YOUNGSTORGET (VG) Jan Christian Vestre establishes a new principle for executive salaries in state-owned companies: no top manager should have a higher salary increase than employees – not in percentage – but in crowns and øre.
Updated less than 10 minutes ago
And if Vestre’s new principles are broken, the result could be astounding in the boardrooms.
– There is no property notice that has gone this far before. This is a very strong tightening. But I want to be a minister of affairs who accomplishes something.
The Minister of Industry and Commerce Jan Christian Vestre (Ap) tells VG. Friday will present those of the government property noticeThe government is proposing a comprehensive plan for what the state will accomplish by owning shares in a large number of companies. These are both companies that are on the stock exchange, but also pure state companies..
But it is already releasing the most important news from the message in this interview with VG: the government is introducing a very strict regime for the development of executive compensation in companies that the state owns.
Bonus brake
Today the state owns about a third of the Oslo Børs’ values and the total market value of the state’s listed shares exceeds NOK 900 billion.
The state divides its ownership into three categories, which cover why the state is on the side of ownership (see the fact box below for more information). The government will ban bonuses in all “category 2” companies and halve the maximum bonus from 50 to 25 percent in “category 1” companies.
– Can’t wait to hear the reasoning
But perhaps more drastically: it will put an end to the wage development of corporate top managers.
– We are introducing a principle whereby if a manager receives a higher than average salary increase of the employees in the organization, and then we speak in crowns and øre, this must be justified separately and presented at the general meeting.
In other words, the fact that a top manager receives more in wage evolution than the average employee should only occur in exceptional cases.
– And if we think the justification is not enough, the state will vote against.
Vestre hopes the move will narrow the pay gap for top managers and over time close the gap with ordinary employees.
– What is reason enough to earn an above average salary for employees?
– Then there will be the tedious answer that we have to evaluate each individual case. But if a manager has a competitive salary and believes that one needs a higher pay raise than others in the company to be motivated, then I can’t wait to hear that justification, she says.
– That should be enough motivation
Vestre points out that over time there is talk and talk of moderation in the salaries of managers.
– But it has been talked about, without having seen any sufficient effect. That is why we are now going much further than many have thought or anticipated. It’s because we’re serious and expect an effect, he says.
Vestre believes that managers with salaries in the millions shouldn’t need large annual salary increases as a motivation to lead companies.
– Leading such companies can almost be compared to a position of trust, it is leading some of the most interesting and exciting companies in Norway with incredibly good people and rewarding tasks. It should be motivation when the salary is already good, she says.
It will close all loopholes
Vestre is also clear that this affects total pay.
– Some may be tempted to compensate for the reduction in wage growth with a bonus, pension or other type of remuneration. But this is about total pay.
– What if the boards don’t deliver?
– Then I think about who will sit there.
– So we have it all clear – do those thoughts have consequences?
– Yes. As any other private owner would say, they can have it.
Cast rule
The minister of affairs has already sent a letter to the boards of directors of which the state is the owner and has announced a line of moderation for the salaries of executives. The state also expressed its expectations at the general meetings.
– The state has high expectations of councils, including executive salaries. If boards don’t listen to a great owner in these matters, we’ll think about who should sit there. It is not a threat to say that the advice should listen to the owners, just ask any private person.
The minister of affairs has already fired a board due to dissatisfaction with how he handled the CEO’s very generous schemes.
– Are you ready to do it again?
– Deposited and deposed. We replaced all but one of the council members in Argentum, because we felt that the council did not listen to the expectations that the state, as the sole owner, had of them.
LO in a hundred
LO leader Peggy Hessen Følsvik gives two thumbs up for the proposal.
– I would just miss the fact that managers should have the same wage growth as most people. But unfortunately we have seen too many examples of how sadly this is not always the case, says Følsvik.
He also points out that there has been a lot of talk about moderation, but little concrete action.
– That is why we are so happy that the Minister of Affairs is so clear.
He is also happy that Vestre is warning of losing his mind in ballots that violate his new principles.
– Over and over again, we have seen that the boards of state corporations do not listen to their largest owner. They were able to do this because too often this didn’t have any consequences, he says
Earlier, the government has already announced in the state budget that everyone with an income above NOK 750,000 will have increased taxes.
– And now this comes. Who the hell will think of the million-dollar salaries of top executives, if not the minister of affairs?
– Do you think there are some of these top managers whose salaries are too low to get by? Good. They didn’t tell me, says Vestre.
