Renumeration for the Board and Executives
Checklist for the Board and Company
- Supports strategy and long-term value creation.
- Board members’ share ownership.
- Simple and transparent executive compensation scheme.
- Alignment of interests between management and shareholders.
- Defined upper limits for variable pay.
Folketrygdfondet places great importance on ensuring that the remuneration of senior executives support long-term value creation. Guidelines for pay and compensation should be designed to reinforce the company’s strategy and contribute to sustainable value creation over time.
Folketrygdfondet’s expectations for the remuneration of board members and senior executives are based on the OECD Principles of Corporate Governance, the Norwegian Code of Practice for Corporate Governance (NUES), and the Norwegian Public Limited Liability Companies Act with its associated regulations.
Board remuneration
• Board compensation should reflect the board’s responsibilities, expertise, time commitment and the complexity of the business.
• Shareholder-elected board members should not be included in incentive-based remuneration schemes.
• Share ownership helps align interests around long-term value creation, and we expect shareholder-elected board members to hold a meaningful ownership stake in the company.
Remuneration of senior executives
Remuneration includes fixed and variable pay, pension schemes, severance arrangements and any additional benefits. Variable pay may take different forms of incentive schemes.
• The board must establish guidelines for the pay and remuneration of senior executives. The total level of remuneration should not result in an unreasonable transfer of value from shareholders.
• There should be an upper limit for variable pay.
• Executive remuneration schemes should be simple and transparent to support good governance and align the interests of management and shareholders. A significant portion of total annual remuneration should be provided in the form of shares with long-term holding requirements. The holding period should be independent of the end of the employment relationship, and a longer holding period should be considered for the CEO than for other senior executives.
• We expect that guidelines and reporting are clear and communicated openly in accordance with applicable laws and regulations.