The head of the Petroleum Fund, Nicolai Tangen, takes a highly required and timely settlement with the extremely high management salaries in large, international companies.
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In an interview with the Financial Times (FT), Tangen says that greed in companies has reached a level we have not seen before.
The Government Pension Fund Global, popularly called the Oil Fund, has large equity holdings in many of the most well-known global companies.
The fund has investments equivalent to 1.5 percent of the value of all listed companies in the world. Our common fortune is invested in more than 9000 companies worldwide.
Tangen’s words therefore get a lot of attention. On Friday morning, his confrontation with the culture of greed was mainly in FT.
In a post in Dagens Næringsliv, Tangen and ownership director Carine Smith Ihenacho also elaborated on the Petroleum Fund’s views on executive salaries.
This year, the Petroleum Fund has decided to do something about the galloping wage development at the top level.
They have started in American companies where the fund has ownership interests and top management salaries are greatest. But they will also look at the salary level in European companies where the fund has large investments.
The Petroleum Fund will use the voting rights actively to influence the companies in the right direction, in line with the principles the fund has previously drawn up.
This is necessary when we see the gigantic salary packages that are given to top managers, even in cases where the companies’ financial results are only mediocre.
The average salary for executives in the 500 largest listed companies in the US rose last year to 14.2 million dollars, or close to 140 million kroner. There are many who earn much more.
The Petroleum Fund voted against the salary package for the boss of Apple, which is estimated at between 91 and 135 million dollars in 2021. This corresponds to an incomprehensible 900-1100 million kroner.
This week, the fund also opposed an even higher salary package in Intel. According to FT, the Petroleum Fund has also voted against in the proposal for executive pay in IBM and several other large companies.
Tangen argues that a large part of the top managers’ salaries should be in the form of shares that are tied up for many years to come. The management will then have overlapping interests with long-term investors, such as the Petroleum Fund. There must be full transparency about the content of salary packages.
The top-level wage spiral must be broken. For several reasons. It is not in the long-term interests of shareholders. It provokes reactions among employees. And that is a bad signal to society. Especially at a time when the market capitalization of many companies is falling.
Shareholders can use their vote. But the boards of the individual companies have a main responsibility in holding back. Here, Tangen has taken a commendable role as a driving force.
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