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Report: Mutual Funds “Rubber Stamp” Excessive CEO Compensation

A new report takes mutual funds to task for “rubber stamping” executive pay plans through “say-on-pay” votes that the report claims amounts to “excessive wealth unrelated to incentives or results.” The document was issued by As You Sow, “a nonprofit organization that promotes environmental and social corporate responsibility through shareholder advocacy, coalition building, and innovative legal strategies.”

The report identifies the top 100 “most overpaid” CEOs in the S&P 500 and examines the voting record of mutual funds and pensions on the pay plans. To identify overpaid CEOs, the group used “a statistical analysis of company financial performance with a regression to identify predicted pay, as well as an innovative index developed by As You Sow that considers over 30 additional factors.” The report noted that large complexes such as Vanguard and Blackrock supported 97 percent of pay packages that As You Sow identified as overpaid, while the average at large fund groups was 78 percent and the general level of support was 91.86 percent. Looking at all fund complex sizes, the report identified Domini (which markets itself as “socially responsible”) and Calvert as the complexes who voted most consistently against overpaid packages (100 percent and 87 percent of votes cast, respectively).