A new report ranks the CEO it deems to be "most overpaid" -- then looks at how rarely big mutual fund managers and state pension plans voted against their pay package. (Xaume Olleros/Bloomberg)

In 2011, investors began getting the right to have their "say on pay," a rule in the Dodd-Frank financial reform act that requires companies to let shareholders cast an advisory vote on the CEO's pay package.

But many big investors don't have much to say against it -- at least publicly with these votes -- even when it comes to the CEOs deemed to be the most overpaid relative to performance.

report released Wednesday from As You Sow, a nonprofit that focuses on corporate social responsibility, named the 100 CEOs it said have the most outsize pay packages, using an analysis of both shareholder returns and a range of compensation indicators the nonprofit said raise red flags about their pay.

Those among the top names included Discovery Communications CEO David Zaslav at No. 1, whose 2014 compensation was valued at $156 million, thanks to his signing of a six-year employment agreement with big equity and option awards designed to encourage long-term ownership that will vest over time. Other names included CBS Corp. CEO Leslie Moonves at No. 3, whose pay was valued at $57 million in 2014, and General Electric CEO Jeffrey Immelt at No. 10, with $37 million.

But the reason for putting together the list wasn't just to name names. It was to see how institutional investors voted on the compensation packages of the CEOs the nonprofit says are excessively paid.

"The real point of this study is we wanted to do something that looked at how mutual funds and pension funds are voting," said Rosanna Landis Weaver, program manager at As You Sow and one of the report's authors.

What it found, using data provided by the Fund Votes project, is that mutual fund firms voted against these lofty pay packages a median 25 percent of the time. Some large fund providers, such as Schwab and American funds, said 'no' more often -- roughly a third of the time.

But several large mutual fund companies almost never voted against these big paydays. According to the report, Vanguard, a major provider of mutual funds and retirement plans, voted in favor of the report's "overpaid" CEOs 97 percent of the time, as did BlackRock, the world's largest asset manager. In other words, they only voted against three of these reportedly outsize pay packages.

TIAA-CREF, meanwhile, which provides retirement plans at more than 15,000 educational institutions, research centers and other nonprofits, voted with the company's management 96 percent of the time, As You Sow reported. "The contradiction between what people tend to think about CEO pay and how their retirement assets are being voted is astonishing," Weaver said. 

TIAA-CREF's head of stewardship and corporate governance, Bess Joffe, said in an emailed statement that "we believe our approach to executive compensation -- evaluating companies on a case-by-case basis and conducting direct, ongoing engagement -- is the most effective way to support practices that reward sustainable shareholder value."

A BlackRock spokesman pointed to the company's documents on executive compensation, which note that the board's compensation committees are in the best position to make pay decisions and that direct engagement with the board is effective for resolving pay questions. A Vanguard spokeswoman declined to comment.

State public pension funds expressed their dissatisfaction more often. Among the 32 state retirement plans examined by As You Sow, the median level of opposition was 33 percent, up from 22 percent last year.

To evaluate the most overpaid CEOs, the study's authors developed two rankings of S&P 500 CEOs. It used pay data from their most recent proxy as of June 30, 2015 -- as a result, much of the data is for 2014 compensation. One ranking used a statistical analysis to compare five-year returns with the CEO's compensation.

The other ranking analyzed a list of 35 indicators for which a CEO could receive red flags. For instance, CEOs who had low average return on assets but still saw big pay raises, those who received perks valued at more than $500,000 and companies that received poor ratings from outside proxy advisers were hit with red flags that were tallied to develop the second ranking. Other red flags included a big retirement package or a base salary that exceeded $1.5 million, such as GE CEO Jeff Immelt's $3.75 million salary in 2014. (A GE spokesman said in an emailed statement that Immelt's salary "reflects his strong leadership of a company with the global scale and diversity of GE.")

The two rankings were then integrated to come up with the final list.

Even if some negotiation and pressure over executive pay is taking place between investors and companies behind the scenes, the public votes in favor of high pay packages still have a potential downside. Nell Minow, who advised on the report and is vice chair of the governance consulting firm ValueEdge Advisers, said that while the new rule to give investors a voice in the process has been effective in some ways, it could also have unintended consequences if companies use "say on pay" 'yes' rates to defend high pay.

When they get high votes of approval, it acts as a "cover" for boards and their compensation committees, Minow said. Like other past efforts to rein in high executive pay, "no matter what we do, we seem to continue to pour gas on the fire." 

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