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Thursday, February 26, 2015

Fundsters Take Three Spots On an Overpaid CEOs List

Reported by Neil Anderson, Managing Editor

Out of 100 CEOs recently accused of being overpaid, three fundsters made the list. And mutual fund firms in general were put in the spotlight by the report

Earlier this month, a non-profit called As You Sow released a report that included its own list of the 100 most overpaid (according to As You Cow) CEOs of S&P 500 companies. That list included BlackRock's [profile Larry Fink at number 26, Affiliated Managers Group's (AMG's [profile]) Sean Healey at 44, and Invesco's [profile] Marty Flanagan at 99. (The CEOs of three other pureplay asset managers in the S&P 500 didn't make the list.)

Other listed CEOs whom fundsters might find familiar include: 31, Jim Cracchiolo of Ameriprise [profile]; 35, Lloyd Blankfein of Goldman Sachs [profile]; 41, John Stumpf of Wells Fargo [profile]; 55, John Strangfeld of Prudential [profile]; and 80, Joseph Hooley of State Street [profile]. Anthony Petrello of Nabors Industries has the dubious honor of ranking first on the list.

Yet the list is far from the only piece of the 38-page report that points to fundsters. There's a section on mutual fund votes, which includes a chart that singles out the ten "mutual fund families most likely to approve pay of 100 most overpaid CEOs", as well as a chart of the 15 "mutual fund families least likely to approve pay of 100 most overpaid CEOs." There's a chart of the "approval rates of pay of 100 most overpaid CEOs" by the 25 biggest mutual fund shops. There's even a chart comparing the different SRI fund shops' voting records in this area. And there's an appendix that digs deeper into the say-on-pay voting records of more than 100 mutual fund families, all in one big table.

The report fails to distinguish between different types of investing strategies (active versus passive, equity versus fixed income, and so on) that might lead different mutual fund shops to vote differently on such issues. Only socially responsible investing (SRI) fund firms are looked at separately.

So, which mutual fund families come out looking good in the report? Green Century [profile] never approved pay of any of the 100 most overpaid CEOs in the report, and Gabelli's Gamco [profile] did so only three percent of the time. Among the 25 biggest fund firms, Capital Group's American Funds [profile] (58 percent), Schwab [profile] (59), and Columbia (61) were the least likely to approve pay packages for the CEOs listed in the report. And among SRI fund firms, both Green Century and Domini [profile] never approved pay packages for the CEOs in question.

The report was authored by Rosanna Landis Weaver, program manager for power of the proxy: executive compensation at As You Sow. She's an alumnus of the International Brotherhood of Teamsters, the Investor Responsibility Research Center, Institutional Shareholder Services, and Change to Win.

As You Sow is a 23-year-old non-profit based in Oakland, California. On its website, the tax-exempt 501(c)3 non-profit organization describes itself as promoting "environmental and social corporate responsibility through shareholder advocacy, coalition building, and innovative legal strategies." 

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