Is your mutual fund supporting CEO pay raises, even when the CEO doesn't deserve it? TheStreet.com reports on a new study which shows that fund managers back compensation proposals by company management more than 75% of the time:
A study of the proxy voting records of 29 mutual fund families by the American Federation of State, County and Municipal Employees, the Corporate Library and the Shareowner Education Group indicates that between July 2005 and June 2006, fund managers backed management-sponsored proposals on executive compensation just over three-quarters, or 75.8%, of the time.
That represents a slight uptick from 75.6% during the year-earlier period.
'These mutual funds are failing to protect the assets of their clients,' says Gerald W. McEntee, president of AFSCME. 'CEOs should be paid for performance. Investors in these mutual funds should be outraged that their assets are being used to prop up undeserved CEO pay.'"
That pay is undeserved, the study says, because higher pay for company management doesn't generally lead to more profitable companies:
...authors of the report cite research showing that among S&P 500 companies, the largest increases in total compensation actually correlated poorly with improvements in long-term corporate performance."
Is your mutual fund supporting CEO pay raises, even when the CEO doesn't deserve it? TheStreet.com reports on a new study which shows that fund managers back compensation proposals by company management more than 75% of the time:
A study of the proxy voting records of 29 mutual fund families by the American Federation of State, County and Municipal Employees, the Corporate Library and the Shareowner Education Group indicates that between July 2005 and June 2006, fund managers backed management-sponsored proposals on executive compensation just over three-quarters, or 75.8%, of the time.
That represents a slight uptick from 75.6% during the year-earlier period.
'These mutual funds are failing to protect the assets of their clients,' says Gerald W. McEntee, president of AFSCME. 'CEOs should be paid for performance. Investors in these mutual funds should be outraged that their assets are being used to prop up undeserved CEO pay.'"
That pay is undeserved, the study says, because higher pay for company management doesn't generally lead to more profitable companies:
...authors of the report cite research showing that among S&P 500 companies, the largest increases in total compensation actually correlated poorly with improvements in long-term corporate performance."
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