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Nordic governments use say on pay powers

The Swedish government has stepped in to halt incentive-based pay plan for executives at mobile phone operator TeliaSonera. At Wednesday’s AGM in Stockholm, the government used its 37 per cent stake to force through changes to the company’s pay structure which aims to see directors paid a basic salary only.

A proposal that executives should receive only a fixed salary was opposed by the 13 per cent shareholder –  the Finnish government.  However as the Swedish government had the majority of the meeting votes, the measure was narrowly passed. Swedish bank Nordea came under similar pressure last month but was successful in retaining its bonuses.

Günther Mårder of the Swedish Shareholders’ Association supported the Finnish state position against Sweden arguing that Financial markets minister Mats Odell’s directive was “very strange” and “politically motivated”. The Swedish government has taken a strong stance on the bonus culture ahead of September’s general election. Speaking at the TeliaSonera meeting, Urban Karlström, the government’s representative said: “If you systematically go through the research, you cannot find anything to suggest that companies with a bonus outpace the companies with fixed payments.”

Putting the Finnish perspective, Kari Järvinen described the Swedish proposals as “poorly reasoned and not in shareholders’ best interest”. “It is natural that some of management’s compensation should be based on the company’s performance.” he said.

Wednesday’s decision actually increases the company’s fixed expenditure according to Järvinen. TeliaSonera will be forced to raise the salaries to compensate for the fall in bonuses, however the amounts will not be performance-related. The board’s proposals would have seen bonuses limited to 90% of basic pay.

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