The government would like to keep an active ownership policy as long as company legislation and popularly accepted principles for corporate governance allow for this.
A major reason for the State continuing its comprehensive ownership role is the significance many state-owned companies have in Norway. The State would like, therefore, to have a long-term perspective on its ownership, and as a shareholder would like to contribute to these companies’ long-term growth and industrial development.
These companies must be competitive over time if they are to pursue and continue to develop their roll in the Norwegian economy and society. The State must, therefore, encourage long-term value creation in the companies in which they have shares. This requires an active ownership policy in which the board is expected to have high expectations for the company’s development, and in which the State considers the strategic plans for growth and follows up with concrete decisions when there are adequate grounds for it. The board is responsible for the company’s strategy. The state expects that each company will formulate a clear strategy. An active ownership policy includes putting forth commercial demands for dividends and returns, such that this builds up over the company’s long-term maximisation of value and industrial development.
In order for companies to remain competitive over time they must consider more than just short-term gain. Companies must adequately invest in both R&D, and in developing competence in the work force so that in the long run the company will be able to initiate any necessary adjustments due to market competition. Consideration for any negative repercussions to the local community must also be kept in mind. Moreover, the company must ensure diversity in leadership, otherwise the ability to understand the company’s milieu may be impaired. Maintaining high ethical standards in all respects is necessary in order to uphold the legitimacy of the company. Any compensation packages for management must be competitive and transparent such that they do not weaken the management’s general authority or reduce the value of the shares. An active state-ownership policy includes formulating clear expectations in these areas, and that these expectations are clearly communicated to the companies. This is a over and above the usual business administrative requirements for dividends and returns, and it supports the goals of long-term wealth creation and good industrial development.
The State’s active exercising of its ownership policy is limited by the Norwegian legislation for companies and by the accepted principals for exercising good ownership. This implies that it is the board that is responsible for evaluating the expectations which the shareholders and others have towards the enterprise, and for accomplishing the commercial measures which the board thinks appropriate. The shareholders must, on their side, assess the board’s performance. An active policy towards the exercise of ownership must, therefore, place emphasis on evaluating the board’s work efficiently and systematically, and on creating a board which has long-term view of wealth creation.