Norway’s $1tn oil fund voted against pay proposals at Alphabet, JPMorgan and Volkswagen last year as it stepped up its fight against excessive and complex executive remuneration.
The world’s largest sovereign wealth fund said on Tuesday it had voted against 7 per cent of remuneration plans last year, up from 3 per cent in 2016, as it paid particular attention to transparency and the connection between pay and performance.
“If there are pay structures that are so far from our view, for instance being so complex that we don’t understand them, we will vote against them,” Yngve Slyngstad, the fund’s chief executive, told the Financial Times.
The oil fund, which on average owns 1.4 per cent of every listed company worldwide, first set out its thoughts on pay last year, railing especially against long-term incentive plans for chief executives and asking companies to name a ceiling for possible pay.
Mr Slyngstad said the fund continued to prefer dialogue to voting against companies, adding that it had held more than 3,200 meetings with companies last year on a variety of issues.
But where the pay policies went against its belief in “long-term, simple and transparent” plans in a big way, the fund voted against them. At Alphabet, the parent company of Google, it voted against both its stock option plan and the general remuneration policy. It voted against the management pay plans at companies such as drugmaker AstraZeneca, JPMorgan and VW.
In total, the fund said it had voted against management proposals — not just on pay, but on issues from splitting the roles of chief executive and chairman to shareholder rights — about 7,000 times last year.
The oil fund has started to shift its attention away from focusing on companies’ external actions on issues such as climate change and child labour to look at more internal actions. Following its position papers on pay and tax last year, on Tuesday the fund laid out its expectations for how companies should combat corruption, drawing on its experience of dealing with Siemens a decade ago as the German conglomerate dealt with a huge bribery scandal.
“CEO pay, anti-corruption, tax — we are very early on these issues relative to other investors. I haven’t seen any other fund managers look into all of that. Maybe in 10 years' time they all will be,” Mr Slyngstad said.
The oil fund urged companies to establish a clear anti-corruption policy, integrate that into its operations, and disclose their procedures and how they deal with incidents. It is at present monitoring both Eni and Saipem, two Italian oil companies, over “the risk of severe corruption,” according to the fund’s annual report on responsible ownership.