The CEO of the world's largest sovereign wealth fund blasts excessive pay for poor performance at companies.
Norges Bank Investment Management (NBIM), is vowing to target excessive pay packages, which aren't justified by performance or are too vague, according to a «Financial Times» (behind paywall) interview with NBIM's CEO Nicolai Tangen published today.
NBIM, created to manage proceeds from Norway's vast oil revenues, owns 1.5 percent of all listed companies worldwide, giving it a loud voice when it comes to such matters.
«We are in an inflationary environment, where we are seeing many companies with pretty mediocre performance coming out with very big pay packages. We are seeing corporate greed reaching a level that we haven’t seen before, and it’s really becoming very costly for shareholders in terms of dilution», he told the «FT.»
Votes Against
So far this year, the fund has voted against executive pay at Intel and Apple, along with IBM, General Electric, and Harley Davidson. In IBM's case, the fund said it based its vote on «consistently high» pay even in the face of a «disappointing performance,» according to the report.
Looking to Europe
NBIM's chief governance and compliance officer Carine Smith Ihenacho said that while the fund was focusing on the U.S. for now because that's where «the high pay packages» are, it will also look at pay in Europe and elsewhere she said.
In turning to Europe and Switzerland in particular, NBIM had holdings in 134 Switzerland registered companies at the end of 2021, accounting for 3.2 percent of all investments it has, according to NBIF data. Digging a bit deeper revealed the fund held positions in 24 Swiss financial companies at the end of last year valued at $6.7 billion, making up 0.5 percent of total fund holdings.
Swiss Holdings
Among Swiss financials, UBS was NBIM's largest holding at 4.4 percent, giving the fund the same percentage of voting rights, which at the end of last year, was valued at $2.95 billion. Other holdings included Vontobel (1.6 percent) and Julius Baer (1.3 percent), valued at $81.9 million and $195.2 million, according to the data.
It also had a 1.8 percent stake in Zurich Insurance, valued at $1.17 billion.
Credit Suisse
Clearly, NBIF is not shy about taking action and in April joined calls for a special audit into Credit Suisse related to the Greensill and Archegos matters. In a list of voting recommendations, the fund also advised against voting to approve the discharge of the board and senior management for the fiscal year 2020, as finews.com reported.
That is no small matter since the fund owned 1.3 percent of outstanding Credit Suisse shares at the end of 2021, with a value of $325 million at the time, according to NBIF data.
Tangen told the «FT» that to some degree shareholders have not done their work, but added that «We are sensing a bit of a shift in sentiment among the large shareholders in the world towards more scrutiny and more requirement for alignment.”
Still, «the main blame is clearly with CEOs and boards,» Tangen said.
