Mutual fund companies are key enablers in the runaway compensation packages that corporate executive enjoy, according to a new study.

Released yesterday by the American Federation of State, County and Municipal Employees and the Corporate Library - two groups that have been longtime critics of executive compensation - the study analyzed the voting records of 18 of the nation's largest fund complexes. It found that most fund firms voted in favor of management proposals and against those from shareholders at the annual meetings of companies in which they hold stock.

The five worst offenders, according to the study, are Morgan Stanley, AIM Investments, Dreyfus, AllianceBernstein and Oppenheimer Funds.

"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 American Century Investment Management, TIAA-CREF Asset Management, Federated Investors and Vanguard Group.

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 Securities and Exchange Commission's independent chairman rule, the appointment of a shareholder advocate at fund firms, and greater support by corporations to empower shareholders with a consistent voice on compensation issues.

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