Tiny Norway – population not much more than 5 million – happens also to be rich Norway. Historically Norway was one of the poorest countries in Europe. But contemporaneously the situation is different, radically different. Contemporaneously – since it struck oil in the North Sea – Norway has more money than god.
Norway’s profits from oil get deposited into a “sovereign wealth fund.” The fund is ginormous: it has assets of some $870 billion, making it one of the world’s largest investors, with positions in more than 9,000 companies.
Until recently, Norway’s wealth fund has been passive rather than active. As one observer put it, if a company did something the fund didn’t like, “it sold the shares and walked away.” That was then. Now the fund is involving itself in matters of corporate governance – notably though not exclusively in the high stakes game of executive pay. This week it announced that it will no longer tolerate companies that spend shareholder money on exorbitant executive pay. Moreover, it intends to go public. According to the Financial Times, the fund is on the “lookout for an example of bad pay to launch a position paper that lays out its principles for what it expects on the subject from its 9,000-plus holdings.”
In recent years CEO’s have been under fire from various directions. But executive pay has remained as sky-high as sacrosanct. The fact that Norway’s sovereign wealth fund is scrutinizing the issue and planning to publicize its findings signals that times are changing. While CEOs are not in danger of going hungry, they are in danger of having their slice of the pie shrink.