Take measures for greater transparency of the Petroleum Fund – E24

The Petroleum Fund votes in thousands of general meetings each year and is concerned with transparency and good reporting.

Sometimes the fund also challenges the recommendations of the boards. This is especially true when it comes to salaries and dual roles between the board and management. Sometimes the fund also supports shareholder proposals to increase information on things like taxes and the weather.

At a seminar on Monday, the fund’s management gave some more details on why it now wants to indicate ahead of time what it will vote on at general meetings.

– Now we take the next big step. We will cast our vote five days before the general meetings. This is a solid piece of innovation driven by better data and new technology, says Jonas Jølle at the Petroleum Fund.

The fund hopes this can help other shareholders also become more open and active in discussions about the evolution of listed companies.

– This is really completely revolutionary, and here we will be completely leaders in the world, says Nicolai Tangen, director of the Petroleum Fund.

– now we give up

In the past, in some cases the fund has stated in advance why it will vote, but this has been relatively rare. Now the background should indicate what is correct before all general meetings.

The objective is, among other things, to contribute to transparency and that companies do not remain without control even if the ownership is distributed among many small owners.

– Voting is the engine of ownership. Now we are giving up and taking over on a whole new level, says Jølle.

Can challenge corporate boards

Starting in January, the Petroleum Fund website will have its own search function where you can search for companies and find out why the fund will vote at the general meeting.

There will also be a short text explaining why the fund votes the way it does, if it challenges the board’s recommendation.

– We have a text that explains our decision in principle. That text was taken directly from our voting guidelines, and there is a link to our position papers and our voting guidelines, says Jølle.

The fund generally votes according to the recommendations of the board, but in some fields the fund has clear opinions that make it vote against what the board wants.

– We do this in about five percent of the cases, says Jølle.

This is how the fund votes

One of the things that the Petroleum Fund typically votes against is that one person must serve as chairman of the board and managing director of a company at the same time.

Sometimes this also applies to salary models that don’t fit the fund’s vision, even if the salary is too complicated.

– We want to arrive early and clear. We want companies to understand how we vote. This will set a new standard. No other investor does this in such a systematic way as we do, says Jølle.

– We will give an explanation when we vote against, and we will be open about the principles that guide our votes against the board, he adds.

He cites as an example the general meeting of the pharmaceutical company Pfizer. Here, the Petroleum Fund voted against the board’s proposal that the CEO should also be chairman of the board. The fund has voted against this in several companies.

– Voice on autopilot

The fund owns about 1.5 percent of all listed shares in the world, and in Europe it owns an average of 2.6 percent. This means that the fund is a relatively small owner in each company.

However, the fund is the largest owner in a good number of companies, because ownership is distributed among many small shareholders. Many smallholders also leave their vote in the hands of consulting firms.

– We see that there are more investors who vote for the automatic pilot. This means they blindly follow the recommendations of commercial actors, says Jølle.

– We are concerned that passive owners could lead to companies being left without an owner. So we want other investors to also become more active as owners and more open about their vote, he says.

The fund’s vote is based, among other things, on a series of position papers and expectations papers that clearly require the companies that own the fund, on aspects such as fair tax practices, child labor, corruption, aquaculture and climate.

– I would say that we have the clearest voting guidelines in the world, says Jølle.

According to Tangen, no more employees are needed to change the fund’s practice. Today, there are four employees working with voting in the background.

– The way we perceive the situation here and now, we feel we have the staff that we should have, says Tangen.