Following the Norwegian daily VG’s story on Saturday about incoming chief executive of Norges Bank Investment Management (NBIM) Nicolai Tangen’s seminar Back To University 14-17 November 2019, a number of questions have been raised regarding Norges Bank’s Executive Board’s selection process and conditions relating to outgoing chief executive Yngve Slyngstad’s participation at the seminar. A summary of the process and answers to questions raised by the media are provided below:
Choice of Nicolai Tangen to lead the Government Pension Fund Global
Nicolai Tangen was appointed by Norges Bank’s Executive Board against the background of his work in building up one of Europe’s leading investment companies and his outstanding performance as an international capital investor. The Executive Board gave weight to his broad experience and good leadership qualities, and has emphasised that Nicolai Tangen can give new lift to the oil fund in the years ahead. Nicolai Tangen has been, throughout the selection process, entirely open towards Norges Bank about all conditions that may be relevant to the post of chief executive of the fund.
Norges Bank’s Executive Board appointed Nicolai Tangen at its meeting on 24 March 2020 after a thorough selection process with the assistance of the executive search firm Russell Reynolds. Russell Reynolds was selected on 28 November 2019 using ordinary tendering procedures, following Yngve Slyngstad’s announcement on 30 October 2019 of his intention to step down. Russell Reynolds has a framework agreement with Norges Bank Investment Management (NBIM), but not with Norges Bank. Already in December, Russell Reynolds started a broad search in Norway and internationally to find relevant candidates for the post of new chief executive of the fund. Russel Reynolds then contacted Nicolai Tangen on its own initiative.
The post was advertised on 10 January 2020. On 20 January 2020, a longlist of 41 names was presented to the Chair of the Executive Board. Nicolai Tangen’s name was on that list. The selection committee was chaired by Norges Bank Governor Øystein Olsen and consisted of Deputy Governor Egil Matsen and Executive Board member Karen Helene Ulltveit-Moe. Kristine Ryssdal sat on the committee, but withdrew on her own initiative on 28 January 2020 because she had ties to a potential candidate. Russel Reynolds informed the selection committee about the various candidates’ values and their knowledge of them, including Nicolai Tangen.
On 7 February, a shortlist of 18 candidates that had all been interviewed by Russell Reynolds was presented to the selection committee. The committee made its selection and decided to conduct a first interview with seven of them. The Executive Board had given the committee a mandate to make such a selection.
When the application deadline closed on 21 February, there were eight candidates on the official list of applicants, of which one was exempt from public disclosure under the Freedom of Information Act. At the same time, the Chair of the Executive Board, Governor Øystein Olsen, announced that the selection committee together with Russell Reynolds would continue to consider other relevant candidates. Nicolai Tangen was among those candidates. Tangen was first interviewed by the committee on 12 February and the second interview took place on 3 March, on which day the Chair of the Executive Board also met with Tangen separately.
On 5 March 2020, two final candidates were presented to the Executive Board. The Board unanimously agreed that Tangen was the preferred candidate and continued the work on clarifying certain conditions to ensure that Tangen was eligible for the post as new CEO of NBIM. This included conditions relating to AKO Capital, AKO Trust, AKO Foundation and tax-related conditions. In this phase, 12 different references were contacted to form a further picture of the candidate. In addition to the references listed by Tangen, Russell Reynolds provided a list of references. The reference list included current and former employers, and other persons affiliated with Tangen.
Jane Aamodt Haugland, Executive Director of Norges Bank Administration, provided for the administrative implementation of the selection process together with two other employees of Norges Bank. No employee of the fund was involved in the selection process. Yngve Slyngstad had no role in the appointment of his successor. On 19 March, Slyngstad was informed by the Chair of the Executive Board that Nicolai Tangen was the Board’s preferred candidate. The final official list of applicants was attached to the recommendation document to the Board, which made its decision on 24 March. On 26 March, Nicolai Tangen was presented as the new CEO of NBIM.
Back to University
In May 2018, Yngve Slyngstad was invited to participate in the seminar Back to University at the Wharton Business School and to take part in a panel discussion with the then Governor of the Bank of England Mark Carney. Given Carney’s participation, the invitation to the seminar was discussed with Norges Bank Governor Øystein Olsen.
The week prior to his appointment, Nicolai Tangen sent the programme for the Back to University seminar to Norges Bank, but the seminar and the list of participants were not part of the Executive Board’s decision basis when the Board offered the post of CEO to Tangen. No member of the Board and no person involved in the selection process participated in the event at Wharton.
As Back to University had not been part of the Executive Board’s decision basis, and Slyngstad’s participation at the seminar was entirely independent of the appointment of Tangen, the subject was not deemed relevant for the press conference on 26 March. The programme and list of participants were sent to the financial daily Dagens Næringsliv on 3 April 2020 in response to a disclosure request from Dagens Næringsliv concerning contact between Tangen and Slyngstad in the period to appointment.
Yngve Slyngstad attended an internal seminar at Norges Bank Investment Management in New York on 14 November 2019. He then took the train to Pennsylvania to attend the seminar Back to University. Norges Bank covered the cost of Yngve Slyngstad’s flight to New York, as well as his train ticket to Pennsylvania.
Lodging at the conference hotel and dinner were paid by the organisers. Yngve Slyngstad chose to travel with the other conference attendees on the chartered flight from Pennsylvania to Oslo. This is the first time that Yngve Slyngstad, as head of the fund, did not travel on a scheduled flight covered by Norges Bank, and he has stated himself that this was unfortunate.
