Norway SWF calls for annual elections to Kellogg’s board

Apr 25, 2019
World’s largest sovereign wealth fund makes unusual move to announce voting intention

Norway’s $1.1 tn sovereign wealth fund (SWF) says it will support a shareholder proposal calling for annual elections of board members at cereal and snack giant Kellogg Company. 

While the sovereign wealth giant doesn’t normally publish its voting intentions in advance, Norges Bank Investment Management (NBIM), which manages the fund, says it will do so for selected companies to ‘highlight issues that are of fundamental importance to the fund’. NBIM adds in a statement that ‘it is important for us to be predictable when we exercise our ownership.’

The fund holds stakes in around 9,000 companies and says it votes on around 45,000 board members every year, adding that the second quarter is a peak voting time for the fund, accounting for around two thirds of its voting over the year. 

The Kellogg Company annual meeting will take place tomorrow (April 26), in Battle Creek, Michigan, where the company has its headquarters. At the end of 2018, the fund’s stake in Kellogg stood at 0.64 percent, with a market value of $126.8 mn.

‘For board accountability to be effective, shareholders must be able to participate in frequent election of all members of the board, with our preference being annual elections,’ says Carine Smith Ihenacho, NBIM chief corporate governance officer, in a statement. ‘Clear positions on good governance ensure predictability and consistency in our voting. As an owner we can influence companies by deciding who sits on the board.’

Announcing its rationale for supporting the proposal, NBIM adds that it ‘supported Kellogg Company’s attempt to declassify its board in 2014 and we renew our support for a declassified board with annual elections of directors at Kellogg Company’, noting the Kellogg board’s ‘willingness to respond to shareholders’ views on this topic’.

Kellogg did not immediately respond to a request for comment. 

Separately, NBIM also called for greater transparency at mining firm Grupo México, announcing its intention to vote against proposed election and ratification of directors at the firm. 

‘We will vote against the resolution to elect directors since the company has not disclosed the names of the director nominees and bundled the election of its directors into a single voting item,’ states the fund. ‘To ensure board accountability, we need to know who the nominees are, evaluate them and vote on each individually.’

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