Bloomberg News

Norway Oil Fund Puts $25 Million Cap on External Manager Bonuses

October 06, 2011

Oct. 6 (Bloomberg) -- Norway’s oil fund set an upper limit of $25 million on annual bonuses it pays to external fund managers to promote a longer-term investment strategy and after receiving criticism in past years over excess payments.

The Government Pension Fund Global, Europe’s largest equity investor, announced the cap in a letter to the Finance Ministry in connection with today’s government budget.

The fund put in place an undisclosed cap in 2009 after it paid bonuses of 530 million kroner ($91 million) to one manager and 170 million kroner to another. Bonus amounts that exceed the annual cap can be paid out in later years provided managers continue to generate excess returns, Bunny Nooryani, a spokeswoman at the fund, said by phone in Oslo.

“The system of keeping back part of the bonus will contribute to supporting a long-term investment outlook,” the government said in a today’s budget document. The rule went into effect on Sept. 5.

The fund at the end of the second quarter had 199 billion kroner of its stocks externally managed and overall 6.8 percent of its assets were managed externally. The fund said earlier this year in its annual report that it handed out 14 specialist stock mandates in 2010, including in Greece, Spain and Italy.

--Editor: Jonas Bergman, Tasneem Brogger

To contact the reporter on this story: Stephen Treloar at streloar1@bloomberg.net

To contact the editor responsible for this story: Angela Cullen at acullen8@bloomberg.net


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