* Focus on dialogue this year, possible action next year
* Welcomes lower pay package for BP CEO
* On tax, says change could take several years
* Fund's accumulated returns exceed amount injected
(Adds CEO quotes from Reuters interview, reaction)
By Gwladys Fouche and Terje Solsvik
OSLO, April 7 Norway's $915 billion sovereign
wealth fund, the world's biggest, stepped up pressure on the
companies it invests in with a call for them to be more
transparent about taxes and to overhaul executive pay.
Norwegian lawmakers last year ordered the fund, which said
on Friday it earned 298 billion Norwegian crowns ($34.6 billion)
from its investments in the last quarter, to be more involved in
global efforts to combat tax havens.
Norges Bank Investment Management, which invests the
proceeds of Norway's vast offshore oil and gas production, said
that public country-by-country tax reporting is a core element
of transparency, taxes should be paid where economic value is
generated and boards are responsible for tax arrangements.
But the fund does not plan to take steps against companies
it is invested in which have come under criticism such as Apple
"This is a question for the very long run. We are not likely
to put any shareholder proposal to any AGM on this issue," CEO
Yngve Slyngstad told Reuters.
"Our starting point is that we are building on the
international principles that are agreed in international
organisations like the OECD. Then we ask the companies to take a
hard look at these suggestions. They are not binding
regulations, they are suggestions," he added
The fund itself has been criticised for having subsidiaries
in countries such as Luxembourg, although Slyngstad said there
was a clear rationale for using them and no need to change.
Groups that have campaigned on tax transparency gave the
fund's stance on tax a cautious welcome.
"The oil fund is taking a big and important step in fighting
tax evasion," Kjetil Abildsnes from the Norwegian Church Aid NGO
"At the same time they do not set expectations on the
transparency of ownership of companies," Abildsnes added.
SIMPLE EXECUTIVE PAY
NBIM also joined calls for so-called long-term incentive
plans (LTIPs) as part of executive pay to be scrapped.
"For us long-term incentive plans should be removed from pay
packages. The packages we want in the future are very different
from what they are now. They are too complicated," Slyngstad
told reporters following its results. "We want simplicity."
He said the fund would engage in a dialogue with companies
during this voting season and if it is not satisfied, it would
consider further steps such as motions or coordination with
other investors, next year.
"If we find we are a minority investor way off what other
investors are thinking, there is no purpose in trying to enforce
that in a vote that will be not be successful," Slyngstad said.
The fund's approach would differ in individual countries, he
added. While welcoming the lower pay package for BP CEO
Bob Dudley, Slyngstad did not say how the fund would vote at the
oil major's upcoming AGM.
With stakes in close to 9,000 companies globally, owning on
average 1.3 percent of all listed equities, the fund is among
the world's most influential investors and from time to time
expresses its "expectations" in a bid to influence behaviour.
The fund said in the first quarter it earned a return of 3.8
percent and beating its benchmark index by 0.1 percentage point.
In the fourth quarter it booked a return of 2.17 percent.
The fund also reached a milestone during the first quarter
in that the total return it has earned on investments since its
inception is now greater than the cash directly injected.
"Measured in Norwegian crowns, this was the third best
quarter in the history of the fund, driven by strong returns on
the equity investments. In the last month, the total return
exceeded the total inflow of the fund," Slyngstad said.
($1 = 8.6161 Norwegian crowns)
(Additional reporting by Camilla Knudsen; editing by Alexander