Even at a time where the mutual fund industry is trying to shake itself from the scandal, companies are still finding it hard to vote against excessive pay packages for executives.
The Securities and Exchange Commission appeared to have fixed that problem in August when it decided that fund firms proxy votes would become public. Vanguard and Fidelity Investments both railed against the legislation, but to no avail.
According to a report by the American Federation of Labor-Congress of Industrial Organizations on the voting records of the 10 biggest fund companies, Fidelity had 12 proposals on its table to lower pay, pensions and options for executives, and voted against eight of them.
One included the pension package of Delta Air Lines CEO Leo Mullin, whose $13.4 million package was based on 28.5 years of service, even though he had only worked for the company for 6.5 years and Delta was losing money.
The AFL-CIO said it examined 120 proxy votes, and in 25 of them, the mutual fund company had a relationship with the company it was voting on. "While mutual funds have a legal duty to cast these votes in the best interests of their investors," the report said, "mutual fund firms can have an economic interest in voting with management, even if such votes may not be in the best interest of fund investors."