Union Ranks Funds by Executive-Pay Votes
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Wednesday, June 6, 2007
AllianceBernstein Holding and Barclays Global Investors backed pay proposals of executives at companies in which they invest more frequently than other mutual fund firms last year, according to a union study.
AllianceBernstein supported management 94.8 percent of the time on compensation plans, and Barclays 94.7 percent, according to the study released yesterday by the American Federation of State, County, and Municipal Employees, the largest union of public-service workers.
Mutual fund managers vote on issues such as governance, mergers and salaries at thousands of companies on behalf of institutional and individual investors while managing a total of $11 trillion in assets. Nine of 10 institutions are concerned that corporate executives are overpaid, the union said, citing a 2005 study by consultant Watson Wyatt Worldwide in Arlington.
"It concerns us when well-known mutual funds abdicate their role as watchdogs for their clients' money," Gerald W. McEntee, president of the union, said in a statement. "This report shines a bright light on those mutual funds that are complicit in excessive payouts to CEOs."
The average support for management-backed pay plans was 75.8 percent in 2006, compared with 75.6 a year earlier, said the study, which reviewed 29 of the largest fund managers in the year ended June 30, 2006.
Officials at New York-based AllianceBernstein were not immediately available to respond. Lance Berg, a spokesman for Barclays Global in San Francisco, declined to comment. The company is a unit of London-based Barclays.
AIM, a division of Britain-based Invesco, was third, backing 91.1 percent of executives' pay plans. AIM spokesman Ivy McLemore said in a statement that the firm revised voting guidelines earlier this year.
"The 2006 discovery of rampant stock option backdating, in particular, led us to craft policies that hold directors individually accountable for lapses in compensation or audit practices," McLemore said. The new rules will be reflected in a regulatory filing in July.
The money manager most likely to restrain executive pay was Baltimore-based T. Rowe Price Group, which supported 77.1 percent of shareholder proposals seeking to align compensation with performance, the union said.
This is the second year the union released the executive pay study. It was produced with Corporate Library, a Portland, Maine, research firm focused on modern global corporations.
