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| Version 1 | Version 2 |
|---|---|
| Executive pay crackdown by Norway's huge public fund | Executive pay crackdown by Norway's huge public fund |
| (about 1 hour later) | |
| The world's biggest sovereign wealth fund plans to target excessive executive pay. | The world's biggest sovereign wealth fund plans to target excessive executive pay. |
| Norges Bank is currently looking for a company that it considers to be overpaying executives, and will then use that firm as an example in a report to outline the fund's position on pay. | |
| With stakes in more than 9,000 companies and worth $870bn (£595bn), Norway's fund has a powerful voice. | With stakes in more than 9,000 companies and worth $870bn (£595bn), Norway's fund has a powerful voice. |
| In the UK, there have recently been a series of shareholder revolts over pay. | In the UK, there have recently been a series of shareholder revolts over pay. |
| Last week 72% of shareholders in engineering firm Weir Group rejected a proposed pay scheme. That vote was binding and the company will now have to come up with a fresh plan. | Last week 72% of shareholders in engineering firm Weir Group rejected a proposed pay scheme. That vote was binding and the company will now have to come up with a fresh plan. |
| 'Active stewardship' | 'Active stewardship' |
| In the past Norway's wealth fund has not taken a position on executive pay, so its focus on the issue is being seen as significant by the fund management industry. | In the past Norway's wealth fund has not taken a position on executive pay, so its focus on the issue is being seen as significant by the fund management industry. |
| "The Norwegian state sovereign wealth fund has always been quite passive in how it has approached its shareholdings, if a company has done something it hasn't liked it's sold the shares and walked away," said Russ Mould, investment director at AJ Bell. | "The Norwegian state sovereign wealth fund has always been quite passive in how it has approached its shareholdings, if a company has done something it hasn't liked it's sold the shares and walked away," said Russ Mould, investment director at AJ Bell. |
| "I think now it is taking a more active stewardship approach, i.e. debating with the company," he added. | "I think now it is taking a more active stewardship approach, i.e. debating with the company," he added. |
| Last month 59% of BP shareholders voted against a 20% pay rise for chief executive Bob Dudley, that would have netted him £14m. | Last month 59% of BP shareholders voted against a 20% pay rise for chief executive Bob Dudley, that would have netted him £14m. |
| 'Remarkable' moment | 'Remarkable' moment |
| The vote against the increase was non-binding, but BP's chairman said at the annual meeting that the sentiment would be reflected in future pay deals. | The vote against the increase was non-binding, but BP's chairman said at the annual meeting that the sentiment would be reflected in future pay deals. |
| That was a "remarkable" moment according to Stefan Stern, a director at the High Pay Centre, a think tank which monitors executive salaries. | That was a "remarkable" moment according to Stefan Stern, a director at the High Pay Centre, a think tank which monitors executive salaries. |
| "I do think there is a feeling that things have been getting out of hand," he said. | "I do think there is a feeling that things have been getting out of hand," he said. |
| "Shareholders have signed off on pay structures they didn't understand and now we're seeing buyer's remorse," he added. | "Shareholders have signed off on pay structures they didn't understand and now we're seeing buyer's remorse," he added. |
| Three-year cycle | Three-year cycle |
| In the UK, every three years shareholders receive a chance to vote on the way the formula for executive pay is constructed. | In the UK, every three years shareholders receive a chance to vote on the way the formula for executive pay is constructed. |
| That vote is binding, so the board needs the support of a majority of shareholders, to secure the deal. | That vote is binding, so the board needs the support of a majority of shareholders, to secure the deal. |
| Votes between these three-year cycles are not binding, but can create embarrassment for the executives involved. | Votes between these three-year cycles are not binding, but can create embarrassment for the executives involved. |