Mutual fund companies are key enablers in the runaway compensation packages that corporate executive enjoy, according to a new study.
Released yesterday by the
The five worst offenders, according to the study, are
"Like a bartender who pours drink after drink for a patron with an obvious drinking problem and no way home, these mutual funds are helping to feed the executive compensation beast with no regard for the consequences," said Gerald W. McEntee, president of AFSCME, a Washington-based labor union. "Corporate America has a CEO salary problem."
According to a report on the study from the Los Angeles Times, a Morgan Stanley spokesman said the firm "votes all proxies solely based on its fiduciary obligations to its clients." Officials at Dreyfus, AIM, Oppenheimer and AllianceBernstein would not comment on the study.
Fund firms cited by the study as having good compensation voting records included
In 2004, the study reveals, executive compensation at more than 1,500 public companies accelerated at twice the rate of the previous year. Worker pay, meanwhile, has remained stagnate, it claims.
"This report brings to light the role mutual funds play in enabling excessive compensation and helps investors determine which ones are committed to shareholder value and merit their business," said Nell Minow, editor and founder of The Corporate Library, a Portland, Maine-based research firm.
The study suggests increases in disclosure requirements, greater transparency, strict enforcement of the