By voting in favor of management proposals for large executive pay packages rather than shareholder proposals for pay tied to performance, fund companies are contributing to excessive pay, three groups charge.
The fund companies that voted most often for the pay increases were
Fund companies that voted most frequently to constrain pay were
The groups based their charges, in the report Compensation Accomplices: Mutual Funds and the Overpaid America CEO, on analysis of mutual fund voting patterns in 2007 and 2008.
Given the performance of many companies, investors in mutual funds should be outraged that their assets are being used to prop up CEO Pay that is too often undeserved and unearned, said AFSCME International President Gerald W. McEntee. The worst ranked funds are accomplices in the overpayment of CEOs. They should be protecting the assets of their clients by demanding that CEOs get paid for performance, rather than supporting runaway pay.
As an industry, mutual funds are increasingly siding with management on compensation issues, voting with them 82% of the time in 2007 and 84% in 2008, up from 75.8% of the time in 2006.