% to the rest of the Nordic region.

In total, Folketrygdfondet said, it had voted against 58 board proposals this spring.

In the Norwegian market, it had been first and foremost remuneration schemes for senior executives that it had voted against, the manager said.

“The most common reasons why we vote against such schemes are unreasonable scope due to the lack of a maximum ceiling on the scheme,” said Bersagel.

At several AGMs, Folketrygdfondet said it had also voted against issue authorisations – mainly those associated with share-based incentive schemes.

In general, the SWF manager said it was a positive thing that staff and board members owned shares in the company – as this motivated long-term value creation.

But the proposals it had voted against had lacked incentive schemes, Folketrygdfondet said – a shortcoming it said could lead to an unreasonable transfer of value from shareholders to senior figures in the company.

Folketrygdfondet also said that in its view, board members should not be covered by incentive-based schemes.

“This is also stated in the Norwegian recommendation for corporate governance. It is unfortunate if the board manages an incentive scheme in which they participate,” the firm said.

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