Oil Fund Director Nikolai Tangin warns about the high salaries of business executives, which are costing shareholders dearly.
We see that many companies with mediocre results have very large salary packages. We’re seeing greed approaching a level we’ve never seen before, which would be very costly for shareholders, says Nikolai Tangin. financial times.
The Petroleum Fund, which owns an average of 1.5 percent of all listed companies in the world, is voting against CEO pay at Intel’s general meeting this week. They did the same at Apple’s March general meeting, where the president’s salary package in 2021 was estimated at between $91 million and $135 million.
Property manager Karen Smith Inacho of the Petroleum Fund says they’re focusing on the US because that’s where the real, high-paying leaders are, but they also add that they want to look at salaries in Europe and elsewhere.
The median salary for CEOs of S&P 500 companies, which reported numbers for 2021, has risen to $14.4 million a year, up from $13.2 million a year in 2020, according to ISS Corporate Solutions.
It will get worse
Tangen believes the problem will only get worse if investors don’t take action.
If shareholders don’t get tougher on how they vote, it will only continue. To some extent, we feel that the contributors have not done their work in this area. He says we are noticing a shift in the mood among the world’s major shareholders toward more scrutiny and more demands for alignment.
— But the main responsibility clearly rests with CEOs and boards of directors, Tangen says.
However, the management of the oil fund is not opposed to all major pay packages and points to JPMorgan and Amazon as the fund voted for the long-term bonus policy. At Amazon, the manager receives shares that are only distributed after up to ten years. The goal is to ensure that managers have the same incentives as shareholders.
As a long-term shareholder, we prefer the director to have the same incentives as we do.
It’s not in our interest
in a column in today’s work Tangen and property manager Ihenacho wrote Friday that they will be taking a critical look at CEO salaries in the United States during this year’s general meeting season.
– We will toughen our vote in the US in cases where salary packages are unusually large and not long-term enough, they wrote.
The Petroleum Fund has long criticized the fact that some companies offer excessive salary packages to senior managers. As a shareholder, it is not in our best interest for companies to pay too much to motivate good leaders. It is also reported that the wage spiral creates additional costs for us as shareholders in more than 9,000 companies.
– The most important thing for us is that the management gets the same interest as the shareholders, that is, the company develops well in the long run and generates good returns.
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