The Norwegian sovereign wealth fund, the largest in the world with over $1trn under management, is using its influence to limit some excesses related to executive pay. The wealth fund has invested in over 9,000 companies around the globe, with a diverse portfolio that stretches from Bank of America through Nestle to Netflix, and holds a massive 1.3% of the worldwide equities market. The fund makes most of its income from revenues related to exploitation of Norway’s fossil fuel deposits.
It is now flexing its muscle by voting against complicated and long-term remuneration packages. It has voted down pay packets proposed for the CEOs of Disney, Christian Dior, Peugeot and Vivendi.
Fund manager, Yngve Slyngstad, said that the moves were down to the packages not being clear enough.
“It is the transparency and that is quite often linked to the simplicity. If you get to a situation where we have a possibility to voice our opinion on pay, it has to be reasonably well defined in advance — what kind of pay package it will lead to.”
The Oil Fund, as it is commonly known, also tried to stop Elon Musk’s $2.8bn stock option based package at Tesla. The deal will see the SpaceX head stay on at the electric car manufacturer until at least 2028, and is the biggest such package ever given out. Musk’s stock options will be vested in 12 tranches, and only awarded if revenue and market cap milestones are met The Oil Fund was defeated by other shareholders who voted to award the package.
Accusations of unethical investing had been levelled at the fund, and a royal decree set up an ethics committee to oversee what companies it backs. In 2010 the fund divested itself of interests in tobacco companies, worth around $2bn. It does not invest in companies that are involved in Israeli settlement building in Palestinian territories, are involved in the production of nuclear weapons, or cause severe environmental damage.
This post first appeared on The Market Mogul.