Ordinarily the fund covers expenses associated with work-related travel, but exceptions may be made, for instance, when a fund employee is a speaker at a seminar. In this instance, Norges Bank has chosen in retrospect to be willing to pay for Yngve Slyngstad’s accommodation and air travel related to the seminar Back to University.
Transparency regarding the list of applicants
Norges Bank chose to publish a list of applicants on the Bank’s website on 25 February after the closing date for applications. However, the Executive Board is free to accept applications received after the deadline. Tangen was placed on the official list of applicants prior to the decision of the Executive Board on 24 March. Pursuant to the Freedom of Information Act, there is no expanded requirement to publish updated lists of applicants. However, Norges Bank recognises that the Bank might have been expected to do so, given the fact that Norges Bank initially chose to publish a list of applicants for a post of considerable public interest.
Nicolai Tangen and AKO Capital
Tangen started AKO Capital in 2005. This investment fund has USD 17 billion under management and around 70 employees. In 2013, Tangen established the AKO Foundation, which supports initiatives in the areas of education, art and climate.
In 2002, Tangen set up the AKO Trust. This trust will now be dissolved and its assets will be transferred to the charitable AKO Foundation. In addition, during the term of his appointment, earnings from Tangen’s interest in AKO Capital will be transferred to the AKO Foundation. Tangen will relinquish all his positions in AKO Capital and the AKO Foundation, so that the company’s and foundation’s investment activities are conducted completely independently of Tangen.
The process going forward regarding Tangen’s personal finances prior to assuming office
It had been clarified with the Executive Board that Nicolai Tangen would continue to hold an interest in AKO and that he would organise his affiliation to be in compliance with Norges Bank’s ethical rules. Norges Bank’s compliance functions are now examining the details of the organisation in a dialogue with Tangen to ensure compliance with the rules.
Generally, new employees at the Bank may continue to own businesses established prior to being appointed, provided that the new employee does not have ownership interests or is not involved in activities in a manner that can give rise to direct or indirect conflicts between private matters and the interests that he or she as an employee of Norges Bank is to safeguard. The Bank is currently in the process of drawing up Tangen’s contract of employment and will incorporate the necessary clarifications in the contract before he assumes office.
Norges Bank’s ethical rules determine which personal financial transactions may be undertaken by Norges Bank’s employees. These rules have also formed part of the basis for Nicolai Tangen’s appointment. The ethical principles entail inter alia that any personal trading in financial instruments undertaken by Tangen after he begins at NBIM will have to be approved by Norges Bank’s General Counsel.
Slyngstad’s relationship to Tangen:
At the request of Dagens Næringsliv, on 3 April, Norges Bank sent this e-mail to Dagens Næringsliv in which the Bank gave an account of the contact between Yngve Slyngstad and Nicolai Tangen over the years:
The Bank desires transparency regarding all discussions between Yngve Slyngstad and Nicolai Tangen. Besides forwarding all e-mail discussions between them, the Bank will therefore also give an account of all contact not necessarily apparent from the e-mails.
CEO Yngve Slyngstad has extensive contact with a number of other funds and investors. As the CEO of AKO Capital, Nicolai Tangen is one of those with whom it is natural to have contact. The contact between Tangen and Slyngstad has been in their professional roles as chief executives of their respective organisations.
As a part of NBIM’s knowledge-sharing activities, Norges Bank arranges annual conferences and regular internal presentations by both internal and external speakers. In this connection, the Bank invites relevant persons such as academics, fund managers and other market participants.
The first discussion between Tangen and Slyngstad took place in August 2016, when Norges Bank Investment Management invited Tangen to be a speaker at the Bank’s Norwegian Financial Research Conference (NFRC). They met both at a dinner with speakers the day before and during the actual conference day. On the same day as the NFRC, the Bank arranged an internal presentation where AKO Capital manager Torkel Eide presented the main contents of the book Quality Investing.
The next meeting between Slyngstad and Tangen took place in May 2017, when Slyngstad was a speaker at the annual Business for Peace Conference in Oslo. Slyngstad spoke about the need for better sustainability data from companies, and Tangen was in attendance. In connection with this event, Professor Adam Grant of the Wharton Business School was in Oslo, and Tangen put him in touch with the Bank’s Communications Unit. After that, Grant gave an internal presentation at NBIM.
In March 2018, Tangen brought to the Bank’s attention that Jamie Oliver would be attending the Business for Peace Conference in Oslo and queried whether he would be an interesting speaker for NBIM. Oliver gave an internal presentation to the Bank’s employees about the food industry’s social responsibility. In June 2018, Tangen brought to the Bank’s attention that Professor Morten Hansen of the University of California, Berkeley, would be coming to Oslo in September in connection with the launch of the Norwegian translation of his book Great at Work. The Bank got in touch with Hansen directly and set up an internal presentation about the topic of the book.
In May 2018, Yngve Slyngstad was invited by Tangen to attend his academic conference at the Wharton Business School with the title Back to University. Slyngstad accepted this invitation, since Tangen was arranging the conference in collaboration with Adam Grant, both of whom had been speakers at NBIM. The conference took place in November 2019, and Slyngstad took part in a panel discussion titled “What type of economic system do we need to prosper in the next decade and beyond?” This is the last meeting between Slyngstad and Tangen.
In January 2020, Tangen sent an e-mail to Yngve Slyngstad requesting information on the job of head of the Government Pension Fund Global. Subsequently, Tangen forwarded an invitation to an event in London. These e-mails were not replied to, and Slyngstad has not participated in the selection process. The first contact between Tangen and Slyngstad after the conference in November 2019 was on the day after Tangen was formally appointed by the Executive Board. The first text message between Slyngstad and Tangen was sent the day after the press conference at which it was announced that Tangen would be the new CEO.