(Bloomberg) — When it comes to CEO pay decisions, Vanguard Group and BlackRock Inc. almost always side with corporate boards.
The mutual fund giants, which together manage $7.6 trillion, voted with directors on executive pay plans 97 percent of the time last year, according to a report issued Wednesday by shareholder advocacy group As You Sow. The data is based on a tally of 100 companies whose chief executives received $9.7 million or more in annual pay.
"The votes mutual funds cast are the public signal of their position on CEO pay," Rosanna Landis Weaver, the author of the report, said in a telephone interview. "I do not believe, particularly given the current discourse on income inequality, that it truly represents the beliefs or interests of individuals' whose 401(k) assets are being voted."
Mutual funds affiliated with Fidelity Investments approved board-backed pay 79 percent of the time, As You Sow said. T. Rowe Price Group Inc. funds supported 92 percent of plans. The rates for Franklin Templeton and JPMorgan Chase & Co. are 70 percent and 79 percent, respectively.
Dimensional Fund Advisors backed only 54 percent of pay proposals, Oakland, California-based As You Sow said. Its report is based on data from Fund Votes, a project run by CookESG Research that compiles proxy tallies for about 110 fund families.
Ed Sweeney, a spokesman for BlackRock, said the firm follows proxy-voting guidelines that encourage companies to tie pay to strategy and increasing shareholder value. Arianna Stefanoni Sherlock, a spokeswoman for Vanguard, declined to comment.
Golden Parachutes
"We take corporate governance very seriously," said Joseph Chi, co-head of portfolio management at Dimensional, which had $418 billion in assets as of Feb. 3. "We continue to press on this issue because it is important to shareholders."
Dimensional's corporate governance committee comprises the firm's most senior officers and directors, including co-founders David Booth and Eugene Fama, Chi said. It never approves of plans that allow single-trigger payouts to executives — golden parachutes without termination — in the event of a merger or acquisition.
TIAA-CREF, the provider of insurance and retirement products for teachers, supported 96 percent of the pay plans, nearly as many as Vanguard and BlackRock. It had more than $800 billion in assets under management at the end of September.
'Say on Pay'
"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," Bess Joffe, TIAA-CREF's head of stewardship and corporate governance, said in an e-mail.
