GLOBAL - Europe's largest pension fund is looking to change the internal rules of six US companies, arguing that it and other institutional investors should not be burdened with "cumbersome and costly" procedures when seeking to nominate board members.
The NOK3trn (€388bn) Norwegian Pension Fund Global (NPFG) said it had filed shareholder proposals for proxy access at the six firms - Charles Schwab, Western Union, Staples, Pioneer Natural Resources and CME Group - in which it holds a combined stake of $1.4bn (€1bn).
It comes as the Norwegian ministry of finance excluded two companies from the fund's investment universe and overruled its Council of Ethics on the exclusion of a third, PetroChina, the eastern state's largest oil and gas distributer.
Anne Kvam, global head of ownership policy at NPFG's asset manager Norges Bank Investment Management, said it was vital that board members be held accountable.
"When they fail to meet our expectations, we as shareholders should be able to propose alternatives without incurring prohibitively high costs," she said.
The decision to seek changes to internal company rules comes after the US Court of Appeals turned down a proposal by the Securities and Exchange Commission to introduce universal proxy access, replacing current procedures that the fund deemed cumbersome.
Norges Bank said each company should allow shareholders to nominate at most 25% of board members and place names on the ballot, as long as an investor held at least 1% of stock for a year.
NBIM said that proxy access would allow shareholders to "put their nominees straight on the company's agenda", rather than submitting alternative agendas for annual general meetings and having to distribute relevant documents among other investors.
The six companies affected by the motion will hold their next annual general meetings in the second quarter of 2012.
The fund has meanwhile received permission to exclude one US and one Canadian company from its investment universe, while placing French company Alstom under observation over concerns of "risk of gross corruption".
Canada's Potash Corporation of Saskatchewan and the American FMC Corporation have been excluded for the purchase of phosphate from a company mining the material in Western Sahara.
Because Western Sahara is not accepted as a self-governed region, the purchase had been made in contravention of UN legal guidelines on mining in such territories, the fund said.
It has now sold shares worth a combined NOK1.9bn.
France's infrastructure giant Alstom has been placed on a four-year observation list over what the ministry deemed the "risk of gross corruption", following a recommendation from the council to also exclude the company from NPFG's universe.
One of Alstom's subsidiaries, Alstom Network Schweiz, was last month ordered to pay a CHF39m fine and compensation payment, following a long-running corruption probe in which Swiss federal prosecutors alleged the company had failed to take measures preventing bribery of foreign officials.
The company was unavailable for comment at time of publication.
The ministry has further decided not to exclude China's largest oil and gas producer PetroChina from the fund's portfolio over concerns of human rights violations during the construction of an oil pipeline by one of its subsidiaries.
The Norwegian ministry of finance said the Southeast Asia Crude Pipeline Company, owned by PetroChina's parent China National Petroleum Corporation, could not be held responsible for what NPFG's Council of Ethics deemed "breaches of ethical standards", as the companies were not a single entity.